educated, young and hard-working
With a population of more than 94 million people, 20% of which are tertiary educated and 66% under the age of 30: any way you look at Vietnam there is a clear message of business opportunity.
Geographically, Vietnam is long and narrow stretching in a north south direction with the two main cities HCM City (formerly Saigon) in the south and Hanoi in the north separated by more than 1,500 km or a 2 hour plane trip. In contrast to this HCM is also a 2 hour flight from Singapore. The north borders Laos and China. The south borders Cambodia.
Hanoi is a sprawling city with a population of 8 million. It is the stately capital exuding rich culture influenced by the Chinese and the French.
HCM already has a population of 8.5 million and a plan to double that over the next 15 years. Looking from the famed District 1 across the Saigon River are the makings of a new HCM in the early stages of development. The aggressive plan includes all the necessary airport, road and rail infrastructure. This is occurring even while a subway development and road improvements occur in the existing city.
An educated workforce
Vietnam has more than 150 Universities and 250 colleges spread throughout the country to cater for a tertiary student population of 2,000,000. Each year around 400,000 new graduates join the workforce. 66% of the population is under 30 making it one of the youngest workforces in the world.
Clearly, the Vietnam Government and, to a lesser extent, private enterprise, have invested heavily in the education infrastructure to help position the Vietnamese as a properly skilled and educated workforce. However, despite this annual injection of bright young minds, an annual GDP growth rate of almost 7% means that the demand from local companies and MNCs is far greater. This results is an unemployment rate of just 3.3% and an ongoing talent shortage.
Managing People and Business
Vietnamese people are well educated, intelligent and open to learning. Clients I have worked with in the north and the south are setting up world class facilities and investing heavily in training and development of their people. In the short term their goals are to have highly skilled local leadership teams and country managers in place.
With a longer term perspective: One foreign clothing manufacturer I visited in a large industrial park outside Hanoi had comprehensive talent development programs for the future leaders and clear succession planning programs in place. The goal: maximum local leadership and business success and sustainability in as short a time as possible.
Women play an active role in the work-force. Leveraging a strong family unit, they take minimal time off work between children. The birth rate in Vietnam is 1.7 per female. This means that maternity leave planning is an integral part of the annual manpower planning. Unlike some other cultures, the Vietnamese female worker is keen to return to work as early as possible to resume her career and the financial support of her family.
Another planning consideration is the Tet holiday period. Tet celebrates several occasions including Vietnamese New Year. Tet holiday period can run for 2 weeks. The exact dates each year vary but usually occurs between end of January and mid-February. It is difficult to do normal business activity for this period and therefore that time and the lead up should be part of your annual planning process.
HCM and Hanoi have both set up a number of huge industrial parks at some distance from the city centers. They boast significant tax benefits to attract industry and factory establishment. Companies need to consider bus transport for workers to ensure adequate talent is available for the business. Industries in the north include a booming IT R&D development zone and clothing manufacture. In the south there are plastics manufacture, automotive and heavier industries.
From a domestic company viewpoint Vietnam’s primary industry has been forming itself into large conglomerates, significant export earners for Vietnam and growing quickly. A good example of this is the dairy industry which is the single biggest primary sector and growing at more than 20% per annum. Other important industries include furniture and footwear.
The economy is growing much quicker in the South around HCM City when compared with the north.
A lot is made by foreign press of the communist government in Vietnam. Of course it is important from a governance perspective and the usual benefits exist for the party inner sanctum. However, in general the government is very business focused and, like any rapidly growing economy, does its best to cater for the fast changing needs of business and the broader community.
80% of the Vietnamese population do not adhere to any mainstream religion. The established religions in Vietnam include the Vietnamese folk religion, which has been historically structured by Confucianism and Taoism from China, as well as a tradition of Buddhism.
Vietnam is a vibrant economy with a young, hard working and well educated work force. Geographically it is well positioned in SE Asia for access to the rest of the world. Many MNCs are setting up a significant presence and riding an economy with a growing population, GDP and talent pool.
Some key Vietnam Economic indicators:
· Population 94 million
· GDP 2,036USD per capita and an increase of 48% in the last 4 years
· GDP growth of 6.7%
· Unemployment at 3.3%