members and allocate controllable resources well to implement the group's internal development strategy. Groups should pay special attention to human resources when expanding their business, because human resources are of utmost importance in management, especially in the current situation where Vietnam is lacking high-quality human resources. The appointment and dismissal regime should be based on economic efficiency as the top criterion and this process should also be made public to all large and small shareholders in the group for an objective view and assessment.
7. Take advantage of outsourcing:
Advanced corporate models in the world and even reformed corporations in East Asia are gradually realizing the advantages of outsourcing over establishing or owning a subsidiary, especially a manufacturing company, to support their operations. Unilever Group, when first coming to Vietnam, invested in buying a series of Vietnamese cosmetic and chemical companies such as PS, Blue Dragon, etc. They spent money to modernize factories, make them meet international standards, make them profitable with beautiful appearance, then in turn sell and transfer their factories across Vietnam to Vietnamese partners such as the General Chemical Corporation. These partners were given many incentives by Unilever to take over all of Unilever's factories and carry out production according to orders for Unilever itself. So Unilever can outsource all responsibility for what can cause pollution, with the complexities of having to manage tens of thousands of low-level workers. Vietnamese corporations should learn and apply this method to reduce the burden of vertical integration, prioritizing economic efficiency.
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8. Take advantage of the benefits of linking members in the group without being too dependent on each other:
Members can support each other in technology, production know-how, share a common brand, training programs... as the chaebols have done, and in fact have produced very good results. This increases the competitiveness of members, especially new businesses entering the industry. FPT Corporation took advantage of this when they established FPT Securities Company and quickly turned this company into one of the most interested securities companies thanks to
FPT brand. It is impossible not to mention that FPT's culture of innovation and daring is inherited to FPT Security when this company completely buys modern foreign trading software while other securities companies buy securities software from FPT Software. Members can even borrow capital from the parent company or other members because capital concentration is a great advantage of the group model, and in the market there is still a shortage of capital and banks refuse to lend. However, companies should operate independently, lend capital objectively with the standard of economic efficiency, should not have too much incentives and the lending company also needs to have an effective credit management mechanism, loans must be paid in full, on time and fairly.
Vietnam should not build a group model in which member enterprises are too dependent on each other. Cross-operating enterprises that are dependent on each other and own each other have caused a chain reaction, one company's loss and bankruptcy leads to the bankruptcy of many other member companies that invest in it. This has happened in the chaebols in Korea and the keiretsu in Japan.
Korea has created a system in which member companies, even if they are not related in capital, are very dependent on the parent companies of the group. For example, when the parent company changes its strategy of not using the old product series, the member company's profits decrease compared to the previous year because they do not actively seek other customers and innovate their business direction. That mechanism has actually brought many disadvantages to the chaebols as analyzed above. Increasing the independence of member companies so that they can provide products to the entire market and compete with other group companies is a way to increase the most sustainable profits for the group. In particular, it is not allowed to establish more affiliated members for unwise purposes such as solving the idle labor in the parent company as the keiretsu has done. There are signs that recently Vietnamese corporations have established a new company that actually has no assets other than the name of the parent company, but the stock price is already sky high and those who know
Information is free to benefit from activities like this. This is a non-strategic expansion decision and is causing difficulties for the market.
9. Do not apply the mechanism of power concentration:
According to the Korean experience, corporations should not consider their affiliates as a board of directors in a company and control all of its activities. They should let the company operate independently, maximizing its own benefits, and the parent company should only have supporting activities. Corporations should separate ownership and management, and set economic efficiency as the standard for selecting and dismissing managers. This will make the corporation run more effectively. Apply a policy of hiring directors and a mechanism of rewards, punishments, dismissals, and promotions based on ability and business performance.
Private corporations often fail to fully understand the risks of this management model, believing that internal operations through transfer pricing or internal subsidies to increase the overall profits of the corporation are a good way to maintain efficiency. Sometimes the corporation owner and his family take advantage of this to make personal profits, and they can run away with huge debts. When a corporation collapses, the economy is severely affected, so controlling corporations is also the task of the State. The State needs to take measures to make the corporate governance system transparent, enhance the rights and obligations of small shareholders so that they can participate in the decision-making process of the corporation, and avoid fraud and manipulation by major shareholders and the main ownership family of the corporation. The government needs to have strict regulations on internal price transfers to avoid corporations using internal price transfers as a tool to evade taxes, manipulate the stock market and engage in unfair competition like Korean corporations.
CONCLUDE
In today's conditions, the international economic and business environment has changed a lot compared to decades ago when East Asian countries began to emerge as a phenomenon. The globalization of the world economy is taking place vigorously and strongly, bringing many opportunities and challenges to developing economies. Countries will have the opportunity to increase competitiveness through joint ventures, partnerships and access to larger and more diverse markets. But a challenge for countries is that old ways of doing things, old methods of operation are sometimes no longer suitable in the new period and require flexible changes. And the process of building a corporate model in our country today has been and is taking place exactly like that.
Therefore, lessons from East Asian countries are a valuable reference for Vietnam in choosing its own direction. However, a basic principle is that Vietnam needs to flexibly apply all lessons in the specific conditions of the country, it cannot apply them subjectively and arbitrarily. And any plan requires a thorough research process; any action must aim towards a strategic goal, not ignoring management loopholes for short-term benefits. Only then can corporations in Vietnam develop sustainably and confidently compete in the international business environment, promoting the strong development of the Vietnamese economy in the future.