Doing Business

New strategies for the opportunities of doing business in Vietnam in times of Covid

Tra Mac

June 2, 2021

Doing Business

New strategies for the opportunities of doing business in Vietnam in times of Covid

Tra Mac

June 2, 2021

The pandemic is still happening complicatedly on a global scale and in Vietnam, affecting many economic sectors. In this context, businesses need to have a continuous “rotation” in strategic directions as well as methods of implementing those strategies. To catch your opportunities for doing business in Vietnam, you are recommended to ensure a plan to adapt and maintain operations, review the business model and strategy, and define the market position for a long-term growth.

READMORE: Vietnam Market Entry Strategy: Joint Ventures

The opportunities for doing business in Vietnam development from a strategic perspective

To Ms. Dao Thi Thien Huong, Deputy General Director of EY Vietnam, In charge of Strategic Consulting (EY-Parthenon *), The COVID-19 pandemic transformed consumers globally – from a value perspective, their behavior, to the way they consume it, and it impacted greatly on the business opportunities in Vietnam.

According to the EY Future Consumer Index in May 2020, 89% of surveyed consumers are and will change the way they shop, 76% are and will change their product and service choice (SPDV), and up to one half (50%) will probably spend only on a few essential SPDVs.

Therefore, these changes certainly have far-reaching effects on the operations of businesses.

EY-Parthenon (5/2020) analysis shows that businesses in the aviation, travel and hospitality, and oil and gas industries are facing many challenges due to declining customer demand and revenue. supply chain breakdown and liquidity risks increase. It is estimated that the global airline industry alone lost about $ 48 billion in revenue between January and April 2020 due to flight restrictions and flight cancellations, according to an EY-Parthenon analysis in June. / 2020.

Companies in the automotive manufacturing, retail real estate (supermarket group), also suffered some negative effects from supply chain uncertainties, declining demand and revenue. However, the impact of COVID-19 on this group of industries is less severe and firms are still able to maintain operations relatively close to the pre-pandemic period.

At the other end, some industries and businesses are finding opportunities for growth and expansion, including last-mile delivery, e-commerce and consumer technology. consumer tech, FMCG and pharmaceuticals.

However, what we want to say is ‘in danger’. In the picture with the dominant gray, EY-Parthenon’s analysis shows that there are still bright spots and opportunities ahead. Firms with industry advantages, long-term adaptation strategies, and tailor-made, will be able to better grasp short-term emerging opportunities and new long-term opportunities.

Business opportunities in Vietnam development strategies

About business opportunities in Vietnam, due to the different levels and trends of COVID-19’s impact on industries, there will not be a common formula for an adaptation strategy for all firms. In general, businesses should build adaptive strategies according to three groups of solutions.

The first group of solutions: focus on crisis management and liquidity management. For example, set up a quick response team to deal with unusual problems that arise in terms of safety, supplies, and production materials. This is an effective way that Vietnamese businesses can apply.

Liquidity management requires businesses to balance cash flows, cut down unnecessary expenses and closely monitor liabilities. Property procurement plans can consider shelving and choose alternatives such as renting a property to maintain a sufficient amount of backup cash.

The second group of solutions: aiming to create short-term value through reviewing and offering immediate actionable solutions to increase operational efficiency and increase cash flow. Solutions may include reviewing portfolios and selling or divesting appropriately, reallocating investment resources to maximize efficiency, and optimizing loans.

In addition, businesses also review product structure, customer structure, and price policy; Review procurement and supply chain costs, optimize taxes and optimize working capital.

However, program cuts often do not create growth and development drivers in the long term, even the tightening of costs and excessive resources can negatively impact growth and development. development in the future – pushing businesses into a difficult competitive situation and leading to a new state of crisis after the crisis.

Therefore, in the third group of solutions, businesses need to focus on repositioning strategies, including business model reform, growth model review, supply chain diversification, and lateral reform. feedback formula, in order to interact better and more effectively with customer behavior and needs. Because this is the core content in the “new normal” period.

These groups of solutions can be implemented individually or in combination, or prioritized for implementation depending on the actual situation and capabilities of each enterprise’s resources.

Predicted business development trends for the long term

On business opportunities in Vietnam, Ms. Dao Thi Thien Huong emphasized, first, to catch business opportunities in Vietnam, businesses will appreciate the importance of increasing resilience to unfavorable circumstances (build resilience). This will include some key areas such as:

Develop response scenarios – at the same time look at macro effects more deeply and broadly, instead of focusing primarily on micro-drivers as before.

Supply chain transformation or re-creation. At this stage, the business will have to better control the increase (potential) in the supply chain costs, due to the choice of diversified sources to avoid the failure or availability of the chain.

Strengthen or diversify measures to protect workers, at the same time, apply automation in production to gradually reduce the dependence on ineffective factors, including labor costs.

Second, there is a possibility that there will be a swapping of positions in the same industry, although it may not be as fast and dynamic as that of industries – due to the impact of the pandemic. Enterprises with strong balance sheets, good management staff, can continue to promote investment in the current period, will have a “once in a lifetime” opportunity to break through and thrive. to lead the market. Tightly managed businesses may have to cede the latest short-term business opportunities to those that are able to adapt quickly, flexibly and dynamically in changing business directions and strategies. .

Third, the “margin” will shift in the value chain, towards the customer touch point. Retail operations, traditional distribution channels become less important, giving way to digital platforms (digital platforms) and more margins are created downstream. It will be easier than ever to reach and serve consumers from the manufacturing side, facilitating last-mile delivery for businesses.

Fourth, the application of robotics and artificial intelligence (AI) in supply chain operations and other business functions, is becoming increasingly apparent.

Fifth, digital transformation is expected to continue to increase, leading the link between traditional business models and digital platforms. In addition, strategic M&A activities and investments in “unicorn businesses” can become exciting when (possibly reduced) valuations are considered more reasonable by investors.

Keep it in mind, if you are unsure or know nothing about the local regulations and laws for doing business in Vietnam, you can ask for our help. Viettonkin will always be ready to assist you anytime!

Related posts

Doing Business

Vietnam fintech ecosystem and the ultimate guide to starting a fintech business here

Vietnam fintech has emerged as a rising star in the ASEAN region lately. Why should you choose the fintech market and how to start a ...

Read more
Doing Business

Guide to establish representative office in Vietnam

Today, quite a few companies have established representative office in Vietnam to facilitate their business. It is statistically reported that there were more than 1,000 ...

Read more
Doing Business

4 steps to make a productive market research before entering Vietnam market

A comprehensive and productive market research is the key for a foreign enterprise to have a successful business investment plan in Vietnam. A bright research ...

Read more
Doing Business

How To Establish a Representative Office in Ho Chi Minh City?

Nowadays, many foreign investors want to set up new business in Vietnam. However, the cost of setting up is relatively high and there might be ...

Read more