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Trang 1 / UNDERSTANDING BUSINESS CULTURE: A COMPARATIVE ANALYSIS OF VINGROUP IN VIETNAM CHAPTER 1: BUSINESS CULTURE OF VIETNAM 1.1 Introduction to Vietnam Business Culture Looking backward to the history, Vietnam had undergone many wars, either civil or resistance ones. During feudal times, the country had been through thousand year-long wars against the conquest of Chinese dynasties, as well as civil wars such as Le-Mac and Trinh-Nguyen wars in the 17 th century (Taylor, 2013; Tran, 2019). After that, the French launched their colonial war in Vietnam in 1858 at Son Tra peninsula, Danang, Central Vietnam. No sooner had this so called “resistance war against French colonialism” ended in 1954 with the defeat of the French, than the Vietnamese people entered another resistant war against the US, known as the Vietnam war from 1955 to 1975 (Nguyen, 2020). Such a long time committed to wars had caused immense losses for Vietnamese people. Taking solely the Vietnam war into consideration, around 2,115,000 casualties (Rummel, 2014). The country’s long history of warfare has left a profound and multifaceted impact on the nation, including the economic landscape. Vietnam Business Culture in the French colonization time Despite the turbulent geopolitical environment, Vietnamese people still nurtured their entrepreneurial spirit. The late 19 th century witnessed some prominent businesspeople namely Luong Van Can, Bach Thai Buoi, Truong Van Ben (Jean-Pierre, 1981, as cited in Pham & Vuong, 2009). Private-owned businesses had capital worthing just 1% the total national capital, and their labor force accounted for around 9% of the paid workers in the economy. Despite the small scale, such great people had successfully built their businesses. For instance, Truong Van Ben was well-known across Indochine peninsula (including Vietnam, Laos, and Cambodia) for “Xà bông cô Ba”, a Vietnamese soap and washing powder brand. His business was a closed loop model, or a circular model, in which the ingredients came from his coconut oil factory, producing around 1,500 tons of oil monthly. Meanwhile, the soap and washing powder factory was based in today’s Kim Bien market in district 5, Ho Chi Minh City. Truong Van Ben’s products, with competitive price range and good quality, outplayed other French and American counterparts, being trusted by people throughout Vietnam and exported to Thailand, Laos, and Cambodia. He was, furthermore, an advocate for the idea “Vietnamese people use Vietnamese products” (Thanh, 2024). One of the major industries during the 19 th century was mining, but the mining permits were limited to French companies (Pham & Vuong, 2009). In 1941, this industry was worth 30 million Indochinese piastres (around 37.6875 pounds of gold, worthing 14 million dollars today). The great value of the mining industry was probably one momentum for the development of financial activities at that time, with the emergence of merchant banks, owned by wealthy businesspeople such as Truong Van Ben or Bach Thai Buoi, along with the Indochine bank owned and run by the French (Chapuis, 2000, as cited in Pham & Vuong, 2009). As seen, the period from the late 19 th to the mid-20 th century indicated some early business activities of Vietnamese people. The few businesspeople were aware of the importance of business to the welfare of the nation. As a famous businessperson, Luong Van Can, stated in his book “Thương học phương châm” (translated as “Business philosophy”):
Trang 2 / Đương buổi thế giới cạnh tranh này, các nước phú cường không đâu là chẳng đua tài thi sức ở trong trường thương chiến, văn minh càng tiến bộ, buôn bán càng thịnh đạt. Việc buôn bán thịnh suy có quan hệ đến quốc dân thịnh suy. Như thế, ta há nên coi thường xem khinh sao được? (Luong, 2024) He emphasized that people should not overlook the role of trading activities in the relationship with the welfare of a country. However, he pointed out ten limitations of Vietnamese businesspeople that time: 1. lack of commodities; 2. lack of trade associations; 3. lack of credibility; 4. lack of perseverance; 5. lack of willpower; 6. Lack of respect for the profession; l. Lack of commercial education; 8. poor social skills; 9. lack of thrift; 10. disdain for domestic goods. Among these ten weaknesses, those of credibility, perseverance, willpower, commercial education are very close to what we call organizational core values, vision, and missions, which are important elements of espoused values, a layer in business culture. Vietnam Business Culture during the Resistance War against France (Indochina War) and the Resistance War against the US (Vietnam War) The establishment of Democratic Republic of Vietnam on September 2 nd , 1945, was a milestone in the history of Vietnam. Under the leadership of Viet Minh, a communist party, Vietnam entered a resistance war against the French, who came back to the Southern Vietnam for their invasion, after fascist Japanese force was eradicated. As for agriculture, the land resources were in the hand of feudal landlords. Agricultural productivity was extremely low, and there were 2 million deaths in the 1945 famine (Gunn, 2011). The manufacturing sector was rudimentary and poorly functioning. (Pham & Vuong, 2009). 95% of people were illiterate (Ngo et al., 2024). In that context, the economy was centralized, focusing on basic production and supply lines to support the war effort. This centralized scheme continued in the North Vietnam during the resistance war against the US from 1955 to 1975. The economy adopted the Soviet model. The government mainly focused on state businesses although they stated to “support private-owned businesses”. The model of “Hợp tác xã” (Cooperative businesses) was imposed in agriculture during this time, with about 93.1% of Northerners being members in 1975 (Vo, 1990). Privately owned companies were gradually eliminated until 1964 when only the state-owned companies stayed (Porter, 1993). The industry sector received 49% of the national capital, 80% of which went to heavy industry such as electricity, metallurgy, chemicals, and minerals. Light industry received the rest 20%, included consumer goods manufacturing. This unbalanced distribution of resources, together with the damage from many war campaigns of The US had exhausted the economy of North Vietnam. It is estimated that 25% of annual GDP of North Vietnam was damaged by the US. Luckily, there was aid from Communist allies, worthing billions of dollars every year (CIA, 2005), approximately 50% or more of the national budget, helping it sustained the lives of people, while supporting the communist army in the South. In contrast to the centralized economy in North Vietnam, the economy of South Vietnam under the leadership of Vietnam Republic (Việt Nam Cộng hòa) and the protection of the US was a market economy, based on four and five-year economic plans. Pre-1965 period under Ngo Dinh Diem saw a rapid growth and major reformation of land as well as currency, with the replacement of French Indochinese piastre by dong. 1954 witnessed a great immigration of industrialists from North Vietnam, bringing with them their capital and technologies, benefiting the economy of South Vietnam (Dang, 2004). However, because the war had escalated since 1965 and the Chinese businesspeople manipulated the market, the growth rates were not stable, with years experiencing downturns, deflations,