Santa Clara University

Collage of Asia 2008 Study Abroad program

Global Business Perspectives: Managing Change in the Asian Environment (IDIS 695)

 

Overview

21 MBA students from Santa Clara University’s Leavey School of Business visited businesses in South Korea (Seoul), Singapore (Singapore), and Vietnam (Ho Chi Minh City) from Sunday, August 24, 2008, to Saturday, September 6, 2008. Professors John Toppel and Andy Tsay led the trip. This website profiles every country and company on the itinerary, and summarizes the key lessons learned.

 

Companies we visited


undefined      

Our hosts included

4 Chairmen
5 CEOs
3 Presidents
1 CFO
2 COOs
1 Vice President
11 Directors
2 Senior-level Managers
5 Managers


 

Top Five Takeaways

 
Government has a huge influence in the business environment
In the past 50 years, South Korea has transformed from a poor agricultural country to a global economic power.  Since the recovery from the Asian Financial crisis in 1999, South Korea's government has gradually shifted from strong central control to a more democratic form.  A free market economy and a more transparent government has accelerated South Korea’s economic growth.
 
Of the three countries we visited, Singapore has the greatest presence of government in the business arena.  Like South Korea, Singapore has transformed from a low-skilled labor society to a knowledge-based one.  The government focuses on attracting the best talent from all over the world.  It offers grants to entrepreneurs with few questions asked.  It helps businesses facilitate change that aligns with its economic development goals.
 
The Vietnamese government is slow on adopting changes.  Although the 2007 entry into the WTO was a big step forward, vague or ineffective laws and the unevenness of enforcement hinder the country's economic development.
 
 
Relationships are crucial to business success

In Korea, most of our hosts emphasized the importance of building relationships.  We learned that a bad relationship between the former GM CEO and his Daewoo counterpart almost undermined a proposed partnership.  Business partners and co-workers strengthen their social bonds by regularly going out for drinks and meals.
 
The Singapore government actively reaches out to businesses to further its economic development goals.  The relationship between the Singapore Economic Development Board and a corporation like Philips resembles that between an account manager and client.
 
Personal contacts are very important for navigating the Vietnamese business environment.  VietnamWorks could not establish a printing business partly because the company lacked the "connections" to obtain a license.  Saigon3 Garment Joint-Stock Company, formerly a wholly state-owned enterprise and currently 10% state owned, has benefited from continuing ties with the government.
 

 
The level of nationalistic pride among a country's residents is a key driver of the business landscape
In general, Koreans prefer to buy Korean products.  This gives Samsung an advantage over foreign-based companies, such as Sony and GE, in selling to the Korean market.  Furthering Korean pride in their country is the fact that they have begun to lead Asia in television, movies, and fashion.
 
 
Poor infrastructure impedes business but also presents many opportunities
Lack of infrastructure definitely impacts day-to-day business in Vietnam.  The main road to Saigon3 Garment Joint-Stock Company is a narrow, one-way dirt road.  Most roads flood during the frequent rains.  However, this need for infrastructure improvements presents a huge business opportunity.  VinaCapital has an investment fund that targets precisely such ventures.
 
 
How corruption is addressed is informative about the local power structure and social norms
Corruption exists in every country. Korea, Singapore and Vietnam are no exception.  However, these countries differs in their attitudes towards corruption.  
 
In April 2008, the CEO of the Korean company Samsung was indicted for tax evasion. Unfortunately, these types of events are not uncommon in other parts of the world. The CEO's response on resigning his post was very Korean, though.  He apologized for bringing shame to himself, his company, and to Korea.
 
Singapore takes preventative measure against corruption. The strong presence of Singapore's government in residents' lives leads many of them to a feeling of being watched all the time, which naturally deters illicit activity. Singapore also pays competitive salaries to its civil servants to reduce their susceptibility to corruption.
 
Corruption is more institutionalized in Vietnam than in the other two countries.  Activities that would be considered corrupt by the standards of other countries, particularly the US, fall more into a gray area in Vietnam and in many cases are accepted as a natural part of business practice.

 

Posted by: A. Shyr, O. Leung, & S. Byers

Printer-friendly format