Khboots fireThe economic boom that started in the US has been spreading its influence globally.Its influence has reached developing countries such as China, India... Vietnam cannot be out of its influence.Consumer News had an interview with economist Dr. Vuong Quan Hoang - University of Technology. Brussels (Belgium), and Mr. Rick Yvanovich - General Director of TRG International in Vietnam, to find valuable advice for businesses.Minimize the risk of loss and risk from the impact of an economic recession.
What to do in a recession
The question that businesses operating in all fields are concerned about is how should they operate production and business to avoid possible losses and uncertainties? According to Dr. Vuong Quan Hoang, in fact, each business will have its own business policies, each industry will have its own problems, because the level of cash usage, debt collection ability, cash flow... of each business is different. But with this very general issue, Mr. Hoang advises some general principles:
Regarding production and business operations: Review the product structure in the direction of focusing on key products, with opportunities to reduce costs and stabilize the consumer market; review the capacity to generate added value of product and service groups, because often only one key product group generates the majority of profits, similar to the first-class and business-class cabins of an aircraft generating up to 70-80% of net profit for a flight; develop alternative/related product and service lines that do not depend on large investments, which can help stabilize or exploit existing market demand.
Regarding financial management - investment: Continuously review daily debts (Dr. Hoang emphasizes the word daily), especially for businesses with large quantities of goods supplied, small unit prices; continuously monitor groups of business financial indicators; renegotiate with partners about credit provision time (without commercial credit, it is difficult to sell goods, but if it is too long or loose, it is difficult to recover, or cannot create a return of money); reduce investments beyond the financial capacity of the business, which can lead to dependence on borrowed capital; do not advocate Ponzi-style financial games, that is, attracting crowd capital, using later people to pay earlier people in the form of assets formed from debt sources.
Regarding the market: Ensure to maintain the distribution system of your products and services by maintaining product quality (melamine milk and the scandal of suspected Highlands “mouse” cake are notable examples) and taking care of agents and customers; observe factors that can affect market psychology and change the priority of using goods and services (during the crisis, it is a total shift, not an increase in choice), for example, the environmental issues of Vedan, Miwon…; with international markets, never forget to check the financial capacity of customers (payment), on-time payment history, and the financial capacity of the bank representing the customer…
Mr. Hoang concluded: In fact, it is necessary to base on the specific topic of the enterprise in a very specific context to have a reasonable action plan and effective response. However, the above principles should also be considered because they are typical of challenging and difficult times.
“May be or not may be”
Will the financial crisis spreading from the US cause the Vietnamese economy to decline in 2009? The first question was answered ambiguously by Mr. Rick Yvanovich: “Maybe or not maybe.” He explained that although the world economy in 2009 clearly cannot recover soon and the Vietnamese economy is of course affected, however, whether the Vietnamese economy will be directly and seriously affected or not depends on whether Vietnam is in the center of that recession or not? Because according to him, there are many economies and economic sectors of some countries that will be less negatively affected, or it could even be an opportunity for them to develop.
Mr. Rick Yvanovich gave an example in the IT field of TRG International in Vietnam. The financial crisis of the world economy has created a good opportunity for his company to develop. Mr. Rick Yvanovich explained: financial difficulties make businesses in developed countries such as the US and Europe think about saving costs, especially increasing efficiency in the field of information technology. And now their businessmen are looking to many countries, including Vietnam, to meet their new needs. Obviously, this is an opportunity for businesses operating in the IT field in Vietnam to score points and expand their production and business activities.
Mr. Rick Yvanovich also provided a rather optimistic view of the Vietnamese economy in 2009. He said that with a fairly fast growth rate (continuously increasing over 7% per year) and no signs of a large decline in 2009, it is still a favorable factor, creating confidence for businesses. The large population leading to high demand, abundant labor force... will also still be favorable factors of a solid nature, creating peace of mind in production activities for businesses to continue investing...
Needs improvement from both sides
Economic downturn has more or less had a big impact on the business environment in general. However, according to Mr. Rick Yvanovich, we must have a more objective view that whether the economy is declining or growing, the difficulties that businesses encounter in the business process in general are unchanged and do not suddenly arise. Especially in Vietnam and many other developing countries, the special difficulties that businesses often encounter are issues related to policies and administrative procedures that are regulated in a cumbersome and unnecessary manner by the State's laws.
According to Mr. Rick Yvanovich, how to improve unnecessary red tape in administrative procedures - one of the factors that determine the favorable or difficult business environment in 2009 - from both the State and enterprises is something that needs to be paid attention to. Mr. Rick Yvanovich said that currently, administrative procedures related to production, business, import and export activities of enterprises are extremely complicated. Foreign and domestic enterprises would not want to have to pay their employees just to take care of administrative procedures.
TGTD