Linking Business Family Community in Vietnam

 

The event aims to help the Vietnamese business community to understand more about the roles of business families in economic and social development.

 

Speaking at the seminar, VCCI President Vu Tien Loc said, based enormous contributions of Vietnamese business families to economic development, along with the actual needs of business families for strengthening unity, building family happiness, and promoting family business traditions to make greater contributions to the country’s economic development, the Vietnam Chamber of Commerce and Industry decided to set up the Vietnam Entrepreneur and Family Council. The ultimate goal of the council is to formulate the community of Vietnamese business families.

 

Mr Pham Dinh Doan, President of Phu Thai Group, said the Vietnam Entrepreneur and Family Council was set up to link typical and prestigious business families in the Vietnamese business community; unite to build family happiness, promote family tradition and family culture; organise meetings and exchanges of Vietnamese business families to strengthen their relationships for joint development and success; cooperate and assist each other to develop business, share business information as well as daily happiness; and honour typical business families to encourage business family-based economic development.

 

The Vietnamese history recorded enormous contributions of many merchant and bourgeois families during the "Golden Week" from September 17 to 24, 1945. This is one of the finest pages of history which illustrates the power of public unity in the early days of the Democratic Republic of Vietnam. Valuable contribution by Trinh Van Bo and Hoang Thi Minh Ho’s family has gone deep into history. His family contributed a total of 5,147 taels of gold in several donations. After the doi moi (renovation) era began, especially in recent years, entrepreneurs have become a new class in society with glorious missions and social trusts. They are compared to “vanguard soldiers in peace.” Vietnamese businesspeople have confirmed their positions with business successes and great contributions to social and economic benefits. They are the vanguard force in the cause of national renovation and development.

 

Mr Lawrence Chong, CEO of Consulus, said Vietnam is having more and more big private companies. Particularly, a new generation of entrepreneurs with good training, knowledge and skills is following the steps of their parents in the business world and showing their ability and calibre. There are more companies operated and managed by two or three generations of a family in Vietnam now. Family companies are playing very important role in economic development and international integration. This model accounts for 70 percent of companies in the world. According to statistics, a third of Top 500 companies in the world are family-ruled, including P&G, Hermes, Toyota and Wal-Mart.

 

Why big companies in the world are usually family-run? That is because, apart from their dedication to business, they also devote to their own family. “The family love generates working dedication. Our researches show that customers trust more in products made by family-ruled companies,” he said.

 

So, when do family-run companies usually encounter problems? Lawrence Chong said there is nothing wrong with family business model. Even, this model is very good. However, this model only has problems when there is too much love put into it. According to Consulus studies, 70 percent of Asian family-run companies see problems when they undergo the period of power transfer between generations and attract outside talents to family-run business affairs.

 

In Vietnam, to make more success in the integration period, family-run companies must change their ways of thinking of corporate governance and more importantly thinking of human resource management.

 

Currently, Vietnam has more and more businesspeople. We place our expectations on well-trained entrepreneurs to lead competition in the region and the world.

In reality, a family-styled company model is unlikely to be successful. So, we have to build business family traditions and values. This model needs the encouragement and support of the entire political system. However, business family traditions still play decisive roles. Family traditions are the business school. VCCI and the Council will link and support entrepreneurs and be the cradle and the school for Vietnamese entrepreneurs.

 

Based on that foundation, along with the actual needs of business families for strengthening unity, building family happiness, and promoting family business traditions to make greater contributions to the country’s economic development, VCCI decided to set up the Vietnam Entrepreneur and Family Council.

 

The strongest point of family-run company is cooperative relations of key members. However, this strength is also the inherent weakness of this model that decides the development of such company. When there is the transfer of power between generations, the heirs must share ownership of the company in the spirit of "partnership". They must decide together how the company run as a common property. And, many family-run companies fail because they cannot solve this issue effectively.

 

According to experience from successful family-run groups in the world, good corporate governance is critical to the long survival and sustainability of family businesses. Thus, the concept of “nepotism” in running family businesses in Vietnam needs to be changed, particularly the thinking of corporate governance and human resource management.