Advancing Business Ethics and Business Culture in FDI Firms

9:14:16 AM | 3/20/2024

The role of business ethics and corporate culture in foreign-invested enterprises operating in Vietnam is increasingly being recognized as a critical component of the nation’s business development paradigm. These entities are driven not merely by personal financial objectives, but also by a commitment to contribute value to society and safeguard the environment. Adherence to legal norms, assurance of transparency and fairness in business practices, promotion of creativity and innovation, and the cultivation of people-centric business models are all integral to their operations.

Many FDI enterprises place integrity, balanced profit growth, and harmonious development at the forefront of their priorities

Great contributions of FDI firms

In the open integration trend, Vietnam has become an ideal destination for many foreign businesses. In 2023, in a difficult economic context, Vietnam impressively achieved a record FDI value of US$36.6 billion, up 32.1% year on year. The sharp increase in both fresh FDI capital (up 62.2%) and licensed projects (up 56.6%) showed continued interest and confidence of foreign investors in Vietnam's investment environment.

Dr. Khuat Thi Thanh Van from the Academy of Journalism and Communication said that entrepreneurs in FDI firms in Vietnam today not only have sharp intelligence but also have creative leadership. Great intelligence and quick adaptability to changes in the business environment are their typical strengths. They are a source of inspiration, not only for the desire to succeed but also for creating social values. They are innovative not only with their products and services but also with their management, community interaction and promotion of environmental and social sustainability.

In addition, FDI firms always comply with ethical and legal standards because, besides the vision for profit, they consider long-term development, create the value for the community and shape a prosperous future. Furthermore, they are also very sensitive and quick to integrate and adapt to host countries. They carefully analyze local characteristics, culture and lifestyle in the places where they invest in order to attract good human resources and good infrastructure for their business.

"Flouting the law" for profit

Vietnam's market economy is still being completed and its legal system is still not completely adequate to regulate actual relations, said Van. This creates opportunities for some entrepreneurs and businesses in the FDI sector who have sought to "circumvent the law" to gain illegal profits.

Some businesses still pursue the goal of maximizing profits at all costs. They do not respect regulations. Businesses often set high growth and profit goals, leading to extreme utilization of labor. Forcing workers to work overtime disrupts the balance of their work and personal life, resulting in fatigue and dissatisfaction at work. Many workers in FDI factories have gone on strike against overwork. For example, in 2019, approximately 400 employees of Cloth & People Vina Co., Ltd, a garment manufacturing company in Ho Chi Minh City fully funded by South Korean investment, engaged in labor actions over several consecutive days.

Placing profit above ethics, many entrepreneurs in FDI companies no longer keep business ethics. They disregard the law and discount their responsibility to society, to employees and to investors like breaching intellectual property rights, destroying the environment and committing fraudulence, deceit and property appropriation. In 2016, Formosa unlawfully discharged wastewater with toxic substances like untreated phenol and cyanide into the marine environment during the trial operation of its factory complex. This incident caused heavy economic, social and environmental damage, with the heaviest impact on the fisheries sector, followed by business, service, tourism and daily life of fishermen.

These misleading and illegal acts have upended ethical standards and values of entrepreneurs and the business culture of FDI firms. This reality has stained the image of FDI firms and caused negative impacts on society.

Fostering integrity and business ethics

To achieve long-term sustainable business development, each FDI enterprise needs to pay attention to building and fostering integrity in business and doing business with profit growth placed in balance and harmony with environmental protection and social and human development, said Van.

By doing so, business leaders need to integrate integrity and ethics into business culture. Business integrity in FDI firms will become an indispensable part of culture if it is instilled in their thinking and determination.

Besides, it is necessary to place people at the center of all production and business strategies of companies and put people at the heart of every decision. This also reflects the spirit of the 2030 Global Agenda and socioeconomic development policies of the Party and the Government. It promotes cultural diversity and greater inclusiveness, encourages innovation and creativity in business and fosters new solutions to new challenges. Additionally, actively taking advantage of the power of technology and adopting digital transformation to optimize productivity and performance in business is important. Digital transformation not only helps save resources but also creates and enhances competitive advantages of businesses.

At the same time, it is necessary to promote the construction and development of a civilized and fair corporate culture and concretely fulfil commitments on business ethics and social responsibility like practicing ethical principles in all aspects of business operations, Van said. Moreover, it is essential to cooperate with government agencies and NGOs to ensure that ethical and social responsibility regulations and guidelines are properly implemented and followed.

By Anh Mai, Vietnam Business Forum