Last update 11/30/2010 4:07:30 PM (GMT+7)

If Vietnam copies China’s model, it will not succeed

VietNamNet Bridge – From the angle of the national competition strategy, if Vietnam copies China’s model and relies on a cheap labor force, it will not be likely to succeed. Vietnam should open its doors and turn ASEAN into its market, according Professor Michael Porter, the father of the competition strategy, who is paying a working visit to Vietnam.

In the morning of November 29, Professor Michael Porter had a 3-hour lecture before 1000 Vietnamese businessmen and guests about the present day competition strategy.

Only differentiation and original ideas can bring success

The main message the professor tried to convey in his presentation was that it is necessary to create differentiation and originality in the competition strategy because those features are the key to success.

According to the professor, Vietnam needs to avoid the commonly seen “traps” in thinking about competition strategy. Many enterprises cannot tell the difference between strategy and purpose and they cannot create any differentiation. It always happens that people try to imitate others and follow the moves made by successful people. In the process of competition, the worst strategy is competing by prices because it will only make companies’ profits decrease. However, it seems that business managers rarely understand this basic principle.

When talking about differentiation and originality, the professor stressed that if enterprises only create minor differentiations in products or services, the products or services will be copied. However, differentiations in strategies cannot be copied by anyone.

The professor also emphasized many times during his presentation that every manager who builds a competition strategy needs to give answer to the question: “what shouldn’t I do?” This is also the core idea of the expert.

What are the competitive edges of enterprises, differentiations or low costs? Every company has to decide which way it will follow: high prices, good technologies, fast deliveries, or low prices, few products, similar designs, but low production costs?

The professor said that if businesses cannot define ways they need to follow, they confuse and blind themselves in their strategy..Managers need to know where they should go and need to position their competitiveness in the market.

However, this does not mean that businesses have to follow the same strategies all their lives. They can change their strategies if the strategies become unsuitable for new trends in the world.

Vietnam will not be able to succeed if it copies China’s model

It is now the new age of competition. Vietnam once obtained impressive growth and it succeeded easily. However, the easy success is a story of the past. Vietnam needs to upgrade its competitiveness for the future, the professor said.

“The business environment in Vietnam was once complicated and it is going to become better. However, Government’s agencies need to listen to businesses so as to know what they should do to help businesses compete better,” he said

According to Mr. Porter, the current competitiveness of Vietnam is a industrious cheap labor force and the vast market. However, Vietnam still can succeed even when it chooses not to rely on a cheap labor force.

At this moment, Vietnam needs to seek other segments and other suitable kinds of business. For example, it can target the regional market. If Vietnam copies China’s model and relies on cheap labor force, it will not be able to obtain success. The most liberalized trade partners for Vietnam are neighboring countries. Vietnam should turn ASEAN into its market.

Professor Michael Porter from Harvard Business School is the leading authority on competitive strategy. He is one of the three brains who have the most influence on world business, together with Peter Drucker, the father of the modern business administration and Philip Kotler, the father of modern marketing art.

Pham Huyen