“The young Vietnamese are diamonds in the rough”
Siemens Vietnam is one of the longest established foreign companies in the country, with more than two decades of experience. In this article, Thai-Lai Pham, president and CEO of Siemens Vietnam, explains what the country must do to achieve sustainable growth – and how demand for infrastructure, energy, healthcare and industry solutions is creating huge business opportunities.
According to Thai-Lai Pham, president and CEO of Siemens Vietnam, Vietnam is at a turning point. “GDP growth has fallen back a little in the past five years but now we are seeing it pick up again,” he says. “What I am pleased about is that the government is now using economic reforms to bring about a different kind of growth, with the accent shifting from rapid growth to sustainable growth.”
While the accent may be changing, the goal of achieving sustainable growth will be challenging. “The country will need further modernisation,” explains Pham, who took his post – and returned to Vietnam after almost 30 years abroad – in 2012. “This means it will have to open up to more foreign influences. European companies – which value innovation and education – have much to contribute to this.”
Pham emphasises Vietnam’s long links with Europe. “Germany has had a special relationship with our country for a long time,” he points out. “The former East Germany welcomed students from Vietnam. As a consequence, Germany has a large Vietnamese community of between 100,000 and 200,000 people. When Vietnamese expats come back home, for example to take up public-sector posts, it can increase understanding and act as a catalyst for business between Europe and Vietnam.”
Modernisation will require improved education. “Young Vietnamese are diamonds in the rough that need polishing,” says Pham. Siemens contributes to this polishing by working with the Vietnamese education system to ensure that courses meet the needs of businesses. “In addition, we train a large number of Vietnamese with high potential. They follow an internal training programme that takes them to various business units – they learn how we think and do things,” adds Pham.
However, for Vietnam to continue to grow, the country will need to do more than just improve its human capital. Investment in infrastructure is essential – presenting a huge opportunity for Siemens, which operates in four sectors (energy, healthcare, industry and infrastructure and cities (which includes rail)) in Vietnam. As Pham noted when he was appointed CEO, overcoming the country’s infrastructure challenges will be critical to Vietnam achieving its goal of becoming an industrialised nation by 2020.
Pham describes energy as the backbone of Vietnam’s growth. “The energy market is growing at more than 10% a year and Vietnam is hungry for more,” he notes. “This means that the energy sector offers great opportunities – not just for Siemens but for other companies too.” Both generating capacity and a more efficient grid are required – a massive 10% of energy is currently lost between the power station and the customer.
Vietnam is now seeking to reduce dependence on fossil fuel imports for power generation and is assessing the potential for wind power (it currently relies on coal, gas and hydroelectric power). While this development is welcome on environmental grounds and is feasible – Vietnam has 3,000 kilometres of windy coastline – it presents additional challenges, according to Pham. “At present this type of renewable generation still places a greater burden on energy grids, because electricity supply fluctuates with the force of the wind,” he explains. “Ideally, you need smart grids to make wind energy possible.”
"The energy market is growing at more than 10% a year and Vietnam is hungry for more"
Vietnam also offers huge opportunities in infrastructure and healthcare. Rapid urbanisation has increased demand for roads and public transport while healthcare provision remains limited. “At present, healthcare institutions are often overstretchedand the demand for high quality healthcare services is increasing: this is highlighted by the $2 billion spent every year by Vietnamese on healthcare outside the country,” says Pham. “Siemens supplies new hospital equipment such as MRI scanners. We also work to increase the efficiency and capacity of existing facilities, by improving workflow so doctors can treat more patients, for example.”
Despite Vietnam’s myriad opportunities, Pham is quick to emphasise that it is not a country for short-term fortune-seekers. “Success in Vietnam requires a long-term perspective,” he says. “You have to really take an interest in how things are done and commit the necessary time to understand the country. Clients are not the same as in Europe. It is only possible to achieve your goals if you build up good relationships and are patient. Vietnam offers plenty in return though – including ambitious and motivated young staff who really want to go for it.”