CSR in Vietnam: a new frontier
Magalie Marais is an Associate with the Australian Centre for Corporate Social Responsibility (ACCSR). She visited Vietnam in February 2011 as a guest lecturer at the University of Hanoi in partnership with La Trobe University (Melbourne).
Vietnamese people can be proud of their country. After years of military conflicts, the fight for independence and international economic alienation, Vietnam’s economic growth and the reduction in poverty are impressive by any measure.
According to the data provided by the AusAid program, since 1993 Vietnamese growth in real gross domestic product has averaged around 7.5 per cent a year and the poverty rate has been reduced from 58 per cent in 1993 to 13 per cent in 2008.
While the country’s success has been driven by its export orientation, market liberalisation and job creation in the private sector, challenges lie ahead in its efforts to maintain high growth rates and meet poverty reduction targets.
The inclusion of Vietnamese companies in the global value chain (PDF) of multinational companies, and increasing awareness amongst Vietnamese workers and consumers, is increasing focus on issues such as product quality, workers’ rights, and health and safety. Failure to conform to requirements has contributed to a decrease in key export markets in the past few years and growing community activism in Vietnam.
Based on what I have seen during a recent stint as a lecturer in corporate social responsibility (CSR) at the University of Hanoi, I believe Vietnamese national competitiveness could be strengthened by awakening the CSR attributes of their traditional culture, which have lain dormant as the society prioritised economic growth.
This reawakening is already beginning and community sacrifices are no longer acceptable on the path to economic progress. Consider these examples:
• The contamination of milk at the State-Owned company HanoiMilk and other recent ‘quality crisis’ have contributed to the destruction of consumer trust within the country. Although price remains the main determinant of Vietnamese citizens’ purchasing decisions, consumers have made it clear that this cannot come at the expense of basic human rights.
• A 2010 strike by 10,000 workers at a shoe factory in Bien Hoa City over claims for better recognition, career opportunities and working conditions, underlines the urgency of social concerns within the country and the increasing activism of workers.
• A 2008 scandal over environmental violations by Taiwanese-backed firm Vedan Vietnam and its subsequent US$5.4 million fine was extensively covered by the Vietnamese media and generated a strong movement of protest within the country, significantly damaging the company’s social license to operate.
The promotion of a responsible corporate behaviour in Vietnam could significantly contribute to improve the national competitiveness and resilience of the economy. But how?
First, national companies could use CSR as a way to strengthen their reputation and their competitive advantage within the global value chain. By proactive improvements in health and safety, in environmental management or in the promotion of good working conditions, Vietnamese businesses could be seen by the international market-place as reducing the risks for their trading partners.
Secondly, a proactive approach by a few leading firms to engage stakeholders on these issues could provide a model for other companies and contribute to the long term change in the Vietnamese economic landscape. New investors and foreign companies would then be attracted to operate in Vietnam because it was seen as a country trying to engage in a responsible dialogue with its stakeholders.
The development of CSR in Vietnam will need the support of all the different economic bodies within the country to be successful. The government as well as the NGOs will have a significant role to play to initiate and spread this kind of engagement. Training and incentives to companies will be a priority, as well as further action to fight corruption, which probably remains the strongest current obstacle to CSR success within the country.
In spite of these challenges, the Vietnamese culture seems to be a great asset to support internal buy-in and commitment towards CSR within organisations. The solidarity of the Vietnamese people, its humanism and its compassion provide a strong basis to rapidly develop collaborative, innovative and effective CSR projects.
Awakening these values could create new ways of doing business and to support further social and economic progress in Vietnam.