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HR Related Issue of an
Expanding the Shoe
Manufacturing Company to
Vietnam

By Sarani Tharanya Jayasundara

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Executive Summery
The report focuses on launching its production in Vietnam with the aim of expanding the
running footwear business. It discusses the cultural issues of human resources
management and how to cope with them. What kind of culture is Vietnam in the country
and the footwear production in the country. Discuss the cultural and human resources
practices of the country and how they are affected. Hofstede Cultural Dimension
discusses the potential opportunities and threats identified in Vietnam using the strengths
and weaknesses of PESTEL analysis. However, it is important to note that the skilled and
unskilled laborers required to start this business are important and they are focused on
their skills and education. In this case, people of two cultures have to work together
because of a culture shock. This kind of detail is expected to be presented.
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Content Page No.

1. Introduction and Nature of the Vietnam…………………………………… 4-5

1.1. HR practices in Vietnam…………………………………………… 5-6
2. SWOT analysis with Hofstede cultural dimensions………………………… 6-7
2.1. PESTEL analysis……………………………………………………. 8
3. Training and development……………………………………………………. 9
4. Cultural shock and possible solutions……………………………………….. 10
5. Conclusion and recommendation……………………………………………. 11
6. References……………………………………………………………………... 12

1. Introduction and Nature of the Vietnam

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Vietnam located at an Asia pacific region and there main religions are Buddhism, Taoism and
Confucianism. As of March 2016 in Vietnam population 94.1 million. Vietnam’s GDP growth rate has
averaged 6.4 per cent per year for the last decade. (Chi, 2017)Vietnam is a country where cultural values
are socially and economically evolving. They aim to achieve this through innovation and industrial
advancement. This is mainly focused on human resource development. It aims to increase knowledge,
skills development and international labor supply. The primary focus is on school, family and community.
(Nguyen, 2016)

There is a value system in Vietnam that has five components. They are,

01. Vietnams
Traditional
Values

02.Confucian
05.Socialist
and Toaist
Value
Values

04. Western 03.Buddhist

Value Value

Multi-Layer of Vietnams Value system (Nguyen, The Vietnams Values systems, 2016)

Vietnam is a multi-ethnic and multilingual country. Along with the Western bloc, they focused
on the concepts of freedom, equality and democracy. As a result, the level of education in human
resources in Vietnam is growing rapidly. Although there are two formal and informal enterprises
in Vietnam, the higher education level has enabled the employment of the academia sector.
There are also a large number of unemployed people in Vietnam who work in the illicit sector.
(Uwe Blien, 2011). And the workers here are paid less than their competitors. (Uwe Blien, 2011)
Also, the stringent working conditions on their payments have been removed (Uwe Blien, 2011).

In terms of footwear, Vietnam is a 3rd largest footwear exporter in the world. There are 1382
footwear companies and over 50% are foreign companies. The footwear export market has
shown an improvement over the last 5 years. Nike and Adidas are the biggest brand in the world,
but Vietnam has not qualified for these two brands. (Chi, 2017)

1.1 HR practices in Vietnam

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Human resource management in Vietnam is divided into three themes.

I. Public Management Theory and HRM Dimensions.

II. Human resource management in diverse political, social and economic environment.
III. Ownership in the use of Human Resources (YING Z H U et al., 2008)

The following table shows the dimension of human resource practices in Vietnam.

Dimension HRM

01. Employment status Fixed term Contract (Casual Labor)

02. Job allocation Department Manager

03. Wage determination Individual bargaining

04.Wage relation Individual performance

05.Training & development Internal ongoing plan

06.Recruitment & staffing Internal de - centralization

07. Union De – emphasize

08. Labor management relationship Cooperative culture

The Dimensions of Different Human Resource Practices (YING Z H U et al., HRM and Economic Transition,
2008)

According to the above table, fixed term contract is used as a human resource
management practice to draw attention to the employment situation. When it comes to starting a
new business, you have to be careful in deciding the job position, and if you hire workers from
Vietnam for permanent employment, you are responsible for ensuring the quality of the job. Also
the Geo - centrism theory can be considered here. (YING Z H U et al., 2008)
They are used by the head of the department when allocating jobs, so they have to be
careful when selecting the head of the department. Moreover, there is a possibility of a power
issue, so it is better to choose from the home country according to ethnocentrism. (YING Z H U
et al., HRM and Economic Transition, 2008)
Individual bargaining is done as a HRM practice with a focus on pay. Therefore, there is
a risk that employees will be given positions. In Vietnam, however, wage relationships are built
on individual performers. This situation seems advantageous. (YING Z H U et al., HRM and
Economic Transition, 2008)
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One of the most important things to talk about HRM is recruitment & staffing. This is
centralized in Vietnam. In this context, the powers of a certain authority are chosen according to
the ethnocentrism theory. (YING Z H U et al., HRM and Economic Transition, 2008)

2. SWOT analysis with Hofstede Cultural Dimension

SWOT and PESTEL analysis can be used to get a better understanding of the
country in which to launch a company. It seems appropriate to describe it in Hofstede
cultural dimensions.

Strengths &
Weaknesses

Enviorenment Opportunities
al & Leagal & Threats

Technological Political

Social Economical

SWOT & PESTEL framework with Hofstede Cultural Dimension

Similarly, power distance refers to not all individuals in society. This is a cultural
attitude because it shows inequality. Power Distance scores as high as 70 in Vietnam. In
this case, the power-sharing process does not involve consulting with both managers and
employees. This seems to be a weakness due to inequality in starting a new business.
(Hofstede, 2020)
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Individualism and Collectivism, in the dimension of individualism, represent the

individualism of the society as "I" and the collective as "we". Vietnamese individualism
has scored 20 points and they are more inclined towards a collective society. In such a
culture, it is good to have a good environment for teamwork. Teamwork is invaluable
when two cultures meet when starting a new organization. It is not wrong to call this
strength. (Hofstede, 2020).
The higher the masculinity, the greater the male dominance in a country. Also,
when two cultures are going to work together, a femininity culture is much easier. This is
because in a femininity culture, cooperation is a priority. They are also working for a
living. Therefore, equality, quality and solidarity are first and foremost in the making of
the Convention. Flexibility and incentives are preferred. This is an advantage. As such,
this dimension can be made good. (Hofstede, 2020)
Another strength is that there is a good environment for investors in Vietnam. This
is because they have 30 points of uncertain avoidance, according to the Hofstede
dimension. When establishing a business in general, the image of a foreign country is
very important. There are 30 in Vietnam to prevent uncertainty. According to the
Hofstede dimension, this is a country that has the strength to start a business. It is also a
country that does not see innovation as a challenge. This can be seen as a positive thing,
and if people are recruited from the country, it is easier to hire innovative people.
(Hofstede, 2020)
Job stability is still important to a person. The long-term vision of the business
must be clear when employing any person overseas. According to the Hofstede
dimension, the 57-point mark takes the long-term orientation. There is also a strong
tendency to invest in Vietnam. Another good point here is the positive about increasing
education. (Hofstede, 2020)
Working with many people in an organization can have many problems. It is
especially important in communication between people. It is an invective or restrained
communication. This score indicates that it is a culture of restraint, with a score of 35 in
the Vietnam. It is very important to be disciplined when dealing with an organization.
(Hofstede, 2020)

2.1 PESTEL Analysis

Political
According to Human Right Watch (2020), Vietnam is a weak country on human
rights, even though Vietnam is a socialist country. Due to their political influence,
freedom of expression, association and peaceful mass gatherings have been severely
curtailed and opponents have been jailed. (Rahman, 2020)
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Economical
In Vietnam, there is a large export market for textile and leather footwear for the
US, Japan, China, South Korea and Germany. (Rahman, 2020)

Social
In Vietnam, the average male life expectancy is 93 years and the female life
expectancy is 81 years. Their goal is to build an emerging middle class by 2026. The
Vietnamese people are friendly. However, foreigners have complained of excessive
payments and harassment by local residents. (Rahman, 2020)Since Buddhism is the
dominant religion, many beliefs are built on it. This can be very valuable strength.
(Vietnam's technical education & vocational training center, 2004)

Technological
Vietnam ranks eighth in the world in providing IT services. There are currently
five IT industries: Fin-Tech, Artificial Intelligence, E-Commerce, Software Outsourcing
and Educational Technology (Samuel, 2019). However, as many companies are shifting
their manufacturing operations to Vietnam, there is a struggle for skilled labor and the
current shortage of skilled labor is exacerbated. (Rahman, 2020)

Environmental
Vietnam is one of the most beautiful countries in Asia, and in 2019 it received 18
million international visitors. However, it should be noted that the fear of the coronavirus
(COVID-19) threatens public health. As a result of economic development, Vietnam is a
major problem for air pollution and water pollution which has a significant impact on
human health. Vietnam is highly exposed to natural disasters such as volcanic eruptions,
floods, droughts, earthquakes, floods and hurricanes (Rahman, 2020)

Legal
The last aspect to look out for in the pastel analysis of Vietnam is the legal impact
of the country. Foreign companies are encouraged to invest directly or indirectly by
Vietnamese government. In fact, company law has become significantly easier in recent
years, and international investors can now create limited liability companies. In
November 2019, the National Assembly of Vietnam passed a new Labor Code with effect
from January 1, 2021. This new code is amended and supplemented by several provisions
in all chapters of the current Labor Code (Baker Mackenzie, 2020). (Rahman, 2020)

03. Training & Development

As of 2004, workers accounted for 6.5% of the entire industry. This ratio in
specialized companies ranged between 35-40%. Accordingly, a basic part of the
workforce is trained to produce, most of whom are women - 85% and 70% of the total
workforce of the migrant employment enterprise. (Tong, 2020). Vietnam is a leading
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country in the footwear industry. Let us therefore focus on the training and development
of footwear workers in the country.

In Vietnam, for industry workers they have offer Technical Education & Training
Plan. It became Level 01 through Level 03.

Level 03
Level 01
Level 02 Highly Skilled Training
Short Course Training
Intensive Training Providing Providing Advanced skilled
Providing Basic Skilled
Skilled Labors Workers, Technicians &
Labor
Craftsperson
01. Short term course and Training provide highly
Modularized and develop
this training providing to skilled technical workers and
highly qualified workers
skilled workers master craft persons
02. To satisfy labor market
demand, for basic skilled
Training duration is 1.5 – 2 Training duration is 2.5 – 3
labor and increase
years years
opportunities to employment
or self-employment.
Successfully completes , Successfully completes ,
03. This course training or
awarded level 02 National awarded level 03 National
module less than 1 year
Vocational Qualification Vocational Qualification
04.Training offered at
Training provided at Supplies skilled personal for
Vocational Training Centre
technical school, vocational modern industry production
(VTC) or job placement
school and technical college. technique.
center
Kennedy (2002) (Vietnam's technical education & vocational training center, 2004)

4. Cultural shock & possible solutions

Culture shock area Possible Solutions

Communication  They laugh and smile easily ,  Fully Aware about

but it’s not indicate happiness the communication
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patterns in Vietnam
the people who
willing to working in
 English language use less of that country
the people
 Training program to
minimize the
language barriers
 It is believed that diseases can
be caused by a supernatural  Study program or
Health care &
force awareness about the
Beliefs
 Employees may suffer illness beliefs
and pain
 Main infectious diseases
• Hepatitis, Typhoid fever
• Malaria
• Dengue Fever
• Yellow Fever
• Japanese Encephalitis
• African Trypanosomiasis
• Cutaneous Leishmaniasis  Awareness and
Health risk & • Plague information program
concerns • Crimean-Congo hemorrhagic in induction period
fever about the health care
• Rift Valley fever
• Chikungunya
• Leptospirosis
• Schistosomiasis
• Lassa fever
• Meningococcal meningitis
• Rabies

(Vietnam's technical education & vocational training center, 2004)

5. Conclusion

This can be used to get some idea of Vietnam when it comes to expanding
footwear. It is mainly for human resource management. The above analysis does not
make much difference. It is detected by Hofstede dimensions. Vietnam can be seen as a
great demand for foreign enterprises. On Buddhism, solidarity is tied to beliefs and
values. This is seen as an advantageous situation. A positive view of technology and
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innovation. There is not much education and literacy, but there are national level
programs that train and train workers. However, Vietnam is weak on human rights.

References

Chi, D. Q. (2017). The labour and trade nexus in Vietnam. The missing link in the chain? Labour
standards in the garment, footwear and, p.5.

Hofstede, P. Retrieved from www.hofstede-insights.com: [online]. Available from:

https://www.hofstede-insights.com/country-comparison/vietnam [ Accessed 20.03.2020]

Nguyen, Q. T. (2016). The Vietnamese Values System: A Blend of Oriental, Western and Socialist, p.32.
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Nguyen, Q. T. (2016). The Vietnams Values systems. The Vietnamese Values System: A Blend of Oriental,
Western and Socialist, p.34.

Rahman, M. Howandwhat. Retrieved from /www.howandwhat.net:[online]. Available from:

https://www.howandwhat.net/pestel-analysis-vietnam/ [ Accessed 20.03.2020]

The Asian Institute of Research. (2019). Jurnals of Economics and business, 739.

Tong, D. N. (2020, 03 21). VIETNAM LEATHER AND FOOTWEAR INDUSTRY -OPPORTUNITIES &
CHALLENGES ON THE WAY OF VIETNAM ENTERING WTO. Labor forces, p. 15.

Uwe Blien, P. t. (2011). The traditional Vietnamese culture. The Interaction between Culture and
Economy in Vietnam, p. 20.

Vietnam’s institutional and economic contexts. (2017). Development of human resource management,
p. 7.

Vietnam's technical education & vocational training center. (2004). In B. J. Rojewski, International
Perspectives on Workforce Education and Development (p. 108). United sate of amarica.

YING Z H U et al. (2008). HRM and Economic Transition. In N. C. YING Z H U, NEW FORMS OF
OWNERSHIP AND HUMAN RESOURCE PRACTICES IN VIETNAM (p. 158). Melbourne: online in
Wiley InterScience.

YING Z H U et al. (2008). The Dimensions of Different Human Resource Practices. NEW FORMS OF
OWNERSHIP AND HUMAN RESOURCE PRACTICES IN VIETNAM, p.159.