“To implement our management philosophy, ‘each employee is an internal customer’” --An interview with a director of a Vietnamese manufacturer and supplier of mechanical and electrical parts and components
AP Electrical Equipment Co., Ltd.
Ms. Bui Thi Thanh Phuong (Vice Director)
Many business people from abroad including the emerging countries have participated in HIDA training programs. Positions of the targeted audience vary with the programs, and there are some programs aimed for top executives.
This time, we interviewed with a person who runs a manufacturing and supplying company of mechanical and electrical (M&E) parts and components for big building and the like in Vietnam.
--Please explain your company profile first.
AP Electrical Equipment Co., Ltd. (AP Co., Ltd.) was established in July 2010, and we currently have 33 employees working in our company, which is located in Ho Chi Ming City. AP Co., Ltd. specializes in manufacturing and supplying Mechanical and Electrical (M&E) parts and components for big buildings, factories and thermal power plants, such as steel pipe conduits and fittings which comply with American Standard (UL 797/1242), British Standard (BS4568), and/or Japanese Standard (JIS C 8305), switch boxes, junction boxes, pipe hangers, Uni-strut/ C-channels and beam clamps.
Our management philosophy is that “each employee is an internal customer”, and this is very important to us. With this thinking, if you want to satisfy and adapt any requirement of your customers, the company must adapt and satisfy employees first by providing them with such things as: a comfortable working environment, care about the difficulties in their work and helping to resolve them smoothly, opportunities for employees to learn and improve, encouraging the employees to innovate their work which will lead to them succeeding, obtaining job promotion, financial incentives if they get a good result, acknowledgement of the widespread importance of their roles in achieving the general goals of the company, etc. Once your employees feel satisfaction in their jobs, they will put a great deal of effort in their work, and they are willing to serve and satisfy the requirements of the customer even though they may be fastidious customers.
--Do you think of any challenges that hinder your company business to grow and develop further? What kind of actions do you think need to be taken to address the above-mentioned “challenges”?
Vietnam joined the Asean Economic Community in 2016 and maybe the Trans-Pacific Partnership (TPP) will come into effect in 2018, which means that all of the companies in Vietnam in general including my company, in particular, will meet difficulties in competing, in terms of product, capital, and management capabilities, with companies from other countries in Asean and countries in the TPP group as well.
For solving the above-mentioned challenges, we are currently trying our best to improve our weak points as follows:
Products: We are building a new bigger plant at the beginning of 2017, and then we will buy some more modern machines for manufacturing, and ask some of our sub-contractors to manufacture our products in our plant, so that we can check the quality of products as well as the product design to make sure everything meets our customer requirements.
Customer: As all of us know the principle of 20/80: inside 100% of turnover is included 80% turnover coming from 20% current customers. And we know this is important, so our company tries to improve the value added products to customers by taking care of them from start to finish, with the order process, consulting with them about which products have optimal costs for their project, and by providing them with all the documents related to products’ international standards.
Management capabilities: All the members of top management have spent much time taking part in business management courses in Japan and Germany since 2014. We improved many capabilities in management from these courses such as building a business strategy for 2015 – 2020, building corporate philosophy and sharing all matters with our employees, for their greater understanding, and helping them with their best efforts to work for our company’s objective.
--How do you view the current status of your business in the global market?
The situation of the global economy is growing slowly but does not affect my company so much. Our company is just focusing on and developing the market all over Vietnam and in Cambodia. There are currently much bigger projects that are tendering for building in Vietnam and Cambodia. Also, we are trying to manufacture as soon as we can adapt the projects.
In Vietnam, we have many business relationships with Japanese, Korean, and Chinese contractors. Among these customers, we particularly focus on serving Japanese contractors to the best efforts that we can do, because all of the Japanese companies never fail in their commitment in supporting or ordering our products for their projects, with payment always on time. If our company always maintains good quality, delivers on time, and meets their requirements in product specifications, we think the Japanese companies will always be our customers even though our product price is more expensive than our competitors.
--Please tell us about the current market environment of your business in your country.
In Vietnam, almost all the information in your field is not transparent. So, it is hard to know what your competitive position is among your competitors. Because of incorrect information, it is difficult to have the right business strategy for the Vietnamese market. At the end of 2015, we built up a business strategy for the short term, of the coming new year, and the long term, for about 5 to 10 years ahead, and our customer service staff must visit all projects from the south to the north to check whether there are any changes in the customers’ designs of their projects or not, before tendering starts. Then we will check and revise our strategy so that we can make sure that our business strategy is in line with any changes.
Our company comes up against serious difficulties with overseas competitors as follows:
- Product prices from some particular countries are cheaper than those manufactured in Vietnam.
- Transportation costs from their countries to Vietnam are cheaper than transportation costs from the southern to northern part of Vietnam due to some matters beyond our control.
- Maybe the quality of products is better than products at home because their machinery is more modern than ours.
- Design of packaging is more eye-catching than products at home.
--Business customs of your country may differ from those of other countries including Japan. Please use a few episodes to explain your distinctive differences from them in terms of the mindset for working, business culture, and national characters.
Firstly, the business environment in Vietnam is a mixed environment in terms of styles and standards, and therefore, it does not have a single list of standards. For example, although many projects in Vietnam are designed for M&E products that comply with American standards, some projects require British standards or Japanese standards. So it’s difficult to estimate which products adhering to which standards should be manufactured more.
Secondly, since the information on each economic field is not correct, it has a great deal of impact on companies to know their positions correctly in the Vietnamese market and how to make their business strategy.
Thirdly, the customer always wants to have a product at a moderate price and with the best quality, but will not compromise between these two requirements. If you quote your product with a high price, they don’t care why your price is higher than another company’s. They don’t care about the difference in quality between your product quality and the other company’s.
Fourthly, with many projects in Vietnam, they don’t provide a schedule for their projects. If they send the order confirmation, it means that they need all the products to be available in one or two days at their sites. That is why our products always have to be stocked in a warehouse so much and it costs a lot of money for inventory all items.
From 2014, two members of our top management took part in business courses in Japan, and then we changed many things in our business strategy and activities, but our employees can’t meet our requirements enough. We have many difficulties with employees in Vietnam.
Firstly, when employees have studied at university in Vietnam, almost all of them were educated with academic knowledge but not reality based practical knowledge, so that when they start working in our company, we have to take a lot of time to train them.
Secondly, for Vietnamese employees, if they work individually by themselves, maybe they achieve a good result with their duties, and resolve problems flexibly. But if they work as a team in a company, they cannot achieve a good result nor implement any thing.
Thirdly, most Vietnamese employees are not loyal to their current work, and they seem to be lazy in studying to improve their qualifications.
In order for employees to be able to do better and adapt themselves with our fast changing business strategy in the near future, our company made many plans for improving our employees qualification, working together, and soft skills from 2015 as follows:
- Organizing a lot of training in knowledge of products, teaching them how to consult with the customer about the features of the product, optimal costs, etc.
- Training in soft skills for resolving problems smoothly, negotiation of payment method, delivery time, place of delivery, etc.
- Organizing team building activities, like meeting every Saturday to socialize together, in order to share their difficulties or problems in their work and lives, etc.
- Organizing company meetings for listening and solving their difficulties in work, organizing birthday celebrations for employees each month, organizing many charitable activities for them to realize that they are luckier than other people, and they can understand the value of life and working.
- Teaching them how to do their job smoothly and comfortably, and how to make a to-do-list at the beginning of every day. We take exercise 5 minutes each morning at10.00 am, and afternoon at 3.00 pm to refresh their mind and body.
- Looking for many courses at VJCC (Vietnam – Japan Human Resources Cooperation Center) in customer services, sales, 5S, PDCA, and HO-REN-SO for improving their knowledge.
--What is your impression about Japan and Japanese companies? Please share with us an episode or experience that surprised or touched you.
I was deeply impressed by Japan and Japanese companies after hearing the story of Mr. Konosuke Matsushita, a great person in terms of his character, way of thinking and working. I think that he represents the character of Japanese in general as well as Japanese companies particularly as follows:
- Even in some difficult situations, they are always patient with the tenacity to overcome these challenges and try their best to develop more strongly.
- They always work with burning enthusiasm and all their hearts to make the best products with the best quality.
- They always strive to make their products much better and more comfortable than previous products in order to serve the best quality and best service for their customers.
- They always create many benefits for their employees for "Building today for brighten tomorrow".
- When negotiating with others, they never make concessions but always find common points for both sides in order to achieve win-win goals.
- While the path of business always meets difficulties, they do not stop working and always improve and develop.
I would like to share the famous words of Mr. Konosuke Matsushita with everyone here; "Every person has a path to follow. It widens, narrows, climbs and descends. There are times of desperate wanderings, but with courageous perseverance and personal conviction, the right road will be found". And I hope that his words will be a motivational power for all of the people who want to have a business for themselves and the benefit of their society.