“It’s been a few days since the Keieijuku seminar, but the two words ‘prospects’ for the manufacturing industry still resonate within me with a burning urge to change my own business within those ‘prospects'” – This was shared by a Keier with us in a quick morning chat today.

The seminar “Global Economic Fluctuations and Opportunities for the Manufacturing Industry from the Perspective of Japanese – Vietnamese Businesses” took place on the afternoon of November 2, [Correction: The file states the event occurred on October 19, 2023 ] 2023. This event attracted over 300 attendees, including leaders and senior managers from domestic and international enterprises. The seminar was honored by the presence of guest speaker Ms. Vu Hong Hanh – Kei12 Hanoi Class, Chairwoman of HTCOM Group Investment and Development Joint Stock Company, along with valuable insights from other Keiers, providing diverse and profound perspectives on the current and future economic landscape.

1. Key Questions Shaping the Discussion

The seminar was guided by key questions posed by Mr. Nguyen Dao Vinh, aiming to elicit in-depth analysis and discussion from experts and entrepreneurs:

• Sharing historical experiences through various stages of economic crisis/recession.
• Identifying the context, key indicators, and their fluctuations that will impact the macroeconomy.
• Assessing upcoming trends and potential scenarios, and how to identify them using specific indicators/signals.
• Identifying potential “Black Swan” risks (worst-case scenarios) and suggesting necessary actions to prepare for such contingencies.
• Finding opportunities within crises: What are the sharpest opportunities for Keiers – those with a relatively strong foundation in production management?

2. Historical Lessons from Economic Crises

Speaker Vu Hong Hanh opened the seminar by reviewing the history of global economic crises and the concern about a 10-year cycle. From the Tulip Mania in the Netherlands (1636-1637) to the Great Depression of 1929-1939 caused by loose credit and the Wall Street stock market crash. The OPEC oil crisis in 1973, the Asian financial crisis in 1997 originating from Thailand , and the global economic crisis of 2007-2008 due to the US housing bubble burst, culminating in the bankruptcy of Lehman Brothers. These lessons highlight the cyclical nature of economies and the importance of early identification of signs. Forecasts for a global crisis in the 2021-2024 period due to pandemics, the Russia-Ukraine war, and the Chinese real estate crisis were also mentioned, along with concerns about the impact of biotechnology and AI on life.

3. Global Macroeconomic Context and Its Impact on Vietnam

3.1. Global Economic Situation

• USA: Facing high inflation and rising interest rates, along with the risk of economic recession due to involvement in the Russia-Ukraine war, leading to a consumer crisis. The rising USD affects slow FDI investment in Vietnam, increases public debt repayment burdens, and creates budget deficits, slowing public investment.
• China: Focusing on internal politics, products losing prestige and international standing due to a period of rapid growth. The real estate crisis, with 7.2 million surplus apartments (enough for 3.8 billion people), has led to the bankruptcy of major real estate groups, affecting related industries such as steel, cement, bricks, construction materials, labor, and electrical equipment. The manufacturing and processing industries are also losing prestige and orders, resulting in oversupply and dumping of cheap goods into Vietnam, causing fierce competition.
• Russia-Ukraine War: Sanctions and instability in Europe are causing metal prices to rise.
• EU: Most European countries are experiencing a double recession due to USD interest rates, exchange rates, and material prices, leading to minor recessions spreading across countries, affecting Vietnam’s exports and imports.
• Currency War: Controlled by the US, will determine the fate of nations.

3.2. Vietnam’s Internal Strengths

The Vietnamese government focuses on key operational tasks to stabilize the country: stabilizing state management apparatus, stabilizing macroeconomic management, ensuring national security and defense, international diplomacy, developing culture, tourism, services, media, and environmental protection.

Key macroeconomic indicators show:

• Banking and monetary policy: Interest rates and exchange rates (inflation/deflation) are being adjusted to keep interest rates lower than GDP growth (5-5.5%).
• Public investment: Slow implementation.
• Real estate: The market is declining, growth is very slow.
• National energy: Unstable regulation, demand exceeding supply capacity, power shortages during heatwaves.
• Manufacturing, textiles, footwear: Stagnation due to lower domestic demand than supply, accumulated exports, slow FDI into Vietnam.
• Agriculture, aquaculture: Stable, especially in afforestation and food security.
• Logistics, life insurance, F&B services: Slow growth.
• Tourism, culture: Stable, continuously reforming but attracting a low percentage of visitors.

Vietnam’s GDP data from 2011 to estimated 2023 shows fluctuations, with GDP growth reaching 8.02% in 2022 and an estimated 5.52% in 2023. Industrial GDP also saw corresponding changes.

Key public investment projects for 2021-2030 and 2031-2050 include North-South and East-West expressways, Long Thanh Airport, ring roads, high-speed rail, and 500KV power grid upgrades.

Government regulation through key sectors such as state banks, energy, media, and oil exploitation, along with controlling private and state-owned enterprises, is a crucial factor.

4. Future Trends and Opportunities

Vietnam is assessed as ready for an economic boom after a long period of stagnation due to pandemics and recession. Favorable factors include:

• ** đón FDI wave:** Shifting supply chains from China and other countries to Vietnam.
• Excess capital, low interest rates: Abundant money supply for production and business.
• Real estate market: Not much inventory due to strict new project approval policies. Housing demand for low-income individuals still exists, and real estate loan interest rates are being loosened to promote development in related industries.
• High USD exchange rate: Stimulates tourism and export growth.
• Public investment: Large projects like expressways, Long Thanh Airport, and 500KV North-South power grid upgrades are being implemented.
• Government stability: International standing is rising due to increased transparency and reduced corruption.

The period from 2024 is forecast to mark the beginning of an economic boom from 2025, peaking in 2029, offering opportunities for all Vietnamese businesses.

However, there are still limitations affecting this boom:

• FED’s USD interest rate adjustments: Slows down FDI disbursement and public investment due to exchange rate fluctuations, increased material costs, and lack of funds.
• China’s economic recession: Caused by real estate crisis/global supply chain recession leading to price and scale competition with Vietnamese businesses.
• Russia-Ukraine, Middle East wars: Causing raw material shortages, reduced consumer demand, and insecurity.

5. “Black Swan” Risks and Risk Mitigation Strategies

Potential “Black Swan” risks include: unpredictable global economic developments due to excessively high US inflation, sharply rising USD exchange rates, and crises spreading throughout the US and Europe. The risk of the Russia-Ukraine and Israel wars escalating into a third global war. The Chinese real estate crisis spreading to Vietnam with ultra-cheap goods. US recession and involvement in wars could lead to China instigating island disputes, affecting national security and defense.

Although Vietnam is relatively cautious about risks, with real estate loan outstanding balance accounting for only 18.83% of the total loan outstanding balance in the banking system, it cannot avoid the impact of the aforementioned crises, leading to slow GDP growth.

Risk mitigation strategies for businesses:

• Continuous information updates: From partners, customers, media, web, and relationships to grasp international and domestic situations (exchange rates, project investments, competition).
• Close relationships: With banks, ministries, and media agencies.
• Focus on customer retention: Maintain quality, continuously improve, accept break-even/reduced profits to lower selling prices for competitiveness (including against Chinese goods) to sustain business.
• Weekly/monthly/annual financial planning: Rapid capital turnover, avoiding bad debts and chain bankruptcies.
• Tighten spending: Cut external investments, thoroughly recover debts.
• Financial provisions: Short-term and long-term, liquidate real estate to compensate in worst-case scenarios (provision for 1-2 years).
• Accept mergers: To increase competitive advantage, market share, sell shares to cover debts.

6. “Opportunity in Crisis” for Keiers

For Keiers – those with a strong foundation in production management, there are always opportunities in crises:

• Leveraging when weak businesses go bankrupt: Recovering lost customers, acquiring bankrupt businesses at low prices to expand scale, minimizing initial procedural costs. Can use financial leverage by borrowing from banks with low interest rates.
• Utilizing low-interest capital: Accelerating business turnover when opportunities arise. For example: buying liquidated real estate at low prices, importing bulk raw materials for trading, fast-turning retail.
• Acquiring potential future businesses: Especially those where Keiers have sufficient management expertise.

The seminar provided valuable knowledge and multi-dimensional perspectives, helping Keieijuku entrepreneurs gain more motivation and clear direction for their businesses in the new “prospects” of Vietnam’s manufacturing industry. This is an important reference document, reflecting the diversification of entrepreneurial perspectives in a volatile economic context.