Dubs told a workshop entitled ‘Global Economic Crisis - Lessons Learnt’ held last Tuesday in HCM City that local businesses need to incorporate crisis management in their strategic plans as well as in day to day activities.

A former president of the HSG University of St. Gallen in Switzerland, Europe’s leading German-speaking Economics University, Prof Dubs has also taught at Harvard and Standford and been a board member of many Swiss and international corporations. He predicted that the ‘crisis will go on at least until the beginning of next year’, and that Viet Nam would recover "as long as it can improve exports, investment and tourism to and from the Western world".

Viet Nam cannot reduce its dependence on time of globalisation, he stressed, adding that it was well positioned to stage a faster recovery "given its political stability, motivated workers and cheap labour costs."

Recent scandals that have smeared the reputation of Chinese products have opened opportunities for Vietnamese manufacturers to whom Western orders will divert, Dubs said.

Local exporters must ensure ‘quality, on-time delivery and competitive price’ in order to benefit from this trend, he advised.

For now, the country should ‘simplify administration of business activities which is time-consuming’ and ‘continue to invest in infrastructure’ given that they are the main motors of growth for the time being, Dubs said.

Unlike European countries where infrastructure investment is not a big part of the economy, the under-developed infrastructure in Viet Nam leaves it open for huge projects that create thousands of jobs and stimulates spending significantly, he said.

Dubs also advised that Viet Nam avoids last year mistakes when it set growth rate objectives that were too high, prompting the banks to put too much money into circulation, resulting in high inflation that aggravated the downturn. He hailed the government’s stimulus package for bringing "life to the economy"

"The lesson Viet Nam can learn from this crisis is that its bankers should not give out credit easily as what happened in the USA", he said, stressing that the crisis was rooted in Americans’ excessive lifestyle that prompted borrowings they could no longer pay back.

Crisis management

Enterprises, especially small and medium-sized, usually do not have active crisis management as a part of their regular strategic planning during times of growth. As a result, so they are not well placed to go through possible downturns, said the professor.

He said it was crucial for businesses to spot "a possible strategic crisis", whose indicators include incompetent management, insufficient capital capacity, numerous projects, stronger rivals, outdated production lines, unnecessary staff, multi-level hierarchy and premature diversification of business activities.

He said the quality of human resources, including that of board members should be checked constantly to eliminate incompetent ones. "Make sure that you always have better resources and personnel… otherwise you will be losing positions to your competitors," he noted.

Dubs also advised businesses to expand their activities only when they had people with appropriate expertise in the fields.

When it comes to crisis management, responsibilities should be clearly identified, he said, adding that power should not be concentrated in the hands of CEOs to avoid the possibility that one man’s mistake could lead to the whole company flopping.

No mass layoffs

Dubs recommended that executives should have long-term vision, instead of focusing on the immediate problem of shrinking turnover.