(VNS) Viet Nam News spoke to Global Change Ltd Co chairman Patrick Dixon about the country's economic outlook. Dixon, the author of 15 books, has been called one of the 50 most influential business thinkers alive today (Thinkers50 2005) and advises many of the world's leading corporations on risks, trends, opportunities and strategies.
What are the most important global trends driving the future of business? How will these affect Viet Nam?
Business leaders face many uncertainties, in particular about the timing of global economic recovery. However, there are many major trends that we can be sure about, which will transform the future of Viet Nam and the wider world.
Each of these trends is related to the wider picture, and will continue to generate huge business opportunities in innovative products and services. Demographics, urbanisation, growth of wealthy domestic consumers, mobile digital devices, mobile payments and banking, social media and marketing, healthcare, further shifts of manufacturing to low-cost economies, and the $40 trillion green tech revolution.
For example, in many EU nations, and much of Russia, China and Japan on current trends, you will need eight great grandparents to produce a single great grandchild. Nations either have to make babies to balance those getting old, or allow large-scale immigration, or risk gradual decline in population and economic power.
In contrast, India and Viet Nam are very young and dynamic societies. One in four of the population of Viet Nam is under 14, the median age is only 27, and there is a literacy rate of 94 per cent. Labour costs in many parts of the country are only half those of China and Thailand. Wage inflation in China's coastal cities is averaging around 12 per cent a year, which will encourage more factories to relocate. Chinese wage inflation for the most-experienced managers can be as much as 100 per cent a year. Viet Nam will therefore continue to attract major manufacturing investment and has a great future.
The global economic outlook continues to be gloomy. When do you think the global economy will recover? Which industries and sectors are the ones to watch for signs of the recovery?
It depends on how you look at things. Economics is about more than numbers. One of the greatest issues is confidence, emotion, how do ordinary people feel, and that can change very rapidly.
From the perspective of Europe, countries like Viet Nam, with average growth of 7 per cent over more than 20 years, are astonishing success stories. Of course, it can be disappointing if your business forecasts have been based on China growing at over 10 per cent a year, instead of around 7 per cent.
The truth is that we have not seen a global recession. While there continue to be major economic adjustments which are very painful, Asian economies will continue to see growth rates that are astonishing to those in developed nations. This growth will be driven by their huge populations of people with low incomes, compared to developed nations.
Viet Nam has a great future, and we can expect economic growth to continue at average levels over the next 30 years that are fairly similar to those in the last 20 years, an average of 7.1 per cent from 1991 to 2012. Of course, we will see variations in economic cycles, but the long-term trend is very encouraging.
How should business leaders cope with unprecedented crises and unexpected events?
The strategies of many of the world's largest corporations are being overtaken by events. The world can change faster than you can hold a board meeting so we need to lead in a different kind of way. We need to encourage future-thinking, having more than one plan or strategy. — VNS