Oct 29, 2012

Vietnam - The unsuccessful “power transfer” affairs

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VietNamNet Bridge – The abdication of a lot of Vietnamese CEOs recently shows that the process of transferring power to the next-generation managers, who are believed to be younger and more dynamic, does not succeed.

The resignation of Truong Dinh Anh, former CEO of the Corporation for Financing and Promoting Technologies (FPT), the leading information technology group in Vietnam, was a hot topic in the discussions of the business circle.

Anh, a member of the FPT’s “golden generation”, took the post of CEO 18 months ago, after Truong Gia Binh, who had taken the office for a long time, “left the tribune.”

However, Anh only had a short time on the post, before he resigned. Binh, who is now 56 years old, has once again returned to hold the post of CEO.

The case of FPT, in the eyes of businessmen, is considered a typical example for the unsuccessful “power transfer” plans being pursued by big corporations. The failure of the power transfer has been attributed to the differences in drawing up strategies and the corporate management methods between CEOs and the boards of directors.

The things done by Truong Dinh Anh, a representative of the second-generation leadership - young, dynamic and ambitious - during his 18-month work on the position could not satisfy the shareholders.

FPT’s pretax profit was 2515 billion dong in 2011, an increase of 24 percent over 2010, fulfilling 104 percent of the business plan set up at the beginning of the year, but just fulfilling 96 percent of the business plan adjusted in mid-year.

Meanwhile, in the first two quarters of 2012, the turnover and pretax profit of FPT were 11,465 billion dong and 1205 billion dong, just fulfilling 37 percent and 40 percent of the yearly business plan.

Hoa Sen is not a very big economic group, but its failure in the power transfer plan was so noisy, while the news about which were once always on the first pages of newspapers.

While Anh of FPT could stay for 18 months on this position, Pham Van Trung only had 18 days working as CEO of Hoa Sen Group.

The story about the Saigon Paper Corporation once also drew the special attention of the public, since two CEOs had to leave the business just within three years.

Some financially powerful corporations decided to hire foreign CEOs, considering this a good choice to implement their renovation plan and march towards the international corporate governance standards. However, in many cases, these were the wrong decisions.

In 2008, Vo Quoc Thang, CEO of Dong Tam Corporation, a well-known powerful businessman in Vietnam, invited Etienne Lucien Laude, of French nationality, a person with good job profile--to work as CEO of Dong Tam.

However, just two years later, the French CEO resigned from his post at Dong Tam in 2010.

The case of the Asia Commercial Bank (ACB) is a similar example. Tran Mong Hung, the bank’s first CEO is also considered the founder of the bank, who deserved credit for leading ACB to make it become a leading bank in Vietnam.

In March 2008, Hung withdrew from the board of directors of the bank, while Tran Xuan Gia, a VIP, former Minister of Planning and Investment, came to take the office.

However, Gia finally had to leave ACB, giving his office to Tran Hung Huy, 34, who is the son of Tran Mong Hung.

Analysts have commented that there’s a common thing in all the unsuccessful power transfer deals: the founders, after some time of leaving the “tribune,” have returned to the offices they once held before. Binh of FPT, or Thang of Dong Tam are the two of them.

Compiled by C. V

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