12 ★ FINANCIAL TIMES Wednesday19 February 2020

COMPANIES

F

oreign executives who do business in Vietnam

sometimes like to offer amateur history lessons,

especially after a few drinks.

When speaking with respect — or resignation

— about the tenacity of their local partners, they

will remind you that this is a country that always wins:

Vietnam vanquished France and the US in two wars, and

fought China to a draw in a third.

Lately, some have unearthed an old, 20th century word

to describe a new trend in business: “Vietnamisation”.

The term was last in use in the 1960s and 1970s in US-

backed South Vietnam when it referred to American

attempts to shift more responsibility for their faltering war

effort to the locals.

Today, it has different connotations. Vietnam’s leaders,

after decades in which they allowed foreign business to

have the upper hand, arepromoting Vietnamese compa-

nies and capital, sometimes at the former’s expense.

Communist-ruled Vietnam has until recentlywelcomed

foreign investmentto an extent rarely seen in even the

most pro-business capitalist countries.

“The government gave a lot of financial incentives to for-

eign investors, like tax holidays, access to land, and other

preferential treatment,” said Le Hong Hiep, a fellow at the

ISEAS-YUSOF Ishak Institute in Singapore, a think-tank.

“This tends to crowd out some domestic investors who

don’t really get access to such privileges.”

Now Hanoi wants its own national championssuch as

Samsung, the South Korean conglomerate that makes

nearly two-thirds of its mobile phones atfactories in

northern Vietnam.

In doing so, it is taking a page not only from South Korea

— probably the Asian country that Vietnam admires most

— but from its neighbour and rival China, which has priori-

tised building big domestic groups while setting strict rules

on what foreign investors can and cannot do.

The scale of Vietnam’s industrial ambition is clear at

companiessuch asVingroup, a private conglomerate

which has over the past two years begun manufacturing

cars and smartphones. The

group is completing the

country’s first Formula One

racetrack in Hanoi ingood

time, ahead of the first race

planned for April.

Viettel, the state-owned

m o b i l e p h o n e g ro u p,

recently said it had become

the sixth telecomsgroup in

the world to develop 5G technology — faster than US telcos.

At a time of rising economic nationalism, fromDonald

Trump’s AmericatoXi Jinping’s China, Vietnam has argu-

ably been a latecomer to the nativist party. But the conse-

quences for foreign business in Vietnam could be big.

One example of the changing times is thehuge tax bills

the Vietnamese authorities recently handed out to some

multinational companies, includingUnileverandCoca-

Cola. “I don’t see Vietnamese companies getting hauled in

like this,” one executive in Ho Chi Minh City said.

Car manufacturing is another sector where Vietnam is

regarded as favouring local producers. Foreign carmakers

have complained bitterly about a decree that took effect in

2018 which set exacting new requirements for the import-

ing and testing of foreign cars, down to the length of com-

panies’ vehicle test tracks (800m).

Meanwhile, a draft decree requiring video streaming

companies to have a minimum 30 per cent Vietnamese

language content has slowed the arrival of foreign digital

companiessuch asNetflix.

The tougher official stance on foreign investment comes

when investors in Vietnam arewalking on eggshells owing

to the political calendar: the country will in early 2021

select a new communist leadership. Businesses, Vietnam-

ese and foreign, say there has been a slowdown in govern-

ment decisions such as building approvals in anticipation.

This is all separate from growing concerns aboutcorona-

virus, which seem certain to cause a sharp slowdown in

Vietnam’s economy, which grew 7 per cent last year. A sur-

vey by the American Chamber of Commerce in Vietnam

last week found that more than half the group’s members

were having difficulty sourcing supplies or materials

because of the outbreak.

But there are reasons to think Vietnam’s economic

nationalism has natural limits. For one, while China is big

enough essentially to write the rules of the game, Vietnam

cannot afford to do so.This month the country’s central

bank dropped a proposed 49 per cent cap on foreign own-

ership for e-payment businesses.

Moreover, as most Vietnamese will tell you — in contrast

with amateur historian expats — warring against foreign-

ers is a thing of the past. It’s now time for the country to

prosper, even if it will be looking to do so on its own terms.

[email protected]

INSIDE BUSINESS

ASIA

John

Reed

‘Vietnamisation’ push

seeks to develop

national champions

Investorsare

walking on

eggshells owing

to the political

calendar

N I KO U A S G A R I— COVENTRY

Jaguar Land Roveris flying compo-

nents in suitcases out of China as it

races to prevent its UK plants from

closing by the end of the month.

Ralf Speth, chief executive of the UK’s

biggest carmaker, said the company’s

British plantswere “safe for this week”

and the week after, but faced difficulties

sourcing parts from China in the weeks

after, which represented “a risk for

overall production”.

“We have flown parts in suitcases

from China to the UK just to make sure

that we have got the right parts,” he said,

adding that last week the company was

missing 38 key components.

JLR has three factories in the UK and

is the latest carmaker to warn of the

impact on its supply chain from the

deadly coronavirus, which has spread

around the world from Wuhan and

killed nearly 1,900 people.

In early February,Fiat Chrysler

warned that one of its European plants

would be forced to halt production in a

matter of weeks as it struggles to source

key parts from Chinese suppliers.

“If we miss a critical part then there

might be a risk for overall production,”

Sir Ralf told journalists at an event

unveiling the company’s autonomous

electric car, Project Vector.

He added that the “very first critical

part” facing a shortage was the key fob:

“We have to take all the key systems

apart and every car only gets, at the

moment, one key fob just to make sure

we can produce.”

Sir Ralf added that special teams had

been set up to manage and monitor the

situation but “nobody can predict the

future”.

The spread of coronavirus has hit glo-

bal supply chains with carmakers

dependent on parts from China among

those hit hard.

Automobiles

JLR rushes parts out of China in suitcases

L E O L E W I S A N D K A N A I N AG A K I— TOKYO

One ofKirin’s biggest investors has

given the brewer an ultimatum,

demandingit choose between a signifi-

cant change to its board or riska proxy

battle at theannual meeting.

Theconfrontation between Kirinand

UK-basedIndependent Franchise Part-

ners(FP) comes as more Japanese

boards are being dragged into public

conflicts with investors and the market

braces for what could bethe country’s

most contentious season of shareholder

meetings.

The clashes, and the prospect ofproxy

battles, are symptomatic of what ana-

lysts said is ashift inJapan as embold-

ened shareholders confront manage-

ment over what they see as value

destruction, opaque strategic decisions

and other lapses of governance.

In the past week alone, investors have

initiated showdowns withthree Japa-

nese companies: Kirin;Sekisui House,

one ofthe nation’s largest homebuild-

ers; and technology groupSun. Ineach

case, shareholders are demanding a

board shake-up, an approach that has,

until now, been a rarity.

The March season for annual meet-

ings involves a relatively small fraction

of listed Japanese companies, but acts as

bellwether for theseason in June when

thousands of listed companies face their

shareholders. The number of share-

holder proposalsintroducedin Junehas

been rising foryears, but is expected to

smash records in 2020,said analysts.

Yesterday, FP, which owns roughly 2

per cent of shares in Kirin, said it was

willing to withdraw all four of its share-

holder proposals but only if the com-

pany agreed to accept its two candidates

for independent directors and if the

group’s business plan for 2027was sub-

mitted to the new board for “a thorough

and independent review”.

Food & beverage

Kirin investor threatens to launch proxy fight

ST E P H E N M O R R I S A N D A R A S H M A S S O U D I

LONDON

Intesa Sanpaolo, Italy’s biggest domestic

lender, has launched a €4.86bn

takeover bid forrivalUBI Bancain

an audacious attempt to kick-start

consolidation in Italy’s fragmented

banking sector.

Just before midnight on Monday,

Turin-headquartered Intesa unveiled

an all-share offer to buy Italy’s fourth-

biggest lender through a series of

notices detailing its plans to issue new

shares to fund the deal.

The combination would create the

seventh-largest bank in the eurozone

with €1.1tn in assets and give Intesa

an additional 3m retail, small

business and private-banking clients,

the company said.

Intesa has offered to pay 17 new

shares for every 10 UBI Banca shares

tendered. It said the bidcorresponded

to a value of €4.25 per share in UBI

Banca, or a 27.6 per cent premium to the

Bergamo-based lender’s share price at

the end of last week.

Shares in UBI Banca, which climbed

5.5 per cent on Monday, were up 24 per

cent inafternoon tradingyesterday.

Intesa shares were up 3 per cent, giving

the bank a marketcapitalisation of

€46bn.

“Intesa considers UBI amongthe best

Italian banks... [It] has local

entrenchment in the most dynamic

regions of the country, enjoys outstand-

ing results that have been achieved

thanks to the excellent job of both its

CEO and its management team, and has

a sound business plan,” the lender said.

The bid makes Intesa chief executive

Carlo Messinathe first to act decisively

among the country’s largest lenders,

responding to supervisors’ repeated

appeals for Italian banks to consolidate

to reduce excessive competition, cut

costs and boost the sector’s persistently

low profitability.

The country’s lenders have been

on the front line oftensionsbetween

Italy andthe EU, not only over bad

loans during the European debt crisis

butover its expansionary budget.Con-

cerns over the package caused spreads

on sovereign debt to balloon in 2018,

reviving fears of a vicious cycle between

banks and the sovereign, knownas a

doom loop.

Intesawill have to get permission

from the European Central Bank for the

deal to go ahead, and negotiate with

Rome and unions over 5,000 jobcuts it

plans as part of the deal. The acquirer

forecasts that the deal could lead to

€730m in annual expense and revenue

synergies, but will cost €1.3bn before

tax to execute.

To address competition concerns,

Intesa said its offerincluded a binding

agreement to sell between 400 and 500

branches of the combined group to

Modena-basedBPER Banca.

See Lex

Banks

Intesa sets ball rolling on Italy mergers

Bid for UBI represents

bold response to appeals

for sector consolidation

T I M B R A D S H AW— LONDON
RYA N M C M O R R OW— BEIJING

In China,coronavirusis forcing office

workers to stay at home and adopt a

range of online remote-working tools

for the first time.

Across the world in Silicon Valley,

tech companies are doing the same

thing — not to escape infection, but to

aid recruitment and keep staff happy.

The two trendsare creating a boom

for providers of technology that facili-

tate office-free collaboration, from mes-

saging appSlackand videoconferencing

providerZoomin the US, to their newly

bolstered rivals in China, includingAli-

baba’s Dingtalk andBytedance’s Lark.

“Remote working is getting towards a

tipping point,” said Patrick McKenzie, a

software engineerwho has been a

remote worker in Japan for 10 years,

including the past three at San Francis-

co-based Stripe.

“For a while it was happening at a

number of firms that were close to the

experimental fringes of the tech com-

munity. We are increasingly seeing it at

extremely savvy companies that have

achieved a certain level of scale.”

Daniel Zhang, Alibaba’s chief execu-

tive, said during last week’s quarterly

earnings call that the “black swan

event” of Covid-19 presented “near-

term challenges” to Alibaba’s online

sales platforms and also “opportunities

created by the forces of change”.

Just as ecommerce was boosted by the

Sars outbreak 17 years ago, he said, the

coronavirus has triggered “explosive

growth” for DingTalk, Alibaba’s chat,

videoconferencing and task manage-

ment tool.

According to App Annie, a mobile

data and analytics provider, DingTalk

was languishing outside China’s top

250 iPhone apps as recently as Janu-

ary 25. Now, it has been top ofApple’s

App Store in China by daily down-

loads for most of February, beating all

other apps and games in the region,

App Annie said. Overall, Chinese

downloads of business apps for

iPhones in the first week of Feb-

ruary more than doubled over

the prior week to 7.4m, the

researcher added.

Meanwhile, the

share price s of

Zoom and Slack, which

are both available in

China, have risen by a fifth

and a third, respectively, since the Chi-

nese new year holiday.

Within Alibaba, Mr Zhang holds daily

briefings with the heads of his various

business units through DingTalk.

“The crisis is a very, very big challenge

to the society but also... gives people a

chance to try [a] new way of living and

new way of working,” Mr Zhang said.

His enthusiasm for a distributed

workforce was echoed in San Francisco

last week byJack Dorsey,Twitter’s

globetrotting chief executive.

“As we look forward, we’re reaching a

talent pool that expects a lot more

remote work... and we should be

building our company around that,” Mr

Dorsey told investorson Twitter’s quar-

terly earnings call.

It is not just San Francisco’s eye-

watering living costs that are driving the

trend. Distributed teams have been

hailed as a solution to everything from

work-life balance and employee diver-

sity to climate change, by cutting com-

mutes, and an economic downturn, by

reducing rents.

Tech start-ups themselves are among

the most enthusiastic adopters of these

online collaboration technologies.

WhenRyan HooverstartedProduct

Hunt, a site for discovering new apps

and gadgets, in San Francisco in 2013,

some of his earliest appointments

were based in Europe or other parts

of the US.

“We just realised, OK, we have

these amazing people in the team, we

are not going to ask them to move, eve-

rything seems to be working, and now

we can open up the talent pool to any-

one in the world,” said Mr Hoover, who

runs Product Hunt’s team of about 20

from Los Angeles.

But he concedes that remote working

has been easier to manage with a rela-

tively small team. “The bigger the com-

pany, the harder it is to change proc-

esses or adjust to the distributed team

lifestyle.”

Stripe, the payments platform that is

now the most valuable private US tech

company, last yeardeclaredits fifth

“engineering hub” would be “remote” —

putting home workers on an equal foot-

ing with its offices in San Francisco,

Seattle, Dublin and Singapore.

Such a structure “puts a name on a

practice and causes norms around it”,

said Mr McKenzie, who helped to draw

up Stripe’s remote-working guidelines.

“Your company can have policies in

place to measure the health of its remote

workforce which it would not have if it

had 100 people individually doing

something that works for them.”

It also helped shatter assumptions

about office productivity. Stripe’s man-

agement used to believe certain types of

product development benefited from

“synchronous, in person” work, Mr

McKenzie said.

But now that remote working has

been formalised, internalappraisals

suggest “our level of satisfaction with

engineers is actually marginally higher”

when they operate outside one of its

physical hubs than for staff within its

offices, Mr McKenzie said.

Workers in China have had little time

to weigh up the costs and benefits of

remote working before circumstances

foisted it upon them. Denise Chen is

stuck in her hometown of Xiangyang in

Hubei, the province at the centre of the

outbreak which has been quarantined

off from the rest of China.

“Since January 25 I haven’t left my

apartment block more than once or

twice,” she said. “I’m disciplined and get

my deliverables in, so it hasn’t been a

problem so far.”

But a software engineer at one of Bei-

jing’s largest tech companies, who has

worked at home for the past two weeks,

estimated he had only been 80 per cent

as efficient.“I can’t wait until we can go

back into work,” he said.

Technology.Remote teams

Home-working sparks digital tools boom

Online collaboration buoyed

by crisis in China and Silicon

Valley’s drive to gain recruits

Twitter chief

Jack Dorsey,

below, looks

forward to

building the

company

around a talent

pool that

expects ‘a lot

more remote

work’— Alamy;

Bloomberg

Covid-19 presented

challenges to Alibaba’s

online sales platforms

and also opportunities

Surge in China business apps

Overall App Store rank in China

by downloads (position)







Jan Feb



Source: App Annie

Tencent

Meeting

Huawei Cloud

WeLink

Ding

Lark



€4.9bn

Value of move

by Italy’s biggest

domestic lender

for rival UBI

€1.1tn

Assets that

the proposed

combination

would command

FEBRUARY 19 2020 Section:Companies Time: 18/2/2020-18:10 User:alistair.fraser Page Name:CONEWS1, Part,Page,Edition:USA, 12 , 1