The Digital Rules of Engagement
The most successful interactive campaigns have these five principles in common
May 5, 2008
-By Daniel Stein
Reading Twitter recently, I came across a great quote by Tom Ajello (Meat99), who said Twitter is like "an army of deaf people shouting into a canyon." This also describes the current state of traditional marketing.
If ads are losing effectiveness, is the best solution to create more ads, increase frequency and heighten disruptiveness? Should you continue using the same words but louder? The problem is consumers no longer speak the language of traditional marketers. Instead, they speak digital. They control the messages they consume and filter and navigate the media landscape with a new kind of freedom. Instead of screaming to get attention, advertisers need to create a positive experience that consumers will freely seek out and enjoy in their own time.
At EVB, we've experimented with new media, failed a few times, learned a lot and enjoyed some achievements. Looking back, each successful initiative shared specific tactics. These commonalities have become our core principles.
1) Practice participation marketing. The key to engagement is participation. Consumers are empowered to engage in the content they choose; if they don't "care" about a campaign, they'll avoid it. When executed in a welcoming, nondisruptive manner, digital content invites consumers to engage on their terms.
Before digital content is developed and released, it's integral to ask why the consumer should care. A simple question, but not one marketers have historically considered. In today's marketplace, marketers don't build brands -- consumers do. Our job becomes providing consumers with the content, message and tools that enable them to create a personalized experience to share with others.
A great example of participation marketing is the "Freak your mind" campaign created for the third-season premiere of A&E's Criss Angel MindFreak. Users provided a friend's name, phone and e-mail, and a video featuring Angel performing a personalized magic trick was sent to the friend, taking them from e-mail to video to mobile, ending in a mind-boggling scare. Once someone was "freaked," he or she passed it on tenfold. In weeks, the campaign garnered millions of visitors and resulted in the show's highest ratings to date.
2) Think "working production." The terms "working dollars," to define media, and "non-working dollars," to define creative and production, have never made sense to me. For engagement marketing, such terms are irrelevant. Instead, emphasis must be put on the "experience" created to draw consumers and retain their attention. By elevating the importance of creative and production, unique consumer experiences are born, and consumers become brand ambassadors willing to share your content with their digital networks.
I'm often asked for seeding strategies "to make something viral." The truth is, if the content doesn't strike a chord, no amount of seeding or advertising will make it viral. Campaigns like "Elf yourself" and "Freak your mind" each started with an e-mail to a select group of "influencers," who took it upon themselves to contribute to its success. Next are the blogs; they are the tipping point. If the blogs ignore your content, it has little chance. After blogs comes the digital press. From there, the traditional press furthers the spread of content.
3) Create liquid content. At this point, all marketing is digital. Why should a great idea be constrained by the boundaries of the Web? To create "liquid" content capable of moving freely among platforms, start with an overarching idea and then find the best way to distribute it. No message should live and die in a single medium.
The recent 2K Sports campaign was built around the core idea of "football resurrected," marking 2K's return to the gridiron video game arena with All-Pro Football 2K8. The campaign launched with a dynamic digital component and expanded to TV, print, street teams and a national concert tour that together celebrated the return of "real" football gaming.
4) Simplicity is key. Digital consumers are "snackers" and choose to be reached on their terms with quick and satisfying content. They lead fast-paced, multitasking lives with only enough time for content that serves a useful or entertaining purpose. It should allow them to briefly engage and move on. A campaign should give more to the consumer than it takes in return. Many assume that "digital marketing" must use a lot of high-tech bells and whistles. In fact, simple, useful content is more effective and more welcome.
5) Integration is never an afterthought. Forcing together disparate parts and shoehorning creative doesn't make a campaign "integrated." Instead, strive for ideas that are integrated at the core and work gracefully together between platforms.
The Adidas soccer campaign around the 2006 and 2007 Major League Soccer seasons utilized an integrated idea with powerful results. In 2007, the campaign, called "MLS represent," commissioned 12 rising bands to write and record original anthem tracks for each MLS team. The tracks were made available for free download. Concert posters were created for local postings and used in print media. User-generated videos were created online. CDs were distributed at Adidas retail locations and events. Anthems were played in stadiums, some live. Music videos were filmed and later used for TV and online advertising.
The days of one-way communication are behind us. Speaking louder will only further separate you from your audience. In fact, they aren't your "audience" anymore; they are an "active participant" in the content you create.
Daniel Stein is the CEO of EVB.
http://www.adweek.com/aw/content_display/community/columns/other-columns/e3i26f1bfd408799a2069ad1546ccdefb3f
Sunday 11 October 2009
360° Digital Influence
360° Digital Influence
A New Marketing & Communication Discipline
How are marketing and communications changing?
The emergence of social networks, blogs, and the wave of consumer generated media has created new patterns of influence. No longer from the center, or top down, we find communications evolving towards a culture of two-way conversations and away from the established model of one-way messaging. “Digital” is bigger than just a new channel or format. Digital is part of a larger transformation of how people get information, who they listen to, and are ultimately influenced by.
Today, it is an understatement to say that we are influenced in new ways. With the explosive growth of online media, consumer word of mouth and new technologies springing up every day, we needed a new discipline to understand these changes and put them into practice for ourselves and our clients to reach business objectives today. That discipline is Digital Influence.
What is 360° Digital Influence?
Our 360° Digital Influence team is a global, word of mouth marketing discipline that uses new technologies and social media methods to create new communications strategy and programs. We have a methodology for identifying and engaging influencers - important bloggers, online community members, traditional influencers and a new breed of influencer that looks like you and me. Successful social media programs are more than connecting with the most popular bloggers. We also activate networks of people – social networks, groups, communities and affinity groups online - to participate, share and recommend products, services and issues. By creating engaging experiences and inviting influencers and networks to participate in a way they find valuable, we can amplify the most trusted form of communication today – word of mouth.
What do we do for clients?
We create comprehensive digital strategy for clients who want to engage customers or constituents in direct conversation. We both plan programs, and we design and build. While our programs are custom planned for each client there are 4 fundamental parts to every Digital Influence Strategy:
• Listening
• Planning
• Engagement
• Measurement
Listening
All of our programs start by listening to what people are saying about a brand, an issue or a set of brand-related topics in blogs, message boards, social networks and review sites online. This intelligence is key to deploying any program online and can provide invaluable insight into how consumers think and talk about brands and issues.
We have three basic listening programs:
• Conversation Snapshot (Conversation Map)
• Live Listening Post
• Crisis Monitoring
Planning
Like the tradition of strategic planning in communications firms and connections planning in advertising agencies, we have a process for planning influencer and word of mouth programs. Based upon listening to conversations online, we plan an engagement strategy – how we can authentically involve people online so they will “care to share” with their peers and spread word of mouth. Engagement plans focus on providing value to users and inviting them in to participate with a brand or organization in some way. Engagement plans are highly creative yet firmly based in strategy.
The biggest step in the planning process is our Influencer Audit and Network Mapping. Influencer Audits identify the people with the most potential influence for our engagement program. These can be high profile bloggers, individual mom bloggers somewhere in the world, or proam (part professional, part amateur) experts in a B2B market. Anyone can be an influencer given certain context. We look well beyond the obvious. Network Maps do the same thing at the social network and community level – what affinity groups exist that we can connect with? Both the Influencers and the Networks are mapped to specific engagement plans. We not only identify who is important but how we will reach and involve them online.
Search has changed the way everyone finds information online. Every Digital Influence Strategy includes a Visibility Plan that combines SEO with an overall content plan including multimedia (audio, video, images) distribution. The goal is to make our content and supportive third-party content as visible as possible via search engines
Engagement
Engagement programs all involve users in different ways from very simple and superficial participation to the deepest levels of engagement in co-creation and community. “Engagement” describes our ability to hold a conversation with people, invite them to participate with a brand or issue, motivate them to co-create a product, service or experience. It’s what sparks sustained word of mouth.
http://ogilvypr.com.au/Ogilvy-360/
The biggest mistakes made by corporate accountants
The biggest mistakes made by corporate accountants
Over the next few editions, David Parmenter, CEO, waymark solutions, talks about the biggest blunders company accountants make and how to fix them.
1 Having over 80 account codes for profit and loss
Show me a company with less than 60 account codes for their P/L and I will show you a management accountant who has seen the light.
However, I have seen many charts of accounts with more than 300 expense account codes in the general ledger, with up to 30 accounts for repairs and maintenance.
Action:
Do not break down costs into a separate account unless they represent at least 1% or greater of total expenses. This will reduce your costs to somewhere between 40 to 60 account codes.
Do not break revenue into separate codes unless revenues represent over 3% of the total revenue. This will reduce your revenue to somewhere between 15 to 20 account codes. Have larger buckets to collect your revenue and expenditure and when you are asked a question, ask in return what decision is going to be made based on the information requested. A skilled management accountant can always investigate six weeks of expenditure and then annualise the number.
Had you captured that particular expenditure in a separate account code the balance in the general ledger could be wrong, as miscoding increases with the number of account codes.
2 Only forecasting to year end
Some corporate accountants reforecast year end numbers monthly. This is flawed on a number of counts.
Firstly, why should ‘one bad month, one good month’ translate into a changed year end position? We gain and lose major customers, key products rise and wane: this is the life cycle we have witnessed many times.
Secondly, the forecast is a top-top forecast (agreed by the finance team and senior management) with little input and no buy in from the budget holders.
Thirdly, two months before year end, management appear to ignore the oncoming year.
Action:
Forecast quarterly, six quarters ahead using a planning tool (not Excel) - a commonly accepted better practice. The trick to this rolling forecasting is to make it a fast, light touch, so that managers can do it quickly. Quarters 2 to 6 are not the important ones. The key is to get quarter 1 correct.
3 Investing in a complex general ledger (GL) and upgrading unnecessarily
If I owned an accounting package company, I would issue upgrades every time I wanted to improve my bottom line. Accountants shouldn’t waste money on GL upgrades, or worse - invest in a more complex GL. Yet corporate accountants will spend hundreds of thousands on a GL package when the core services could be delivered for a fraction of the investment.
The task of the GL is very simple: record the expenditure and revenue. Nowadays, it is not required to report the numbers, hold budget figures or be the enquiry tool. These are all done by user friendly tools.
Action:
You really only need to acquire a new GL if your existing one does not support 21st century accounts payable options. Stick with your existing system and maximise its use - especially all the accounts payable features such as storing scanned images of invoices, electronic ordering and receipting.
CIMA Insight May 2009
4 Letting Excel dominate the finance system
I wager that Bill Gates never, in his wildest dreams, thought that Excel would become the core financial system in many companies and that the models would reach gigantic proportions. This epidemic has a cure: a moratorium on new Excel models and a deadline to remove the rest that are used daily, weekly or monthly in deriving the numbers.
This is essential. KPMG has said that for every 150 rows of a spreadsheet there is a 90% chance of a logic error. Excel is great for doing a diagram or one-off costing, being a table of numbers. It is not, and never should have been, a forecasting or reporting system.
Excel has no place in reporting, forecasting, budgeting and other core financial routines. It was never intended for the uses we put it to. In fact many of us, if we worked for NASA, would be using Excel for the space programme. I would not like to be the astronaut in outer space, finding out that there is a 90% chance of a logic error for every 150 rows in the workbook.
Action:
We need to embrace the new tools that are available, including:
• a drill down tool so budget holders never need to look at the general ledger (G/L)
• a planning tool for forecasting and recording the annual plan
• a reporting tool to replace the procedure of dumping the monthly numbers to the G/L
• balanced scorecard tools for displaying performance measures.
5 Doing another annual plan – just like the last one
The annual planning process typically does not add value. Instead it undermines an efficient allocation of resources, encourages dysfunctional budget holder behaviour, negates the value of monthly variance reporting and consumes huge amounts of time from the board of directors, senior management team, budget holders, their assistants and of course the finance team.
When was the last time you were thanked for the annual planning process? At best you have a situation where budget holders have been antagonised, at worst budget holders flatly refuse to co-operate! The nightmare of three to four months arguing over resource allocation when nobody knows the answer, the endless cut-back rounds, the game playing, the spend it or lose it mentality is not befitting the 21st century. So why continue with this outdated, unproductive exercise?
The only things stopping us from making this change are the difficulties of:
• committing the time to understand the solution
• learning how to sell change
• finding the gap in our busy workload to make it happen.
Action:
The extermination of the annual plan was first written about by Jeremy Hope of the Beyond Budgeting Round Table. To test the hypothesis that organisations would thrive without an annual plan he went searching for organisations that have never had the process in the first place. These organisations exist and are thriving. The beyond budgeting movement has many converts and the best place to start this journey is to read Jeremy Hope’s articles - any search of the internet will find many.
Read Hope’s work 'Reinventing the CFO: how financial managers can transform their roles and add greater value', Harvard Business School Press, 2006.
6 Breaking the annual plan into 12 before the year starts
As accountants we like things to be neat and tidy. Thus it appeared logical to break the annual plan into 12 monthly breaks before the year had started. We could have been more flexible. Instead we created a reporting yardstick that undermined our value to the organisation. Every month we make managers all around the organisation write predictable variance analyses such as ‘it is a timing difference….’; ‘we were not expecting this to happen…’; ‘the market conditions have changed radically since the plan…’ etc.
Action:
If you still need to perform an annual planning process you can at least remove the need for 12 monthly targets arising from this process. We should instead report against more recent targets derived from quarterly rolling forecasting process. This change has a major impact on reporting. We no longer will be reporting against a monthly budget that was set, in some cases 17 months before the period being reviewed.
CIMA Insight June 2009
7 Giving budget holders an annual entitlement
Doing an annual plan is misguided enough but to compound it with asking budget holders what they want and then, after many arguments, giving them an ‘annual entitlement’ to funding is the worst form of management.
I use portioning out a birthday cake at a nine year old’s party to explain the problem with an annual plan. A clever parent says to party goers: ‘Here is the first slice, if you finish that and want more, I will give you a second slice.’ The annual planning process divides the cake up and portions all of it to the budget holders.
Like nine year olds, budget holders lick the edges of their cake so that even if they do not need it all, nobody else can have it. Why not, like the clever parent, give the manager what they need for the first three months, and then ask what they need for the next three months and so on. Each time we can apportion the amount that is appropriate for the current conditions.
Action:
The better practice is to tell budget holders that we are aware of their annual request but will only fund what they need to run the next quarter. This small but significant change means:
• ‘spend it or lose it’ can no longer work, as budget holders find it nearly impossible to hide their reserves in the next three month period
• budget holders are encouraged to seek funding for initiatives that were not in the annual plan, as long as they have a sound fit with the organisation’s strategic objectives
• budget holders will stop asking for an annual entitlement they do not definitely need as the real budget setting takes place once a quarter.
8 Budgeting at account code level
Why should we set targets at account code level? It was done by our forefathers so we followed in their well trodden steps. It makes no sense.
Having budgets at account code level has encouraged budget holders to allocate expenditure to an account that has room for it. This undermines the purpose of the general ledger (G/L) which is to account for costs and revenue in the right areas.
You don’t need a target or budget at account code level if you capture trend analysis effectively in the reporting tool. We need to apply Pareto’s 80/20 rule and establish a category heading which includes a number of G/L codes.
Action:
Limit the number of categories in a budget holder’s budget to no more than 12. Have a budget category line if the account code is over 10% of the total - for example, show a revenue line if the account code is over 10% of the total revenue. If the account code is under 10% consolidate it with other account codes until it forms a category representing over 10% of the total.
Map the account code expenditure history to these categories. A planning tool can easily cope with this issue without the need to revisit the chart of accounts.
9 Producing numbing monthly financial reports
Many management reports are not a management tool. They are merely memoranda of information. Too many of our reports are issued well after the die is cast. Management reports should encourage timely action in the right direction, by reporting on those activities the board, the management and the staff need to focus on.
Many monthly finance reports prepared by the finance team are never read. They include endless detail, often as a result of having a common template for all subsidiaries regardless of size. The result is a consolidated pack with a four to five page essay, consolidated numbers and a copy of each subsidiaries submission. I once saw a 140 page pack!
Action:
Reduce the finance pack down to fewer than ten pages. Eliminate the essay and simply have a small comments box on each statement. Only have one page to summarise the subsidiaries results and only include the large ones and any others that are in trouble. Small subsidiaries that are performing well do not need to be included in the pack.
A wise CFO has said: ‘Educate and engage with senior and middle management. Find out and assess what they really need to manage the business and ruthlessly eliminate the eye-sight ruining and worthless pages that engineers and middle management are so fond of.’
CIMA Insight July 2009
10 Reporting on the wrong performance measures
Many companies are working with the wrong measures, many of which are incorrectly termed key performance indicators (KPIs). Year after year accountants and other senior officials have added additional suites of measures. This has lead to a confusing potpourri of performance measurement and reporting, with none of the measures tied in to the critical success factors of the organisation.
From my extensive research, very few organisations monitor their true KPIs. The reason is that very few organisations, business leaders, writers, accountants or consultants have explored what a KPI actually is. I have come to the conclusion that there are four types of performance measures:
• Result indicators (RIs) – tell staff what they have done.
• Key result indicators (KRIs) – give an overview of past performance and are ideal for the board as they communicate how management have done in a critical success factor or balanced scorecard perspective.
• Performance indicators (PIs) – tell staff and management what to do.
• Key performance indicators (KPIs) - tell staff and management what to do to increase performance dramatically.
Action:
Read Kaplan & Norton’s book ‘Translating strategy into action: the balanced scorecard’ and my book ‘Key performance indicators – developing, implementing and using winning KPIs’.
11 Selling change by logic
Nothing was ever sold by logic! You sell through emotions. Remember your last car purchase? The car sales person identifies and exploits emotional drivers. To a 23 year old IT geek, they will point out the 180 BHP, the low profile tyres, and say that this car needs to be driven by an excellent driver as it is quite dangerous. To me, having spotted the grey hair, they will point out the six air bags and tell me that this car has enough power to get you out of any trouble you find yourself in and you will never loose traction with those tyres.
Many initiatives driven by the finance team fall at this hurdle because we attempt to change the culture through selling logic, writing reports, issuing commands via email. It does not work.
Action:
We need to radically alter the way we pitch a sale to the senior management team and the board. We first have to make sure we have a good proposal with a sound focus on the emotional drivers that matter to them. We then need to focus on selling to the thought leader on the SMT and board before we present the proposal. This may involve informal meetings, sending copies of appropriate articles, telling better practice stories.
All major projects need a public relations machine behind them. No presentation, email, memo or paper related to a major change should go out unless it has been vetted by your PR expert. They are experts on emotional drivers. All your presentations should be road tested in front of the PR expert. Your PR strategy should include how to sell the change to staff, budget holders, SMT and the board.
12 Allowing month-end reporting to go past three working days
When I was a corporate accountant each month end was a disaster waiting to happen. You never knew when and where the next problem was going to come from. Things always appeared under control two or three days away and yet each month we were faxing the result five minutes before the deadline. Our fingers were crossed as a series of late adjustments had meant that the quality assurance work we had done was invalid and we did not have the luxury of doing it again. Does this sound familiar?
Quick month-end reporting has been around since the early 1990s when far seeing CFOs starting looking at the concept of ‘day one’ reporting. However this has been superseded by those who have developed systems capable of giving the CFO a full accrual net result, at any time, during the month! The virtual close, as it is called, is performed by Cisco, Motorola, Oracle, Dell, Wells Fargo, Citigroup, JP Morgan Chase and Alcoa.
Up to 70% of a corporate accountant’s time is spent on month-end reporting, the annual accounts and the annual planning process. When were you last thanked for any of these tasks?
Action:
You need to attack the month-end.
CIMA Insight August 2009
13. Spending months on the annual accounts
The annual report, while an important legal requirement, does not create any value within your organisation. Thus seldom will your team have received any form of gratitude for it in the past. Accounting functions therefore need to find ways to extract value from the process while at the same time bringing it into a tight time-frame.
How many times has the final year end audited number been within 5% of the month 12 number? We spend far too much time chasing our tail. There is absolutely no reason in 99% of cases why the first cut off year-end for internal reporting should not be the same as the last cut for external reporting.
Allowing the auditors the luxury of a leisurely year-end sign-off based around their workload provides them with many months of hindsight where unrecorded liabilities and the like are there for all to see. It is daft to air problems for that length of time!
Action:
Make it a level playing field and request a sign-off within 15 working days of year-end. Understand how to perform a year-end inside 15 working days post year-end by attending my course Quick month-end reporting.
14. Using the Julian calendar as a reporting tool
Julius Caesar gave us the calendar we use today. It is not a good business tool because it creates 12 dramas a year for the finance team and budget holders, with each month being slightly different.
Between three and five months every year will end on a weekend, and finance teams often find that the month-end processes are smoother for these months. Why not close off on the last or nearest Friday/Saturday of every month like many US companies do? The benefits of this include precise four or five week months, which make comparisons more meaningful. This also means that there is less impact on the working week as the systems are rolled over at the weekend.
Otherwise every month is a drama because we close on a different calendar day. Every month we have to issue detailed instructions to do on Thursday what you did on Wednesday last month.
Closing off at the weekend can be done for all sectors; some will require more liaison than others. It would also make a big difference in the public and not-for-profit sectors. You simply present June’s result and balance sheet to the board. You do not need to highlight the 2 July close. At year-end the missing two or extra two days of income and balance sheet movement will be taken up in the auditor’s ‘overs and unders’ schedule.
By making this change you are beginning to create 12 non dramas a year, the El Dorado of all corporate accountants.
Action:
Contact your general ledger provider and ask who uses your G/L and closes on a set day each month. They will link you to them and you will see at first hand the benefits.
Choose which day. It is best to be the nearest rather than the last ‘Friday’, ‘Saturday’, ‘Tuesday’ to month end etc. The last Saturday can have you closing six days before month-end, whereas the preferred option of nearest Saturday will only be a maximum of two working days out.
15. Letting emails dominate our day
Why do we, as accountants, need to see our emails 24/7? Are we that important that looking at our emails at the weekend is essential? Nobody dies, or is at the risk of death because we have not looked at our emails. And looking at emails first thing in the day is the most destructive habit you can have. You have guaranteed losing, forever, at least one hour, going nowhere quickly.
Action:
For eight weeks take up this challenge. Look at emails two or three times during the working day and never before 10.30am. Eliminate weekend email correspondence. After that time you will thank me!
CIMA Insight September 2009
16. Not producing daily / weekly decision based reports
In leading organisations, decision based information is based around daily / weekly reports on progress in critical success factors (CSFs). In one company the SMT has a daily 9am news report followed by further weekly information. All managers can contribute to the monthly management meeting to discuss results.
I believe you have arrived as a corporate accountant when your management team intuitively understand at the time whether the month is a good or bad one, enabling them to do something about it.
Senior finance people should insist that assistant accountant level staff be engaged with staff across the business so that they can discover what is really happening.
Here’s a quote from a wise CFO: ‘There are highly intelligent people in key parts of the business with great systems and a finger on the pulse of their part of the operation. So don’t be an isolationist bean counter, but network and forge relationships with marketers, logistics, and production people. Be prepared to use their systems and information to add depth and quality to your forecasts. You’ll get a better result, gain respect across the business and have more fun if you make the best of what’s out there. These connections need to happen at all levels of the finance team.’
If this networking is ignored, finance will always be on the outside and always the first to look like chumps when that session with SMT starts getting heated.
Action: Corporate accountants should look to provide the following daily and weekly reporting:
• yesterday’s sales reported by 9am the following day
• transactions with key customers reported on a weekly basis
• weekly reporting on ‘late projects’ and ‘late reports’
• reporting some weekly information on key direct costs
• daily / weekly reporting on the KPIs.
17. Not adopting the purchase card – a free accounts payable system
The average cost of the whole purchase cycle has been estimated at between £45-£60 per transaction. Pretty horrific when you realise that a high portion of your transactions are for minor amounts. The bulk of invoices can be for low value amounts, especially if consolidated invoices have not yet been organised. Remember it costs the same to process a £10 transaction as it does a £100,000 transaction.
In addition, is it appropriate to request that budget holders raise an order for a £20 transaction? Surely the purchase order system would work better if it focused on the larger invoices, where 100% compliance was a given.
Purchase cards are different from a credit card and are here to stay. There are three liability options - limited to genuine business; company has sole liability; and individual has sole liability. They work particularly well with high volume, low value items purchased through the same suppliers as the supplier will be able to insert general ledger (G/L) code information on the transaction.
For example, organisations have given their national stationery supplier the G/L code for stationery and the department codes associated with purchase cards. The purchase card is certainly a way for you to take control of processing these minor value / high volume transactions, where they cannot be organised through an electronic consolidated invoice.
Action:
Look at BetterManagement where I have explained this process in a free web seminar and article.
18. Not celebrating enough
I once came across an accounting team who were too busy to even organise their Christmas celebration. The marketing department organised it for them. Some accountants have yet to realise that a celebration is a great communication and motivational tool.
By being too busy to celebrate your achievements you are effectively saying you have nothing to celebrate.
Action:
Schedule your next celebration and make it happen. Invite members of the senior management team along. Suggestions include:
• celebrate every project completion
• hold a staff meeting in a café once a month and treat the team to coffee and muffins
• set up a regime where birthdays are celebrated
• for Christmas give your staff options – for example cinema tickets instead of a Christmas function
• praise team members’ achievements during team meetings.
19. Getting sucked into activity-based costing / activity-based management
Jeremy Hope of the Beyond Budgeting Round Table has pointed out the fallacy of activity-based costing. These systems cost a lot to put in and maintain, provide information of dubious quality and are run 24/7 when you only need such information infrequently.
If you feel it is necessary make sure you have sorted out all the other areas I have mentioned in this series first. After which read Jeremy Hope’s work. I am sure you will have second thoughts.
Action:
Read Jeremy Hope’s book ‘Reinventing the CFO’ from Harvard Business School Press.
CIMA Insight October 2009
www.cimaglobal.com
Over the next few editions, David Parmenter, CEO, waymark solutions, talks about the biggest blunders company accountants make and how to fix them.
1 Having over 80 account codes for profit and loss
Show me a company with less than 60 account codes for their P/L and I will show you a management accountant who has seen the light.
However, I have seen many charts of accounts with more than 300 expense account codes in the general ledger, with up to 30 accounts for repairs and maintenance.
Action:
Do not break down costs into a separate account unless they represent at least 1% or greater of total expenses. This will reduce your costs to somewhere between 40 to 60 account codes.
Do not break revenue into separate codes unless revenues represent over 3% of the total revenue. This will reduce your revenue to somewhere between 15 to 20 account codes. Have larger buckets to collect your revenue and expenditure and when you are asked a question, ask in return what decision is going to be made based on the information requested. A skilled management accountant can always investigate six weeks of expenditure and then annualise the number.
Had you captured that particular expenditure in a separate account code the balance in the general ledger could be wrong, as miscoding increases with the number of account codes.
2 Only forecasting to year end
Some corporate accountants reforecast year end numbers monthly. This is flawed on a number of counts.
Firstly, why should ‘one bad month, one good month’ translate into a changed year end position? We gain and lose major customers, key products rise and wane: this is the life cycle we have witnessed many times.
Secondly, the forecast is a top-top forecast (agreed by the finance team and senior management) with little input and no buy in from the budget holders.
Thirdly, two months before year end, management appear to ignore the oncoming year.
Action:
Forecast quarterly, six quarters ahead using a planning tool (not Excel) - a commonly accepted better practice. The trick to this rolling forecasting is to make it a fast, light touch, so that managers can do it quickly. Quarters 2 to 6 are not the important ones. The key is to get quarter 1 correct.
3 Investing in a complex general ledger (GL) and upgrading unnecessarily
If I owned an accounting package company, I would issue upgrades every time I wanted to improve my bottom line. Accountants shouldn’t waste money on GL upgrades, or worse - invest in a more complex GL. Yet corporate accountants will spend hundreds of thousands on a GL package when the core services could be delivered for a fraction of the investment.
The task of the GL is very simple: record the expenditure and revenue. Nowadays, it is not required to report the numbers, hold budget figures or be the enquiry tool. These are all done by user friendly tools.
Action:
You really only need to acquire a new GL if your existing one does not support 21st century accounts payable options. Stick with your existing system and maximise its use - especially all the accounts payable features such as storing scanned images of invoices, electronic ordering and receipting.
CIMA Insight May 2009
4 Letting Excel dominate the finance system
I wager that Bill Gates never, in his wildest dreams, thought that Excel would become the core financial system in many companies and that the models would reach gigantic proportions. This epidemic has a cure: a moratorium on new Excel models and a deadline to remove the rest that are used daily, weekly or monthly in deriving the numbers.
This is essential. KPMG has said that for every 150 rows of a spreadsheet there is a 90% chance of a logic error. Excel is great for doing a diagram or one-off costing, being a table of numbers. It is not, and never should have been, a forecasting or reporting system.
Excel has no place in reporting, forecasting, budgeting and other core financial routines. It was never intended for the uses we put it to. In fact many of us, if we worked for NASA, would be using Excel for the space programme. I would not like to be the astronaut in outer space, finding out that there is a 90% chance of a logic error for every 150 rows in the workbook.
Action:
We need to embrace the new tools that are available, including:
• a drill down tool so budget holders never need to look at the general ledger (G/L)
• a planning tool for forecasting and recording the annual plan
• a reporting tool to replace the procedure of dumping the monthly numbers to the G/L
• balanced scorecard tools for displaying performance measures.
5 Doing another annual plan – just like the last one
The annual planning process typically does not add value. Instead it undermines an efficient allocation of resources, encourages dysfunctional budget holder behaviour, negates the value of monthly variance reporting and consumes huge amounts of time from the board of directors, senior management team, budget holders, their assistants and of course the finance team.
When was the last time you were thanked for the annual planning process? At best you have a situation where budget holders have been antagonised, at worst budget holders flatly refuse to co-operate! The nightmare of three to four months arguing over resource allocation when nobody knows the answer, the endless cut-back rounds, the game playing, the spend it or lose it mentality is not befitting the 21st century. So why continue with this outdated, unproductive exercise?
The only things stopping us from making this change are the difficulties of:
• committing the time to understand the solution
• learning how to sell change
• finding the gap in our busy workload to make it happen.
Action:
The extermination of the annual plan was first written about by Jeremy Hope of the Beyond Budgeting Round Table. To test the hypothesis that organisations would thrive without an annual plan he went searching for organisations that have never had the process in the first place. These organisations exist and are thriving. The beyond budgeting movement has many converts and the best place to start this journey is to read Jeremy Hope’s articles - any search of the internet will find many.
Read Hope’s work 'Reinventing the CFO: how financial managers can transform their roles and add greater value', Harvard Business School Press, 2006.
6 Breaking the annual plan into 12 before the year starts
As accountants we like things to be neat and tidy. Thus it appeared logical to break the annual plan into 12 monthly breaks before the year had started. We could have been more flexible. Instead we created a reporting yardstick that undermined our value to the organisation. Every month we make managers all around the organisation write predictable variance analyses such as ‘it is a timing difference….’; ‘we were not expecting this to happen…’; ‘the market conditions have changed radically since the plan…’ etc.
Action:
If you still need to perform an annual planning process you can at least remove the need for 12 monthly targets arising from this process. We should instead report against more recent targets derived from quarterly rolling forecasting process. This change has a major impact on reporting. We no longer will be reporting against a monthly budget that was set, in some cases 17 months before the period being reviewed.
CIMA Insight June 2009
7 Giving budget holders an annual entitlement
Doing an annual plan is misguided enough but to compound it with asking budget holders what they want and then, after many arguments, giving them an ‘annual entitlement’ to funding is the worst form of management.
I use portioning out a birthday cake at a nine year old’s party to explain the problem with an annual plan. A clever parent says to party goers: ‘Here is the first slice, if you finish that and want more, I will give you a second slice.’ The annual planning process divides the cake up and portions all of it to the budget holders.
Like nine year olds, budget holders lick the edges of their cake so that even if they do not need it all, nobody else can have it. Why not, like the clever parent, give the manager what they need for the first three months, and then ask what they need for the next three months and so on. Each time we can apportion the amount that is appropriate for the current conditions.
Action:
The better practice is to tell budget holders that we are aware of their annual request but will only fund what they need to run the next quarter. This small but significant change means:
• ‘spend it or lose it’ can no longer work, as budget holders find it nearly impossible to hide their reserves in the next three month period
• budget holders are encouraged to seek funding for initiatives that were not in the annual plan, as long as they have a sound fit with the organisation’s strategic objectives
• budget holders will stop asking for an annual entitlement they do not definitely need as the real budget setting takes place once a quarter.
8 Budgeting at account code level
Why should we set targets at account code level? It was done by our forefathers so we followed in their well trodden steps. It makes no sense.
Having budgets at account code level has encouraged budget holders to allocate expenditure to an account that has room for it. This undermines the purpose of the general ledger (G/L) which is to account for costs and revenue in the right areas.
You don’t need a target or budget at account code level if you capture trend analysis effectively in the reporting tool. We need to apply Pareto’s 80/20 rule and establish a category heading which includes a number of G/L codes.
Action:
Limit the number of categories in a budget holder’s budget to no more than 12. Have a budget category line if the account code is over 10% of the total - for example, show a revenue line if the account code is over 10% of the total revenue. If the account code is under 10% consolidate it with other account codes until it forms a category representing over 10% of the total.
Map the account code expenditure history to these categories. A planning tool can easily cope with this issue without the need to revisit the chart of accounts.
9 Producing numbing monthly financial reports
Many management reports are not a management tool. They are merely memoranda of information. Too many of our reports are issued well after the die is cast. Management reports should encourage timely action in the right direction, by reporting on those activities the board, the management and the staff need to focus on.
Many monthly finance reports prepared by the finance team are never read. They include endless detail, often as a result of having a common template for all subsidiaries regardless of size. The result is a consolidated pack with a four to five page essay, consolidated numbers and a copy of each subsidiaries submission. I once saw a 140 page pack!
Action:
Reduce the finance pack down to fewer than ten pages. Eliminate the essay and simply have a small comments box on each statement. Only have one page to summarise the subsidiaries results and only include the large ones and any others that are in trouble. Small subsidiaries that are performing well do not need to be included in the pack.
A wise CFO has said: ‘Educate and engage with senior and middle management. Find out and assess what they really need to manage the business and ruthlessly eliminate the eye-sight ruining and worthless pages that engineers and middle management are so fond of.’
CIMA Insight July 2009
10 Reporting on the wrong performance measures
Many companies are working with the wrong measures, many of which are incorrectly termed key performance indicators (KPIs). Year after year accountants and other senior officials have added additional suites of measures. This has lead to a confusing potpourri of performance measurement and reporting, with none of the measures tied in to the critical success factors of the organisation.
From my extensive research, very few organisations monitor their true KPIs. The reason is that very few organisations, business leaders, writers, accountants or consultants have explored what a KPI actually is. I have come to the conclusion that there are four types of performance measures:
• Result indicators (RIs) – tell staff what they have done.
• Key result indicators (KRIs) – give an overview of past performance and are ideal for the board as they communicate how management have done in a critical success factor or balanced scorecard perspective.
• Performance indicators (PIs) – tell staff and management what to do.
• Key performance indicators (KPIs) - tell staff and management what to do to increase performance dramatically.
Action:
Read Kaplan & Norton’s book ‘Translating strategy into action: the balanced scorecard’ and my book ‘Key performance indicators – developing, implementing and using winning KPIs’.
11 Selling change by logic
Nothing was ever sold by logic! You sell through emotions. Remember your last car purchase? The car sales person identifies and exploits emotional drivers. To a 23 year old IT geek, they will point out the 180 BHP, the low profile tyres, and say that this car needs to be driven by an excellent driver as it is quite dangerous. To me, having spotted the grey hair, they will point out the six air bags and tell me that this car has enough power to get you out of any trouble you find yourself in and you will never loose traction with those tyres.
Many initiatives driven by the finance team fall at this hurdle because we attempt to change the culture through selling logic, writing reports, issuing commands via email. It does not work.
Action:
We need to radically alter the way we pitch a sale to the senior management team and the board. We first have to make sure we have a good proposal with a sound focus on the emotional drivers that matter to them. We then need to focus on selling to the thought leader on the SMT and board before we present the proposal. This may involve informal meetings, sending copies of appropriate articles, telling better practice stories.
All major projects need a public relations machine behind them. No presentation, email, memo or paper related to a major change should go out unless it has been vetted by your PR expert. They are experts on emotional drivers. All your presentations should be road tested in front of the PR expert. Your PR strategy should include how to sell the change to staff, budget holders, SMT and the board.
12 Allowing month-end reporting to go past three working days
When I was a corporate accountant each month end was a disaster waiting to happen. You never knew when and where the next problem was going to come from. Things always appeared under control two or three days away and yet each month we were faxing the result five minutes before the deadline. Our fingers were crossed as a series of late adjustments had meant that the quality assurance work we had done was invalid and we did not have the luxury of doing it again. Does this sound familiar?
Quick month-end reporting has been around since the early 1990s when far seeing CFOs starting looking at the concept of ‘day one’ reporting. However this has been superseded by those who have developed systems capable of giving the CFO a full accrual net result, at any time, during the month! The virtual close, as it is called, is performed by Cisco, Motorola, Oracle, Dell, Wells Fargo, Citigroup, JP Morgan Chase and Alcoa.
Up to 70% of a corporate accountant’s time is spent on month-end reporting, the annual accounts and the annual planning process. When were you last thanked for any of these tasks?
Action:
You need to attack the month-end.
CIMA Insight August 2009
13. Spending months on the annual accounts
The annual report, while an important legal requirement, does not create any value within your organisation. Thus seldom will your team have received any form of gratitude for it in the past. Accounting functions therefore need to find ways to extract value from the process while at the same time bringing it into a tight time-frame.
How many times has the final year end audited number been within 5% of the month 12 number? We spend far too much time chasing our tail. There is absolutely no reason in 99% of cases why the first cut off year-end for internal reporting should not be the same as the last cut for external reporting.
Allowing the auditors the luxury of a leisurely year-end sign-off based around their workload provides them with many months of hindsight where unrecorded liabilities and the like are there for all to see. It is daft to air problems for that length of time!
Action:
Make it a level playing field and request a sign-off within 15 working days of year-end. Understand how to perform a year-end inside 15 working days post year-end by attending my course Quick month-end reporting.
14. Using the Julian calendar as a reporting tool
Julius Caesar gave us the calendar we use today. It is not a good business tool because it creates 12 dramas a year for the finance team and budget holders, with each month being slightly different.
Between three and five months every year will end on a weekend, and finance teams often find that the month-end processes are smoother for these months. Why not close off on the last or nearest Friday/Saturday of every month like many US companies do? The benefits of this include precise four or five week months, which make comparisons more meaningful. This also means that there is less impact on the working week as the systems are rolled over at the weekend.
Otherwise every month is a drama because we close on a different calendar day. Every month we have to issue detailed instructions to do on Thursday what you did on Wednesday last month.
Closing off at the weekend can be done for all sectors; some will require more liaison than others. It would also make a big difference in the public and not-for-profit sectors. You simply present June’s result and balance sheet to the board. You do not need to highlight the 2 July close. At year-end the missing two or extra two days of income and balance sheet movement will be taken up in the auditor’s ‘overs and unders’ schedule.
By making this change you are beginning to create 12 non dramas a year, the El Dorado of all corporate accountants.
Action:
Contact your general ledger provider and ask who uses your G/L and closes on a set day each month. They will link you to them and you will see at first hand the benefits.
Choose which day. It is best to be the nearest rather than the last ‘Friday’, ‘Saturday’, ‘Tuesday’ to month end etc. The last Saturday can have you closing six days before month-end, whereas the preferred option of nearest Saturday will only be a maximum of two working days out.
15. Letting emails dominate our day
Why do we, as accountants, need to see our emails 24/7? Are we that important that looking at our emails at the weekend is essential? Nobody dies, or is at the risk of death because we have not looked at our emails. And looking at emails first thing in the day is the most destructive habit you can have. You have guaranteed losing, forever, at least one hour, going nowhere quickly.
Action:
For eight weeks take up this challenge. Look at emails two or three times during the working day and never before 10.30am. Eliminate weekend email correspondence. After that time you will thank me!
CIMA Insight September 2009
16. Not producing daily / weekly decision based reports
In leading organisations, decision based information is based around daily / weekly reports on progress in critical success factors (CSFs). In one company the SMT has a daily 9am news report followed by further weekly information. All managers can contribute to the monthly management meeting to discuss results.
I believe you have arrived as a corporate accountant when your management team intuitively understand at the time whether the month is a good or bad one, enabling them to do something about it.
Senior finance people should insist that assistant accountant level staff be engaged with staff across the business so that they can discover what is really happening.
Here’s a quote from a wise CFO: ‘There are highly intelligent people in key parts of the business with great systems and a finger on the pulse of their part of the operation. So don’t be an isolationist bean counter, but network and forge relationships with marketers, logistics, and production people. Be prepared to use their systems and information to add depth and quality to your forecasts. You’ll get a better result, gain respect across the business and have more fun if you make the best of what’s out there. These connections need to happen at all levels of the finance team.’
If this networking is ignored, finance will always be on the outside and always the first to look like chumps when that session with SMT starts getting heated.
Action: Corporate accountants should look to provide the following daily and weekly reporting:
• yesterday’s sales reported by 9am the following day
• transactions with key customers reported on a weekly basis
• weekly reporting on ‘late projects’ and ‘late reports’
• reporting some weekly information on key direct costs
• daily / weekly reporting on the KPIs.
17. Not adopting the purchase card – a free accounts payable system
The average cost of the whole purchase cycle has been estimated at between £45-£60 per transaction. Pretty horrific when you realise that a high portion of your transactions are for minor amounts. The bulk of invoices can be for low value amounts, especially if consolidated invoices have not yet been organised. Remember it costs the same to process a £10 transaction as it does a £100,000 transaction.
In addition, is it appropriate to request that budget holders raise an order for a £20 transaction? Surely the purchase order system would work better if it focused on the larger invoices, where 100% compliance was a given.
Purchase cards are different from a credit card and are here to stay. There are three liability options - limited to genuine business; company has sole liability; and individual has sole liability. They work particularly well with high volume, low value items purchased through the same suppliers as the supplier will be able to insert general ledger (G/L) code information on the transaction.
For example, organisations have given their national stationery supplier the G/L code for stationery and the department codes associated with purchase cards. The purchase card is certainly a way for you to take control of processing these minor value / high volume transactions, where they cannot be organised through an electronic consolidated invoice.
Action:
Look at BetterManagement where I have explained this process in a free web seminar and article.
18. Not celebrating enough
I once came across an accounting team who were too busy to even organise their Christmas celebration. The marketing department organised it for them. Some accountants have yet to realise that a celebration is a great communication and motivational tool.
By being too busy to celebrate your achievements you are effectively saying you have nothing to celebrate.
Action:
Schedule your next celebration and make it happen. Invite members of the senior management team along. Suggestions include:
• celebrate every project completion
• hold a staff meeting in a café once a month and treat the team to coffee and muffins
• set up a regime where birthdays are celebrated
• for Christmas give your staff options – for example cinema tickets instead of a Christmas function
• praise team members’ achievements during team meetings.
19. Getting sucked into activity-based costing / activity-based management
Jeremy Hope of the Beyond Budgeting Round Table has pointed out the fallacy of activity-based costing. These systems cost a lot to put in and maintain, provide information of dubious quality and are run 24/7 when you only need such information infrequently.
If you feel it is necessary make sure you have sorted out all the other areas I have mentioned in this series first. After which read Jeremy Hope’s work. I am sure you will have second thoughts.
Action:
Read Jeremy Hope’s book ‘Reinventing the CFO’ from Harvard Business School Press.
CIMA Insight October 2009
www.cimaglobal.com
Friday 2 October 2009
Vietnam - News and Regulations
ENERGY - VIETNAM'S ENERGY DEMAND OUTSTRIPS ECONOMIC GROWTH
With energy demand growing faster than the gross domestic product growth, the nation is facing widespread power shortages by 2015 unless investment in new energy sources is increased dramatically, according to Deputy Minister of Industry and Trade Bui Xuan Khu.
Speaking at a recent European Green Business exhibition and conference in Ha Noi, Khu estimated that Viet Nams power consumption would increase at a rate of 8.6-9.7 per cent per year during 2001-25.
"While conservation measures could lower demand in the cement, steel, food processing and other industries by 20 per cent or more, it would require heavy investment in energy-saving technology", Khu said.
"This, along with renewable energy, was an enormous untapped opportunity for foreign investors," he added.
Vietnam had abundant renewable resources that could replace imported fossil fuels and minimise environment impact, said Le Tuan Phong, deputy head of the ministrys energy department, pointing to geothermal reserves that could produce an estimated 200MW by 2020, as well as solar power and wind farms that could produce 800-1,400kWh per square metre per year.
Renewables were already expected to supply 3 per cent of national power output by next year, to rise to 11 per cent by 2050, Phong said, but an overall plan for renewable energy development was now waiting for the Prime Ministers approval.
To encourage foreign investment into the sector, incentive policies for renewable energy needed to be clearer, especially how prices would be established when the power would hit the national grid, said Attorney Oliver Massmann from the law firm of Duane Morris Vietnam.
A new retail power market was in the making, and Vietnam needed to work out reasonable price levels in the power sector, Massmann said, adding that a number of investors worried that they would meet with difficulties in negotiating power prices with the State-run utility giant, Electricity of Vietnam. A truly competitive market should be formed that eliminates the monopoly in deciding power prices and ensures equality, Massmann said.
(VNA) cr: asia pulse
PLEASE EMAIL ME (omassmann@duanemorris.com) IF YOU WOULD LIKE TO RECEIVE THE PRESENTATION “INVESTMENT IN THE ENERGY SETCOR IN VIETNAM” I GAVE AT THIS GREEN BIZ EVENT !
REGIONAL TRADE MOVES ON! Japan removes 7,220 tariffs for Vietnamese enterprises
Vietnam-Japan Economic Partnership Agreement (VJEPA) has officially come into effects from October 1.
Under the commitments mentioned in JPEPA, Japan has removed 7,220 tariffs on imported goods from Vietnam right after the agreement took effect and Vietnam has done the same with 2,586 ones
Under the VJEPA framework, 94 percent of exports and 86 percent of agricultural exports from Vietnam to Japan will enjoy tax exemption within the next 10 years, after the agreement took effect.
Most of the products getting benefits from tax exemption under the agreement include apparel, machinery, electrical cables, computers, components, wood products, shrimp and shrimp-processed products, durians and flowers.
At present, there are three major types of Vietnam-made products exported to Japanese markets including seafood, leather shoes, and apparel. The two-way trade value in 2008 was posted at $16 billion and is expected to reach $18 billion in 2010.VNS
Finance - Vietnam leads in foreign trade growth prospect in HSBC's latest survey on Business Confidence Index
HSBC's latest survey on Business Confidence Index reported that Vietnamese small to medium sized enterprises (SMEs) led among surveyed markets in terms of foreign trade potential.
The bank implemented massive surveys on SMEs in fields of export import in 12 countries and territories-major economies in Asia Pacific, UAE, Brazil, UK and US.
Over 3,500 SMEs joining the survey offered their forecast on commercial transaction volume, risks from buyers and suppliers, commercial support demand, capacity of accessing commercial funding, impacts of foreign currency on enterprises' business operation in next three months. The survey result will be used to figure out Business Confidence Index.
Over a half of surveyed SMEs said that the payment from buyers and suppliers (for the fear of not implementing commercial agreements) will not be unchanged. Majority of Vietnamese and Singaporean enterprises (81 percent) said that the payment risk from buyers will not change and 88 percent of Vietnam and 84 percent of Singapore said that the risks from suppliers not complying with commercial deals will be sustainable.
Compared with the survey in Q2 of 2009, this time Vietnam rose by two points in term of commercial transaction prospect from 108 to 110 points. 65 percent of Vietnam's surveyed companies predicted the commercial transaction will surge three times from now to late December, which is also the highest ratio among the surveyed nations.
When being questioned on the measures that enterprises usually use to protect themselves from payment risks, 41 percent of Vietnamese firms said that they would apply flexible payment measures while 29 percent will require buyers to pay in advance.
In comparison with May 2009, many Vietnamese companies plan to use bank loans to meet their demand of business and commerce support.
Vietnamese importers and exporters assessed China to be the most important market. Over one third (36 percent) said China is still the most potential market for Vietnam's commercial development prospect, 23 percent set their belief in other Asian countries and 14 percent on south-eastern Asia, US and Canada.
The survey result showed positive vision on commercial development prospect of enterprises in newly emerging economies as well as developed markets. The businesses in China (121 pts), Indonesia (120 pts) and UAE (118 pts) have the highest Business Confidence Index on commercial operational and growth. Others in Hong Kong, Singapore and Australia are more optimistic when their Business Confidence Index increased by 10 percent from Q2 of 2009.
However, a lot of import and export companies still consider forex rate changes and low demand of foreign currency to be the two major challenges for the business growth in next three months. In which, the companies of Brazil, UK, South-eastern Asia and China are afraid of forex rate movements while US and UK are worried on the shortage of consumption market. Meanwhile, Indian and UAE businesses fear about a sharp reduction in marginal profit and capacity of credit accession.vn. TBKT
FRANCHISE - Vietnam sees bustling franchise sector
In the first half of this year, the Ministry of Industry and Trade granted licences for the franchise deals of 15 overseas companies, mostly from the US, Belgium and Canada, in the food and beverage, fashion and information technology industries in Vietnam.
The figure reflected a noticeable growing interest from foreign groups in franchise operations in Vietnam, where the consumer market is getting more powerful and the population has now reached 85 million people.
Currently, the US's Grainger Group is looking for Vietnamese manufacturers of industrial equipment and other devices to supply to the group, which already sells 850,000 different products. Grainger has established a network of 18 distribution centres and 600 branches scattered around the world.
The Vietnam Business and Franchise Association and the Business Centre from the Republic of Korea have forecast that the Vietnamese franchise sector will earn $36 million in revenue in 2010 if it keeps growing at the current rate.
They also forecast that by 2010 the number of franchised shops in the country will rise by 50 percent. In 2008 there were only 890.
The Japan External Trade Organisation (JETRO) has predicted that franchise activities in Vietnam will heat up in the near future, particularly in the catering and tourism industries, as a large number of Japanese businesses have shown their eagerness to start up businesses in the country.
More Vietnamese businesses are accepting franchises as an appropriate way of securing their investments when trying to establish a niche in local markets and indirectly penetrating foreign markets in a quicker and easier fashion, if they are not strong enough financially to launch overseas promotions themselves.
For example, the Phu Thai Group, one of Vietnam's leading distributors of consumer goods, has teamed up with Japan's Family Mart to develop a network to distribute Japanese goods in Vietnam and Vietnamese commodities in Family Mart's stores in Japan.
Pho 24 is a successful example in the franchise business, as six years after starting up, it has established a total of 70 franchised restaurants in and out the country.
The company is mulling over a plan to increase its franchises to 80 by the end of this year with the opening of its first restaurant in Hong Kong and its second in the Republic of Korea in October.
The company expects to set up more franchised shops in Japan, China and the US in 2010.
At present, there are around 70 franchising networks operating in Vietnam, mainly Malaysia's Parkson, Germany's Metro, the US 's CBRE, Dilmah and KFC. Several Vietnamese businesses are joining these networks, such as Trung Nguyen Coffee, Pho 24, Kinh Do Bakery, AQ Silk and 24-Seven.VNA
Distribution - Vietnamese goods distribution network expanded
Vietnam made goods appear much in supermarkets now but in the traditional distribution models like small retail points, Vietnamese goods have failed to access the market. Thus, domestic enterprises need to focus on developing the distribution system widely, noted Pham Chi Lan, senior economist on building the professional sales group.
Total 95 percent of domestically made goods in supermarkets and a series of Vietnamese goods support programmes showed that Vietnamese goods are dominating the retail system thanks to remarkable progresses in upgrading goods quality.
Imported goods items only account for 5 percent of total number of business items. Not only Big C but also other supermarkets namely Metro, Nguyen Kim, Fivimart confirmed that 90-95 percent of goods items here are produced by domestic firms.
In September, many local supermarkets launched the programme "Vietnam high quality goods sales-off month" with preferential prices.
In Hanoi, the Department of Industry and Trade organised the programme "bringing Vietnamese goods to outskirt districts" to promote the domestic market.
According to Pham Chi Lan, the South Africa countries, Vietnam and others with the economic conditions like Vietnam, the market share of modern commerce system (modern retailing, supermarket, online shopping) made up about 10-20 percent till 2000.
To date, in Vietnam, the modern retail system accounts for 18 percent with the more readily increasing growth especially after Vietnam joined WTO while the traditional retail channel (traditional markets) 82 percent.
Apart from big supermarkets, Vietnam has new business methods like online shopping, franchising and others.
In the last decade, Vietnamese economy reached high growth rate, averaging 7 percent a year and the income per capita in the past four years has doubled from $560 per person a month in 2004 to over $1,000 this time, which helped increase the development potential of market and boost the growth of distribution system in line with the market demand.vns
INSURANCE- Insurers accelerate business strategies
Life insurance companies have developed business and marketing strategies as the economy begins to show signs of recovery.
French life insurance company Prevoir Vietnam, through an agreement with the Vietnam Post and Telecommunication Group, is exclusively providing life insurance products over a 10-year period through the nation wide network of post offices and banks.
The service is designed to create greater access to life insurance product.
"Although the new insurance system has not bee easy to introduce, Prevoir Vietnam remains optimistic that the personal insurance market will develop in the near future," said Le Thuy Binh, general director of Prevoir Vietnam.
The company had strongly invested in training sale officials for future growth, she added.
Korea Life jointed the Vietnamese insurance market in March this year, and is now accelerating its growth and branding countrywide.
The company will focus on developing a strong network of specialists, said Pham Truong Khanh, marketing director of Korea Life Vietnam.
To help promote its work, the company has paid attention to supporting community projects, including supporting poor patients at Paediatric Hospital 2 in HCM City and the Hanoi Paediatric Hospital. In addition it has organised programes to support Agent Orange victim in Hoa Binh (Peace) Village in Hanoi.
According to Korea Life Vietnam, a large amount will be spent on developing their corporate social responsibility programmes.
AIA Vietnam and ACE Life are focused on developing the quality of their services.
Along with opening the first customer service centre, AIA Vietnam has made high-quality service the centre of their business strategy.
With a population of more than 85 million people,encouraging economic growth figures and a decreasing property rate, Vietnam remains an attractive market for life insurers. Less than 10 percent of the population currently have insurance.VNA
GAS/ INFRASTRUCTURE - 400km gas pipeline for Mekong Delta
The Vietnam National Oil and Gas Group (PetroVietnam) will join Military Zone 9 to build a 400-km gas pipeline project in the Cuu Long (Mekong) Delta.
The project, which is worth nearly $800 million and is invested by PetroVietnam, will supply gas from the Lot B oilfield offshore Phu Quoc Island to gas-fuelled electric power plants in the Cuu Long Delta.
The gas will feed the Ca Mau Province based gas-electricity fertiliser complex and the 6 Mon Electricity Centre in Can Tho City.
Construction on the pipeline, which extends 246km under sea and 160km on land, will begin in the four quarter of this year and is expected to be completed in July
2011. The pipeline will have a capacity to transport 2-2.5 million tonnes of cubic metres of gas a year.
Under the Memorandum of Understanding signed on Wednesday, the Military Zone 9 Command will provide services to protect the pipeline in areas under its management during the time of construction and after completion.
The command will also be responsible for digging canals and building small bridges crossing Ca Mau, Kien Giang, Bac Lieu and Hau Giang provinces and Can Tho City.
The management board of the southwestern Vietnam gas project has also signed a contract with PetroVietnam Finance Corporation to arrange capital for the construction of the pipeline project.
VNNEWS
LUBRICANTS - Total buys back lubricant operation of ExxonMobil
Total yesterday signed an agreement on buying back full lubricant operations and specialised products of ExxonMobil in Vietnam, including the lubricant mill in Dong Nai province and the nationwide distribution network.
The agreement only includes lubricant business transference and does not affect to other business fields of ExxonMobil in Vietnam.
ExxonMobil confirmed it would continue investing in Vietnam's upstream, serving customers in maritime and international airlines in Vietnam.TBKT
LOGISTICS - Logistic centre built in Binh Duong
Binh Duong Production Import Export Co (Protrade) and Singapore's YCH Group yesterday signed a deal to set up YCH Protrade Logistic Centre in Binh Duong province.
The centre covers 6.9 hectares in Binh Hoa commune, Thuan An Dist, 20 kilometres from HCM City with a total investment capital of $14 million.
The centre is expected to start operation from Q1 of 2010.TT
POWER - First turbine of Se San 4 hydropower plant joins the national grid
The first turbine of Se San 4 hydropower plant with total capacity of 120 MW officially contributed electricity to the national grid on Sep 30.
Se San 4 hydropower plant complex was located in Ia O Commune, Ia Grai Dist, Gia Lai province with three turbines, total designed capacity of 360 MW, providing the total electricity output of 1.5 billion KWh per year. The total investment value for this project was about 5.8 trillion dong.
The construction was officially started in November 2004.
After the first turbine of Sesan 4 hydropower plant contributed electricity to the national grid successfully, it's expected that the second turbine would be in operation in November and the third one in January 2010.VIETSTOCK
POWER - Duyen Hai 2 thermo power plant offers investment of $1,200 per KWh
Janakuasa Group, Malaysia has recently submitted to Vietnamese ministry of industry and trade the investment report of Duyen Hai 2 thermo power plant project with designed capacity of 600 MW x2 to be built in Tra Vinh province, under Building-Operating-Transferring (BOT) method.
The group's leaders said the investment rate for Duyen Hai 2 Thermo power plant project might reach $1,200 per KWh.
The construction was supposed to be kicked off in Q3 of 2010, after the group finishes all the concerning negotiations for electricity price, BOT contracts with Vietnamese partners.
France-based Alstom Group seems to be selected as the main EPC contractor for this project.
In the opening ceremony of its representative office in Hanoi last week, Janakuasa Group presented Tra Vinh province with $100,000. The group pledged to fund $1 million every year for building schools in Tra Vinh province, starting from the year the plant is officially put into operation until the ending period mentioned in the BOT contract.DAUTU
TELECOM UNICATION 3G-VinaPhone to be the first mobile provider to offer 3G services
VinaPhone will become the first mobile network provider to offer mobile services on the basic of 3G technologies on October 12. VinaPhone commits to offer reasonable service charges that will be suitable for most of Vietnamese mobile subscribers.
So, after exactly one month since the issue date of 3G certificate granted by Ministry of Information and Communications, VinaPhone is the first 3G service provider in Vietnam. The mobile network provider has already tested successfully the 3G services such as video calls, Mobile TV and other high-speed Internet services.
Ho Duc Thang, VinaPhone's vice director said his company has already finished installing thousands of 3G BTS stations nation-wide. The service charges would be suitable for all Vietnamese mobile subscribers, he added.
The current, available 2G basic services will stay unchanged when using on 3G such as phone calls, SMS, MMS and Data.
Thang said the charges for typical 3G services such as Mobile TV, Mobile Camera, Video calls will be at acceptable level for all Vietnamese customers.
VinaPhone's announcement to launch 3G services in October has removed all the doubts that this mobile network provider will be fined when it fails to carry out the 3G plan in time.
The three other competitors of Viettel, MobiFone and the associate of EVN Telecom & Hanoi Telecom at present are in the middle of testing the services. All the mobile network providers planned to officially offer the services in the earliest time. The total paid deposit was posted at over 8.1 trillion dong, in which Viettel's paid amount was 4.5 trillion dong, and the rest of VinaPhone, MobiFone, and EVN Telecom-Hanoi Telecom.VNEXPRESS
With energy demand growing faster than the gross domestic product growth, the nation is facing widespread power shortages by 2015 unless investment in new energy sources is increased dramatically, according to Deputy Minister of Industry and Trade Bui Xuan Khu.
Speaking at a recent European Green Business exhibition and conference in Ha Noi, Khu estimated that Viet Nams power consumption would increase at a rate of 8.6-9.7 per cent per year during 2001-25.
"While conservation measures could lower demand in the cement, steel, food processing and other industries by 20 per cent or more, it would require heavy investment in energy-saving technology", Khu said.
"This, along with renewable energy, was an enormous untapped opportunity for foreign investors," he added.
Vietnam had abundant renewable resources that could replace imported fossil fuels and minimise environment impact, said Le Tuan Phong, deputy head of the ministrys energy department, pointing to geothermal reserves that could produce an estimated 200MW by 2020, as well as solar power and wind farms that could produce 800-1,400kWh per square metre per year.
Renewables were already expected to supply 3 per cent of national power output by next year, to rise to 11 per cent by 2050, Phong said, but an overall plan for renewable energy development was now waiting for the Prime Ministers approval.
To encourage foreign investment into the sector, incentive policies for renewable energy needed to be clearer, especially how prices would be established when the power would hit the national grid, said Attorney Oliver Massmann from the law firm of Duane Morris Vietnam.
A new retail power market was in the making, and Vietnam needed to work out reasonable price levels in the power sector, Massmann said, adding that a number of investors worried that they would meet with difficulties in negotiating power prices with the State-run utility giant, Electricity of Vietnam. A truly competitive market should be formed that eliminates the monopoly in deciding power prices and ensures equality, Massmann said.
(VNA) cr: asia pulse
PLEASE EMAIL ME (omassmann@duanemorris.com) IF YOU WOULD LIKE TO RECEIVE THE PRESENTATION “INVESTMENT IN THE ENERGY SETCOR IN VIETNAM” I GAVE AT THIS GREEN BIZ EVENT !
REGIONAL TRADE MOVES ON! Japan removes 7,220 tariffs for Vietnamese enterprises
Vietnam-Japan Economic Partnership Agreement (VJEPA) has officially come into effects from October 1.
Under the commitments mentioned in JPEPA, Japan has removed 7,220 tariffs on imported goods from Vietnam right after the agreement took effect and Vietnam has done the same with 2,586 ones
Under the VJEPA framework, 94 percent of exports and 86 percent of agricultural exports from Vietnam to Japan will enjoy tax exemption within the next 10 years, after the agreement took effect.
Most of the products getting benefits from tax exemption under the agreement include apparel, machinery, electrical cables, computers, components, wood products, shrimp and shrimp-processed products, durians and flowers.
At present, there are three major types of Vietnam-made products exported to Japanese markets including seafood, leather shoes, and apparel. The two-way trade value in 2008 was posted at $16 billion and is expected to reach $18 billion in 2010.VNS
Finance - Vietnam leads in foreign trade growth prospect in HSBC's latest survey on Business Confidence Index
HSBC's latest survey on Business Confidence Index reported that Vietnamese small to medium sized enterprises (SMEs) led among surveyed markets in terms of foreign trade potential.
The bank implemented massive surveys on SMEs in fields of export import in 12 countries and territories-major economies in Asia Pacific, UAE, Brazil, UK and US.
Over 3,500 SMEs joining the survey offered their forecast on commercial transaction volume, risks from buyers and suppliers, commercial support demand, capacity of accessing commercial funding, impacts of foreign currency on enterprises' business operation in next three months. The survey result will be used to figure out Business Confidence Index.
Over a half of surveyed SMEs said that the payment from buyers and suppliers (for the fear of not implementing commercial agreements) will not be unchanged. Majority of Vietnamese and Singaporean enterprises (81 percent) said that the payment risk from buyers will not change and 88 percent of Vietnam and 84 percent of Singapore said that the risks from suppliers not complying with commercial deals will be sustainable.
Compared with the survey in Q2 of 2009, this time Vietnam rose by two points in term of commercial transaction prospect from 108 to 110 points. 65 percent of Vietnam's surveyed companies predicted the commercial transaction will surge three times from now to late December, which is also the highest ratio among the surveyed nations.
When being questioned on the measures that enterprises usually use to protect themselves from payment risks, 41 percent of Vietnamese firms said that they would apply flexible payment measures while 29 percent will require buyers to pay in advance.
In comparison with May 2009, many Vietnamese companies plan to use bank loans to meet their demand of business and commerce support.
Vietnamese importers and exporters assessed China to be the most important market. Over one third (36 percent) said China is still the most potential market for Vietnam's commercial development prospect, 23 percent set their belief in other Asian countries and 14 percent on south-eastern Asia, US and Canada.
The survey result showed positive vision on commercial development prospect of enterprises in newly emerging economies as well as developed markets. The businesses in China (121 pts), Indonesia (120 pts) and UAE (118 pts) have the highest Business Confidence Index on commercial operational and growth. Others in Hong Kong, Singapore and Australia are more optimistic when their Business Confidence Index increased by 10 percent from Q2 of 2009.
However, a lot of import and export companies still consider forex rate changes and low demand of foreign currency to be the two major challenges for the business growth in next three months. In which, the companies of Brazil, UK, South-eastern Asia and China are afraid of forex rate movements while US and UK are worried on the shortage of consumption market. Meanwhile, Indian and UAE businesses fear about a sharp reduction in marginal profit and capacity of credit accession.vn. TBKT
FRANCHISE - Vietnam sees bustling franchise sector
In the first half of this year, the Ministry of Industry and Trade granted licences for the franchise deals of 15 overseas companies, mostly from the US, Belgium and Canada, in the food and beverage, fashion and information technology industries in Vietnam.
The figure reflected a noticeable growing interest from foreign groups in franchise operations in Vietnam, where the consumer market is getting more powerful and the population has now reached 85 million people.
Currently, the US's Grainger Group is looking for Vietnamese manufacturers of industrial equipment and other devices to supply to the group, which already sells 850,000 different products. Grainger has established a network of 18 distribution centres and 600 branches scattered around the world.
The Vietnam Business and Franchise Association and the Business Centre from the Republic of Korea have forecast that the Vietnamese franchise sector will earn $36 million in revenue in 2010 if it keeps growing at the current rate.
They also forecast that by 2010 the number of franchised shops in the country will rise by 50 percent. In 2008 there were only 890.
The Japan External Trade Organisation (JETRO) has predicted that franchise activities in Vietnam will heat up in the near future, particularly in the catering and tourism industries, as a large number of Japanese businesses have shown their eagerness to start up businesses in the country.
More Vietnamese businesses are accepting franchises as an appropriate way of securing their investments when trying to establish a niche in local markets and indirectly penetrating foreign markets in a quicker and easier fashion, if they are not strong enough financially to launch overseas promotions themselves.
For example, the Phu Thai Group, one of Vietnam's leading distributors of consumer goods, has teamed up with Japan's Family Mart to develop a network to distribute Japanese goods in Vietnam and Vietnamese commodities in Family Mart's stores in Japan.
Pho 24 is a successful example in the franchise business, as six years after starting up, it has established a total of 70 franchised restaurants in and out the country.
The company is mulling over a plan to increase its franchises to 80 by the end of this year with the opening of its first restaurant in Hong Kong and its second in the Republic of Korea in October.
The company expects to set up more franchised shops in Japan, China and the US in 2010.
At present, there are around 70 franchising networks operating in Vietnam, mainly Malaysia's Parkson, Germany's Metro, the US 's CBRE, Dilmah and KFC. Several Vietnamese businesses are joining these networks, such as Trung Nguyen Coffee, Pho 24, Kinh Do Bakery, AQ Silk and 24-Seven.VNA
Distribution - Vietnamese goods distribution network expanded
Vietnam made goods appear much in supermarkets now but in the traditional distribution models like small retail points, Vietnamese goods have failed to access the market. Thus, domestic enterprises need to focus on developing the distribution system widely, noted Pham Chi Lan, senior economist on building the professional sales group.
Total 95 percent of domestically made goods in supermarkets and a series of Vietnamese goods support programmes showed that Vietnamese goods are dominating the retail system thanks to remarkable progresses in upgrading goods quality.
Imported goods items only account for 5 percent of total number of business items. Not only Big C but also other supermarkets namely Metro, Nguyen Kim, Fivimart confirmed that 90-95 percent of goods items here are produced by domestic firms.
In September, many local supermarkets launched the programme "Vietnam high quality goods sales-off month" with preferential prices.
In Hanoi, the Department of Industry and Trade organised the programme "bringing Vietnamese goods to outskirt districts" to promote the domestic market.
According to Pham Chi Lan, the South Africa countries, Vietnam and others with the economic conditions like Vietnam, the market share of modern commerce system (modern retailing, supermarket, online shopping) made up about 10-20 percent till 2000.
To date, in Vietnam, the modern retail system accounts for 18 percent with the more readily increasing growth especially after Vietnam joined WTO while the traditional retail channel (traditional markets) 82 percent.
Apart from big supermarkets, Vietnam has new business methods like online shopping, franchising and others.
In the last decade, Vietnamese economy reached high growth rate, averaging 7 percent a year and the income per capita in the past four years has doubled from $560 per person a month in 2004 to over $1,000 this time, which helped increase the development potential of market and boost the growth of distribution system in line with the market demand.vns
INSURANCE- Insurers accelerate business strategies
Life insurance companies have developed business and marketing strategies as the economy begins to show signs of recovery.
French life insurance company Prevoir Vietnam, through an agreement with the Vietnam Post and Telecommunication Group, is exclusively providing life insurance products over a 10-year period through the nation wide network of post offices and banks.
The service is designed to create greater access to life insurance product.
"Although the new insurance system has not bee easy to introduce, Prevoir Vietnam remains optimistic that the personal insurance market will develop in the near future," said Le Thuy Binh, general director of Prevoir Vietnam.
The company had strongly invested in training sale officials for future growth, she added.
Korea Life jointed the Vietnamese insurance market in March this year, and is now accelerating its growth and branding countrywide.
The company will focus on developing a strong network of specialists, said Pham Truong Khanh, marketing director of Korea Life Vietnam.
To help promote its work, the company has paid attention to supporting community projects, including supporting poor patients at Paediatric Hospital 2 in HCM City and the Hanoi Paediatric Hospital. In addition it has organised programes to support Agent Orange victim in Hoa Binh (Peace) Village in Hanoi.
According to Korea Life Vietnam, a large amount will be spent on developing their corporate social responsibility programmes.
AIA Vietnam and ACE Life are focused on developing the quality of their services.
Along with opening the first customer service centre, AIA Vietnam has made high-quality service the centre of their business strategy.
With a population of more than 85 million people,encouraging economic growth figures and a decreasing property rate, Vietnam remains an attractive market for life insurers. Less than 10 percent of the population currently have insurance.VNA
GAS/ INFRASTRUCTURE - 400km gas pipeline for Mekong Delta
The Vietnam National Oil and Gas Group (PetroVietnam) will join Military Zone 9 to build a 400-km gas pipeline project in the Cuu Long (Mekong) Delta.
The project, which is worth nearly $800 million and is invested by PetroVietnam, will supply gas from the Lot B oilfield offshore Phu Quoc Island to gas-fuelled electric power plants in the Cuu Long Delta.
The gas will feed the Ca Mau Province based gas-electricity fertiliser complex and the 6 Mon Electricity Centre in Can Tho City.
Construction on the pipeline, which extends 246km under sea and 160km on land, will begin in the four quarter of this year and is expected to be completed in July
2011. The pipeline will have a capacity to transport 2-2.5 million tonnes of cubic metres of gas a year.
Under the Memorandum of Understanding signed on Wednesday, the Military Zone 9 Command will provide services to protect the pipeline in areas under its management during the time of construction and after completion.
The command will also be responsible for digging canals and building small bridges crossing Ca Mau, Kien Giang, Bac Lieu and Hau Giang provinces and Can Tho City.
The management board of the southwestern Vietnam gas project has also signed a contract with PetroVietnam Finance Corporation to arrange capital for the construction of the pipeline project.
VNNEWS
LUBRICANTS - Total buys back lubricant operation of ExxonMobil
Total yesterday signed an agreement on buying back full lubricant operations and specialised products of ExxonMobil in Vietnam, including the lubricant mill in Dong Nai province and the nationwide distribution network.
The agreement only includes lubricant business transference and does not affect to other business fields of ExxonMobil in Vietnam.
ExxonMobil confirmed it would continue investing in Vietnam's upstream, serving customers in maritime and international airlines in Vietnam.TBKT
LOGISTICS - Logistic centre built in Binh Duong
Binh Duong Production Import Export Co (Protrade) and Singapore's YCH Group yesterday signed a deal to set up YCH Protrade Logistic Centre in Binh Duong province.
The centre covers 6.9 hectares in Binh Hoa commune, Thuan An Dist, 20 kilometres from HCM City with a total investment capital of $14 million.
The centre is expected to start operation from Q1 of 2010.TT
POWER - First turbine of Se San 4 hydropower plant joins the national grid
The first turbine of Se San 4 hydropower plant with total capacity of 120 MW officially contributed electricity to the national grid on Sep 30.
Se San 4 hydropower plant complex was located in Ia O Commune, Ia Grai Dist, Gia Lai province with three turbines, total designed capacity of 360 MW, providing the total electricity output of 1.5 billion KWh per year. The total investment value for this project was about 5.8 trillion dong.
The construction was officially started in November 2004.
After the first turbine of Sesan 4 hydropower plant contributed electricity to the national grid successfully, it's expected that the second turbine would be in operation in November and the third one in January 2010.VIETSTOCK
POWER - Duyen Hai 2 thermo power plant offers investment of $1,200 per KWh
Janakuasa Group, Malaysia has recently submitted to Vietnamese ministry of industry and trade the investment report of Duyen Hai 2 thermo power plant project with designed capacity of 600 MW x2 to be built in Tra Vinh province, under Building-Operating-Transferring (BOT) method.
The group's leaders said the investment rate for Duyen Hai 2 Thermo power plant project might reach $1,200 per KWh.
The construction was supposed to be kicked off in Q3 of 2010, after the group finishes all the concerning negotiations for electricity price, BOT contracts with Vietnamese partners.
France-based Alstom Group seems to be selected as the main EPC contractor for this project.
In the opening ceremony of its representative office in Hanoi last week, Janakuasa Group presented Tra Vinh province with $100,000. The group pledged to fund $1 million every year for building schools in Tra Vinh province, starting from the year the plant is officially put into operation until the ending period mentioned in the BOT contract.DAUTU
TELECOM UNICATION 3G-VinaPhone to be the first mobile provider to offer 3G services
VinaPhone will become the first mobile network provider to offer mobile services on the basic of 3G technologies on October 12. VinaPhone commits to offer reasonable service charges that will be suitable for most of Vietnamese mobile subscribers.
So, after exactly one month since the issue date of 3G certificate granted by Ministry of Information and Communications, VinaPhone is the first 3G service provider in Vietnam. The mobile network provider has already tested successfully the 3G services such as video calls, Mobile TV and other high-speed Internet services.
Ho Duc Thang, VinaPhone's vice director said his company has already finished installing thousands of 3G BTS stations nation-wide. The service charges would be suitable for all Vietnamese mobile subscribers, he added.
The current, available 2G basic services will stay unchanged when using on 3G such as phone calls, SMS, MMS and Data.
Thang said the charges for typical 3G services such as Mobile TV, Mobile Camera, Video calls will be at acceptable level for all Vietnamese customers.
VinaPhone's announcement to launch 3G services in October has removed all the doubts that this mobile network provider will be fined when it fails to carry out the 3G plan in time.
The three other competitors of Viettel, MobiFone and the associate of EVN Telecom & Hanoi Telecom at present are in the middle of testing the services. All the mobile network providers planned to officially offer the services in the earliest time. The total paid deposit was posted at over 8.1 trillion dong, in which Viettel's paid amount was 4.5 trillion dong, and the rest of VinaPhone, MobiFone, and EVN Telecom-Hanoi Telecom.VNEXPRESS
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