Saturday, May 22, 2010

Friday, May 21 – Final day of site visits in Ho Chi Minh City

Friday was our final day of site visits in Ho Chi Minh City. We confined ourselves to only two visits today, and for good reason: both were large facilities on the outskirts of Ho Chi Minh City, requiring about 4 hours of total time in the buses.

Our first trip (roughly 90 minutes) took us to one of the largest, if not the largest, shoe manufacturing plants in the world. Operated by a South Korean company, HWASEUNG, who operates plants from China to Detroit, it manufactures 1.45 million shoes each month. Yes, 1.45 million shoes – sneakers, specifically. That's a lot of feet. It's also a lot of plant – 1.6 million square feet – on 4.2 million square feet of land. And it's a lot of employees: 16,000. More on this in a minute...

We met first with Ky Lee, the head manager of the plant, who graciously hosted the entire class in their new, air-conditioned, state-of-the-art offices. We were joined by Ky's son, Hundee, who is applying to BU with the intention of attending next year! Clearly a smart young man. We were also joined by several people who report to Ky directly, from a variety of different countries (European and Asian).

After sharing a short video presentation on HWASEUNG's worldwide operations, Ky and his team spoke about the aims, goals, and output of the Vietnamese plant. This led to quite a few questions from our class- so many that it pushed back our next event, the factory tour, by about fifteen minutes. Normally, this wouldn't be a big issue, but when your tour starts by walking down the same road several thousand people used to reach the cafeteria right around lunch time, you've got a big traffic jam on your hands.

Fortunately, the plant's workers seemed to enjoy seeing us as much as we enjoyed seeing them, and the delay wasn't significant. Once we got through the crowds, we traveled through multiple parts of the production process, seeing some truly gargantuan, modern facilities.

One common refrain we've heard from Vietnamese plant owners is that they get tired of hearing Westerners assume every southeast Asian plant is run by child/prison/slave labor. We were all fairly impressed with the conditions at HWASEUNG's plant, which was clean, well-lit, modern, and filled with employees who were ready to smile and make eye-contact while still displaying a high degree of concentration on their work. We also saw on on-site clinic providing healthcare and a modern cafeteria. The factory floors were not air-conditioned, but even in the US that's not too unusual. All of the design/planning offices were fairly cool.

However, you couldn't help but notice that most employees on the factory floor were young women, and while you did see men, they were much more likely to be in managerial roles.

Our hosts told us that the average factory employee makes $120 USD per month, inclusive of overtime, which (back of the envelope) works out to about $0.60/hour. We heard conflicting information on whether or not these jobs were highly sought by women in Vietnam, but they did seem like safer, better-paying opportunities than, say, farming in the rice patties or selling flowers in the streets of Hanoi, but even in our conversations with multiple people both in and outside of the factory, there wasn't a clear consensus on that. What we did hear over and over is that the Vietnamese were generally happy to have the foreign investment and plant development, and looked forward to the factory's planned ramp-up to 1.6 million shoes per month later this year.

We left the plant and headed off for lunch. At this point, still essentially in the countryside (though technically the outskirts of HCMC), our guide warned us four times that the restaurant we'd be visiting for lunch was not used to serving Westerners and that it may differ from our previous eating experiences in Vietnam. We didn't think this was promising, but the restaurant turned out to be fantastic, serving a giant, well-cooked, diverse meal in a modern, air-conditioned restaurant – complete with multiple flat-screen TVs playing some sort of Victoria's Secret-themed reality marathon!

From there, it was on to our final site visit of the trip: Intel. Intel is in the process of making the largest foreign direct investment in Vietnam ever: $1 billion USD. We had the opportunity to visit their brand-new, state-of-the-art plant, which opened its doors in July 2009.

After arriving, we were treated to an in-depth presentation that helped us to understand exactly why Intel had chosen Vietnam. In short: The Vietnamese government made an offer Intel couldn't refuse, beating lesser (and less eager) offers from India and China. And it was clear that Vietnam's government had gone to huge efforts to help Intel, helping them develop proper power and waste water facilities for their 500,000 square foot facility. With only 400 employees today (9% of whom are expats), they plan to be at full capacity of 4000 employees within 3-5 years, and will start officially shipping chipsets in July of this year. However, Intel was also clear about the challenges they've faced, notably in recruiting qualified engineers in Vietnam, despite the company's formidable internal education and training offerings. For example, right now every engineer is shipped to an Intel facility outside Vietnam for training, and every employee receives English language training, as Intel's official language is English.

Touring Intel's giant (but still mostly empty) offices, we were impressed by how much Intel in Vietnam looks exactly like Intel in Santa Clara – same cubes, same chairs, same breakout rooms ("Play", "Moms", "War Room", etc.), same language. And our hosts stressed that Intel would make all of the same benefits available to employees in Vietnam as they did to employees elsewhere in the world. It's clear that Intel is not a company looking to adapt to Vietnam's local environment as much as they are importing an entire ecosystem into Vietnam. Like HWASEUNG, they are building a profitable, productive mini-state in the far reaches of HCMC offering thousands of employment opportunities for the local workforce.

Finally, touring Intel's production floor (no photos allowed!) we learned all about the challenges of developing a clean-room for chipset manufacture. With a clean room that is eight (American!) football fields long, Intel could not find the expertise required for the construction in-country and choose to bring a Japanese contracting firm in instead – something else with which the government immediately agreed.

It was time to head back to Saigon and a good debrief with Professors Menezes, Suarez, and Russo at the Caravelle. Our teams then met individually to prepare for our final (really final!) presentations on Saturday, and then headed to dinner on the town. Many in the class wound-up, in all places, at the Hard Rock Café in Saigon. Yes, you read that right – the Hard Rock Café. I've never visited one before, but I'm pretty sure it followed the US model closely: classic Rock memorabilia, American burgers and beer, and rock-n-roll music. One thing I'm sure other Hard Rock Cafes don't have is an all-Vietnamese band performing surprisingly good covers of "Highway to Hell", "Sweet Child O' Mine", "Paradise City", and (wait for it) "Stairway to Heaven", and I'm pretty sure I saw about half of EMBA dancing at one point… if only I could find pictures to prove it…!

Tomorrow: A few hours for shopping in Saigon, and our final Capstone presentations.

1 comment:

Daniel said...

One can clearly see that the white shirt and tie (fashionably plaid)dress code applies far from home!