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A performance booster for SOEs – McKinsey & Co.

Some SOEs in emerging markets are closing the gap with their private-sector competitors. Petronas, the state-owned energy company in Malaysia, for example, began an operational excellence campaign focusing on improved technical capabilities and a more effective working culture at its plants. After five years, the initiative delivered upward of $1 billion in savings and new revenues. What’s more, the company’s operational effectiveness, judged by a metric combining utilisation, quality, and performance, is now in the industry’s top quartile. While these better-performing companies draw from well-known best practices in the private sector, they also concentrate on three areas of specific importance in the public sector. These are clarifying objectives and securing an explicit mandate, focusing scarce resources on areas with the highest financial impact and redefining the talent proposition. Governments play a big role in creating the right environment for SOEs to excel.

“A performance booster for SOEs,” McKinsey & Co, July 2012

The unlearned lesson: Vinashin, VinaLines, and other SOEs’ inefficiencies, Saigon Times, May 26, 2012

Additional background

According to the Committee for Enterprise Reform and Development and the Ministry of Planning and Investment, state-owned enterprises hold 70% of the total real property in the economy, account for 20% of investment capital throughout society, and devour a staggering 60% of the credit in the commercial banking system, 50% of state investment capital and 70% of official development aid capital.

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Wal-Mart Faces Risk in Mexican Bribe Probe – Wall Street Journal (FCPA)

Wal-Mart Stores Inc. faces significant legal risks after it disclosed that it is investigating its operations in Mexico for possible violations of the U.S. law that prohibits bribery in foreign countries, legal experts said.

The NYT published a mammoth report this weekend that reads like a John Grisham novel and concluded that “bribery played a persistent and significant role” in the company’s growth in Mexico. Wal-Mart sent its own investigators to Mexico in 2005 and “they found a paper trail of hundreds of suspect payments totaling more than $24 million.” The lead investigator recommended that Wal-Mart expand the investigation, but instead, Wal-Mart’s leaders chose to shut it down.

In December 2011, Wal-Mart, the world’s largest retailer, disclosed in a Securities and Exchange Commission filing that it was conducting an internal investigation into a potential violation of the Foreign Corrupt Practices Act, but didn’t say where or give other details. It now says that it also met with SEC and Justice Department officials around that time to alert them to the probe.

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Apple Nagivates China Maze – Discloses Major Suppliers List, Factory Inspections Report


Firm Details Labor Conditions as Unruly Fans Mar Beijing Debut of New iPhone

Apple Inc. is increasingly finding itself pinched between the promise and perils of doing business in China.

That challenge was thrown into sharp relief by a pair of developments Friday. Under pressure from activists in the U.S. and abroad, the company released a 27-page report detailing working conditions throughout its supply chain, which sprawls throughout Asia, but especially China.

The report followed an unexpected fracas outside an Apple store in Beijing, after fans couldn’t get their hands on the latest iPhone.

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A $ 3 billion fine for GSK isn’t the whole story

Nov 9, 2011. GlaxoSmithKline announced it would try to settle a series of federal investigations by paying a $ 3 billion fine. If the company can resolve the matter with the Justice Department, it will represent the largest single fine ever assessed against a pharmaceutical company, exceeding the $ 2.3 billion Pfizer paid in 2009.

The optimistic note for the future is that GSK’s chief executive, Andrew Witty, has apparently decided to end the company’s longstanding pattern of violations and, it is hoped, start a clean slate that renounces off-label marketing and several other practices. Most of the ongoing offenses started well before Witty assumed the company’s top position and some sources there claim the settlement will allow him to impose a new, more ethically appropriate culture at GSK.

At the same time, a background review of the Justice Department’s investigation remains highly astonishing because the settlement covers the way GSK handled a wide range of business on all its best-selling drugs for more than a decade.

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China issues fresh warning regarding exploration in South China Sea

Singapore (Platts). Nov 1, 2011. China has issued yet another warning to another oil company regarding oil and gas exploration activities in the disputed South China Sea—this time directed at US oil major ExxonMobil.

“Any foreign company shall not engage in oil and gas activities in waters under Chinese jurisdiction. This position is clear and consistent,” Chinese foreign ministry spokesman Hong Lei said at a regular briefing on Monday.

Late last week, ExxonMobil announced that it had discovered hydrocarbons in August in a well drilled off the coast of central Vietnam.

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Bosch achieves robust growth in Dong Nai, Vietnam

HCMC, Oct 3, 2011. Robert Bosch Vietnam has obtained a remarkable growth rate, ranging from two to three digits in the year to date and it plans to expand its production in the domestic market, the company reported in a ceremony to launch its latest products and creative solutions last Friday held in HCMC.

Vo Quang Hue, the company’s general director, said car components and after-sales service sections have maintained steady growth with three digits, while sales growth of security system and parts of handy electric equipment is recorded with two digits.

Bosch obtains high sales in Vietnam in a number of products compared to other markets in Asia.

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Taking care of Representative Office operations

Sep 25, 2011. KPMG’s advisors Nam Nguyen and Hoang Anh Tuan provide valuable insights on what representative offices need to know to ensure they stay within the law in Vietnam.

A representative office (“RO”) is a popular form of business presence of many foreign investors in Vietnam and is commonly used by many foreign investors or traders as the initial vehicle to enter Vietnam’s market. RO operations have proved to be effective and efficient for the purposes of operation management, facilitating trade and relationships with customers and government.

By regulations, the activities of an RO is restricted to auxiliary activities in nature such as conducting market surveys, collecting market information relating to the products or services provided in Vietnam by the parent company it represents, acting as a liaison conduit between the parent company and its business partners in the Vietnam. It facilitates business negotiations and contracting for the parent company. An RO is specifically prohibited from engaging in any direct profit-making activities. In other words, an RO is a cost centre, not a profit centre, and it must not generate any revenue in its own right. This prohibition is often stated explicitly in an RO’s licence.

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PetroVietnam Eyes Conoco’s Vietnam Assets

HANOI—Vietnam Oil and Gas Group and its partners are considering buying ConocoPhillips’s stakes in three oil and gas projects off the coast of Vietnam, according to the country’s state-run oil company, also known as PetroVietnam.

PV Oil’s remarks come at a time when ConocoPhillips is expected to give investors an update on its three-year restructuring plan presented in late 2009 and expanded this year. The plan includes selling up to $ 17 billion in assets.

Conoco Senior Vice President of Planning and Strategy Alan Hirshberg has said in a May the company was looking at leaving countries where it has a small presence.

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Intel Products Vietnam looks for domestic suppliers

HCMC, Jun 22, 2011. Intel Products Vietnam is searching for more domestic suppliers to increase the ratio of local content in its products that are assembled at Saigon Hi-Tech Park (SHTP) in HCMC.

Some 50 domestic enterprises joined a seminar held on Tuesday as part of a cooperation program between SHTP and the world’s largest chipmaker to develop a local supply chain for Intel, and supporting industries for hi-tech firms at SHTP and in the city as a whole.

Nguyen Hoai Huong, manager of purchasing at Intel Vietnam, said at the seminar that her company had plans to increase the percentage of locally made materials for its products and spend more on local supply.

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Vietnam’s Appeal Diminishes as Labor Strikes Increase

Jun 16, 2011. Japanese motor maker Minebea Co. chose Cambodia over Vietnam to build a plant for 5,000 workers in a sign growing labor disputes are hurting Vietnam’s appeal as a low-cost alternative to China.

“A strike would be trouble,” Yasunari Kuwano, a spokesman at Tokyo-based Minebea, said of the $62 million plant, which will make electric motors for appliances and digital equipment. “Labor is the key focus for us in choosing Cambodia. We need reliable labor.”

As Minebea broke ground last month in Phnom Penh, London- based cable maker Volex Group Plc (VLX) and Japanese lingerie company Wacoal Holdings Corp. (3591) were among investors in Vietnam that faced illegal wildcat strikes. Workers are demanding better pay after the highest inflation rate in Asia hurt their purchasing power.

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