Economic News

Mr Truong Dinh Anh (middle).

Renovating businesses with new leadership

The hottest topic in business newspapers these days is the resignation of the CEO of the Corporation for Financing and Promoting Technology (FPT) Truong Dinh Anh.

The news has caught the special attention from the public because FPT is considered the leading information technology group in Vietnam, while Truong Dinh Anh is one of the most famous portraits of FPT, who, in the eyes of FPT’s President Truong Gia Binh, is a young talented person.

High hope was put on Truong Dinh Anh when the owners of the group appointed him the CEO more than one year ago. FPT not only wants to be known as a big Vietnamese information technology leading group, but also as a big conglomerate in Forbes’ top 500.

Though describing Anh’s leave as a “serious loss” for FPT, this is really a necessary move. The signs of turnover and profit downturn have caused worries to the leaders of the group.

Vimedimex, a pharmacy company, last week released the resolution of the extraordinary shareholders’ meeting which said that the whole management team has been replaced in a plan to reform the company.

The shareholders’ meeting held on September 21 decided to dismiss all the members of the board of directors and elected new members. After that, the newly elected board of directors announced the dismissal of CEO and chief accountant.

The decisions were made after the company underwent the worst business quarter in the last many year. VMD lost 2.1 billion dong in the second quarter of 2012, while the debts have increased and the stockholder equity has decreased by 10 billion dong.

In a similar move, the board of directors of Vigatexco, a garment company, has change the whole management crew of the company, removing Nguyen Viet Cuong from the post of Chair of Board of Directors from September 17, 2012, and removing Nguyen Viet Cuong from the post of CEO from October 1, 2012.

Two weeks before, An Phu Radiation Joint Stock Company dismissed the general director because the company could not fulfill the business plan. In the first six months of 2012, An Phu made a modest profit of 6.43 billion dong, far below the goal of 29.8 billion dong targeted by the company in 2012.

The Viet Hai Shipping and Real Estate Company in late August also announced the changes for the posts of CEO and President.

A lot of other companies have also shown the new faces for the CEO and president posts, including the ones operating in the fields of construction, banking and securities.

Making changes, waiting for improvement

Vietnamese listed companies have never before witnessed such big changes with their personnel. The information about the changes in the leadership of companies came rapid-fire before the shareholders’ meeting season at the beginning of the year. Continued changes were reported in March – May, and then in August and September.

It is obvious that the tendency of changing management teams has only been growing recently, when the national economy fell into recession, thus putting big difficulties for enterprises’ operation. The unsatisfactory business results have prompted the businesses’ owners to change their staff in a hope to improve the situation.

Commenting about the tendency, economists say the renovation is inevitable. When the national economy enters a new stage of development, businesses also need to renovate themselves to get adapted to the new circumstances.

Changing the way of corporate governance, and replacing the leaders proves to be the quickest way to do this, though changing horse in midstream is the taboo for enterprises.

Business at standstill, bosses change managers to escape from misfortune