Economic Crisis – The Collapse of Business Trends

1. At the end of 2006, I attended a stock training course that was starting to become a trend in society and the business world. In class, I was surprised to see many of my colleagues who were directors of the companies I attended. During breaks, everyone told spectacular stories about equitization and listing. A director that I met again after a few months boasted: “I have equitized the company, selling stocks makes my hands tired!” When asked why my hands were tired, “It’s simple, my husband and I would come home at night and sign stocks, and the next morning people would line up to buy that “piece of paper”!” The price kept increasing 5, 6 times, then buying and selling at 8, 9 times, and even the director didn’t understand why they were so “crazy”! A few months later, that director friend listed the company on the stock exchange. The price was sky-high! The couple happily just took out the surplus to spend, that was enough to make them happy, no need to do anything. At the end of the year, where will the dividends be distributed? Then they will also take it from the surplus to distribute! The fat will fry it, who told them to just rush in… After a while, I heard people say that he had to hire strict security for his two children because the shareholders kept asking for “meat”. It was not so happy!

At that time, I had a thought, now that the trend of going public, maybe after a while it will be the trend of going public. In 2008-2009, the first hit to go public was when the market fell miserably. At that time, the macro impacts that were not logically correct saved the market a little. But the hit in 2010-2012 made the market collapse completely. At the time when even the butcher in Cho Hom played the stock market, now the stocks are cheaper than the onions in the street market. Shareholder confidence is lost, employees who bought preferential shares are mistreated, company assets are cheaper than ever, … And now the directors are wringing their hands in boredom thinking of ways to “exit the floor”. A wave of companies leaving the stock exchange is about to happen!

2. Another director friend who studied in the same stock class as me, previously had a small garment factory, a few dozen workers also studied the stock class with me. After a few months of meeting again, he gave me a new name card with the word “GROUP” in large letters and said: I’m a Group, sir, 8 member companies, operating in many industries and professions with thousands of employees, … Then I will go public, the director friend continued, but he didn’t bother with the complicated domestic HOSE, HNX, but was considering the Singapore, Kong, and even American floors to make it worthy! Not only that friend, a series of large and small State-owned companies, or even very small private companies, appeared with the name of Group. 2 million is enough to establish a Company, so a group of 20 companies only costs 40 million, which is too cheap! A lawyer friend who specializes in consulting on business establishment said that out of 10 new companies now, 9 are shares and 6 of them want to be named Group.

Then the profits of the small sewing factory of the above director became the main source of income for the Group. Less than a year later, the Group collapsed! The trend of Groups leaving their main fields of operation to invest in other industries gradually collapsed. Companies either went bankrupt or hurriedly returned to their core fields of operation. Not only private companies, large State corporations such as Vinashin, Vinaline, etc. left and other State corporations hastily decided to stop the pilot as announced by the Government a few days ago.

3. In the past, the elders said that no matter what you do, you must have some land. Nothing is better than land! Therefore, every company and corporation must have a real estate project, any company without real estate cannot show its class! And even all the people rushed into land. A country with an average income per capita of less than 1,000 USD/year, meaning that it would take 100 years of fasting and fasting for people to have enough money to buy a low-end apartment. Yet there are 100,000 apartments in Hanoi and 80,000 apartments in Ho Chi Minh City, all of whom are mostly investors and speculators, not to mention that projects that “ride the tiger’s back” still produce more apartments every day!

Foreign financial and real estate institutions predict that in 7 years, Vietnam will not be able to consume all the “inventory houses” today. The bubble will rise and then burst. And it is about to burst, leading to a tragedy for the entire economy, which economic experts predict will not be able to recover in 10 years. Now, anyone who hears about land will shudder!

4. Then there is the story of banking, any tycoon who does not get involved in banking investment is not a tycoon. But where does one get money to do banking? So they open it and just fry it with its fat and then rotate the people’s deposits through subsidiaries by issuing bonds. Then the mobilized money is thrown into land, thrown into minerals, hydropower, cement, gold, … until they all collapse, it is revealed that many banks have lost all their charter capital for a long time! This story of many small banks now is exactly like the operation of Nguyen Van Muoi Hai and Thanh Huong perfume in the 80s of the last century!

5. Finally, the story of football investment, “The tycoon and football”! The tycoons take “virtual profits” from land, from banks, to spend tens of billions of “real money” each year to raise a football team to “be equal to the big brothers and sisters”. Then when the land freezes, the banks are piled up with bad debts, and they don’t know where to find money to continue raising the football team. A trend of abandoning everything and running away is happening and we don’t know how to organize the 2013 V-league season and certainly the 2014 season will be much more miserable!

And there are many other stories about the type of investment following the herd trend such as minerals, steel, cement factories, hydropower plants, etc. This is also a lesson from the time of the newly transformed market economy. All values ​​are turned upside down. People don’t know what the standard is and just rush into one movement after another like moths to a flame. Collapse, break, fall apart… then sit on the ruins and wonder what to do! It’s simple, the butcher should go back to the butcher shop, the tailor should rebuild the sewing workshop,… And securities, real estate, banking companies,… should stick to their core direction. You have to find the core of your work, if you haven’t found it yet, you have to try to find it and stick to it, to use Steve Jobs’ words.

The interview answer of “tycoon” Dang Thanh Tam a few days ago at the National Assembly meeting said it all: “I just wish to go back to the old days. I’m not the only one, the other guys on the list of the richest people on the stock exchange also dream of the same thing. In the old days, we worked less, had less debt, and didn’t have to worry about debt. Wishing like that is like saying that you can go back to a broken pig trough, but that trough is yours, which is better than living in a luxurious castle that isn’t yours, and having to worry about it.”

Yes, Dang Thanh Tam’s saying is the solution for Vietnamese businesses right now: return to your “pig trough” even if it is broken!