Power and Asian Business

This is Part 3 in a short series on Power in Business. Read the previous part here.

When I first arrived in Saigon, my boss told me a story. He knew a man — a foreigner — who ran some factories in the South of Vietnam. This was by all accounts a successful businessperson. He had a trusted lieutenant: a local Vietnamese.

In the late 2000s, if you were a foreigner, you needed a local partner to incorporate a company in Vietnam. Often these were service providers, charging you a fee to register and then maintain the business license, with a local, silent partner — a random person — sitting as director in your corporate entity. The man set up the company in this manner.

The man built up his business for seven years, with this Vietnamese lieutenant as his right hand man. At the end of the seven years, the businessman chose to go back to his home country. He decided to transfer the silent partner portion of the business to the lieutenant. On paper, the businessman still owned the majority of the corporation; in practice, this was an act of total trust because it gave the lieutenant the keys to the entity. And to be clear he did trust in this lieutenant — after all, in all the years that they’d worked together, this man had conducted himself well. They were effectively co-founders; he was there from the beginning.

So the man transferred the ownership and left the country. And then the lieutenant ran away with all the money in the business. My boss laughed when he told me this story: “You gotta give it to the guy. He must’ve been waiting for years!”

What lessons would you have drawn from this story?

Perhaps you shouldn’t trust the locals? This is silly — it is very difficult to do business without trust, and not every person is untrustworthy.

Make sure you have airtight contracts? But this is Vietnam, and so good luck — in many cases contracts aren’t worth the paper they’re written on.

Perhaps you should only do business with people you can trust? This goes without saying, but bear in mind this man absolutely trusted his lieutenant — and the lieutenant had given him no reason to think otherwise in the seven years that they’d worked together.

No, I think my boss told me this story for two reasons:

1. First, he was trying to communicate to me that this was Vietnam, and such things can happen. If they happen, you should expect there to be no recourse.
2. More importantly, I think he wanted me to think through what I would do if I were put in this situation. He knew that I was likely to encounter business experiences of the same type, if not the exact same kind.

It’s been a number of years now, so I’ve had plenty of time to think about the embedded question. It took me a year to work out my first solution. This was around the time I started developing a better articulation of power — some of which I’ve put into this series.