Vietnam HR Summit - Rethinking business strategy to align with AEC Delivered by MR LE TRI THONG, DCEO, Prudential Vietnam

1. Rethinking business strategy
to align with AEC
Le Tri Thong
25.11.2015

2. The rise ofASEAN:A new economic giant
12420
($T)
Mexico
ASEAN 0.7
Spain
Canada
Italy
China
France
UK
Germany
Japan
USA
#10
2050
($T)
India
Italy
Russia
Brazil
ASEAN 2.4
UK
France
Germany
Japan
China
USA
252050
France
($T)
Canada
Brazil
Russia
UK
Germany
ASEAN 5.1
India
Japan
China
USA
#7
#5
2003 2013 2020e

3. Key drivers for AEC economic growth
Share of global flows in manufacturing and trading
Source: McKinsey Global Institute 2014

4. Key drivers for AEC economic growth
The urbanization and its derived economic activities
Source: McKinsey Global Institute 2014

5. Key drivers for AEC economic growth
Disruptive technologies to transform society
Source: McKinsey Global Institute 2014

6. TheASEAN Consumer: The new booster engine
120M to join ASEAN middle and
affluent classes by 2020 ...
... mostly driven by
Indonesia, Vietnam, Philippines, Thai
land and Myanmar
310
0
100
200
300
400
Population (M)
Mass and affluent
population
2020e2013
190
Increase in mass
and affluent population
+~120M
+60M
+18M
+16M
+13M
+4M

7. ASEAN integration:An opportunity with new realities
78%
GrowthCompetitionCapability
68%
65%
Ease access to ASEAN talent
Simplify product and service offerings
Make ASEAN companies more competitive
63%
Decrease logistics and transaction costs ASEAN 58%
Boost internationalisation of ASEAN companies 71%
Attract more foreign competitors 67%
Increase competitive intensity 82%
Boost trade between ASEAN and other regions 73%
Stimulate growth in home market 63%
Stimulate overall growth in ASEAN 82%
Agree
ASEAN integration
as an opportunity
Expected impact from ASEAN Integration
Source: BCG 2014 global ASEAN survey

8. Not everyone is expected to win
23% 62% 10%
Multinational companies (MNCs) 2% 2% 67% 29%
ASEAN Regional Champions 1% 1% 53% 44%
Domestic SMEs 19% 62% 18% 1%
Mid-sized companies 9% 50% 39% 2%
Domestic Champions 5%
Clear WinnerLoser WinnerClear Loser
Source: BCG 2014 global ASEAN survey

9. Overall
78%
2
7
49
29
49 45 54 54 60
39
41 40 27 27 10
Indonesia
45%
9
33
6
Vietnam, Phili
ppines, Myan
mar
70%
10
81%
2
MNCs
85%
Thailand
81%
10
SingaporeMalaysia
90%
Sentiments vary between countries
Significant opportunity Somewhat of an opportunity Somewhat of a threat Significant threat
42%
9%
Perception of ASEAN integration as opportunity or threat
Source: BCG 2014 global ASEAN survey

10. Increase penetration of existing ASEAN markets
Companies are getting prepared
MNCs: focus on
getting better market
access
Regional Companies:
focus on
organizational
capabilities for
international growth
Expand globally & enter more ASEAN markets
Invest in better understanding of other markets
Adapt go to market models
Adjust products/services
Internationalise organisation
Grow M&A/JV capabilities for ASEAN
Invest in international talent
Improve international supply chains
Increase ASEAN manufacturing
Domestic
Companies: focus on
improving operating
model
Adjustments companies are making over the next 3 years to prepare for ASEAN
integration
1000 60 8040 (%)
DomesticMNCsRegional
Source: BCG 2014 global ASEAN survey

11. Companies are getting prepared
65% of companies are planning to expand their footprints in ASEAN
65
34
25
51
54
35
21
14
Exhibit 3 | Two-Thirds of Companies Plan to Expand Their Footprints in ASEAN
Will your company reduce, maintain, or expand its
footprint in ASEAN in the next five years?
Respondents‟ current presence in ASEAN versus their expected
presence five years from now
1
Respondents citing their companies‟
plans for their footprints in ASEAN (%)
CurrentASEAN presence
of respondents, by type
(%)
Expected ASEAN
presence of respondents,
by type (%)
Expand footprint
Reduce footprint
Maintain current footprint
Regional Emerging Domestic
Source: BCG ASEAN Economic Integration Survey, April 2014.
Note: “ASEAN” refers to the ten member states of the Association of Southeast Asian Nations. Each company‟s ASEAN footprint was determined
by a score calculated on the basis of the company„s degree of penetration in seven key ASEAN markets: Indonesia, Malaysia, Myanmar, Philippines,
Singapore, Thailand, and Vietnam. A score of 1 indicated a “strong presence” or “very strong presence” in a given market; a score of 0.5 indicated a
“limited” presence or “somewhat of a presence.” An aggregate score was then calculated, and the company was assigned to one of three categories
that express ASEAN footprints: “domestic” indicates that a company has a presence in only one country; “emerging” indicates a presence in two to
four countries; and “regional” indicates a presence in five to seven countries.

12. ASEAN Labor: Growing labor force and increasing
productivity...
Improving educationGrowing labor force Increasing labor productivity
30 million joined the labor
force in the last 5 years
Five-year productivity
growth higher than
Mexico, Brazil, US
Among the top 200
universities globally

13. ... but still significant talent gaps
Example: Indonesia
20202011
1.0
1.5
–6%
2.0
0%
0.0
0.5
(Millions of people)
Demand
Supply
15
20
5
10
0
–13%
–56%
20202011
5
0
5%
–17%
20202011
25
20
15
10
With shortage of leadership
skills and global
exposure, quality gap is
larger than quantity gap.
Shortages in both quantity
and quality will worsen.
Quantity gap will come on
top of the quality
challenge.
Senior management Middle management Entry level
(Millions of people) (Millions of people)

14. Strategies for Vietnamese companies
Each company will have to make its strategic choices for the new games
Expansion - Growing
• Going out to expand
footprints to other
markets in AEC
• Accessing to the
regional resources pool
to bring the business to
the higher level of
development
• Joining the global value
chains to realize the
opportunities from the
integration
• …
Merger - Partnership
• Merge with regional /
international players to
become a member of a
bigger group
• Acquire existing
businesses in other
markets
• Participate in the
international strategic
partnership (or alliance)
to compete at regional
markets
• …
Defense - Divest
• Stay local and improve
the ability to defense
current local market
• Identify a niche market
to occupy and develop
the business in that
market
• Sell or divest the
business to “cash-out”
before the market-
share gets diminishing
• …

15. Implications to HR Strategies
No matter which choices are made,
people strategy is now at the front line of business strategies
Expansion - Growing
• Ability to recruit qualified
staffs and managers in new
markets
• Ability to manage the
diversity and complexity
• Ability to access and
compete in regional talent
pools to acquired new
talents / capabilities
• Readiness of work-force
and corporate capabilities to
be part of a global value-
chain
• …
Merger - Alliance
• The readiness of work-force
and corporate culture to
become a member of a
international group
• Ability to manage post M&A
business integration
• Building capabilities and
accumulating experience to
enter (or extract from)
international partnership /
alliance
• …
Defend - Divest
• Ability to retain qualified
managers and staffs in the
increasing competition at
home market
• Sharpening or sustaning the
special or unique
capabilities protect the
niche market
• Ability to support the
business leaders in pre-
M&A processes / increasing
the value of M&A deal
through increasing value of
work-force
• …

16. Thank you