A positive impact
The Unilever Vietnam case study, published in 2009, helps show how corporate investment can drive growth, help accelerate social and economic development, and improve livelihoods in the country.
Deeply rooted presence
Vietnam's Central Institute for Economic Management (CIEM) – a think-tank under Vietnam's Ministry of Planning and Investment – has studied Unilever Vietnam as a model of foreign direct investment. CIEM aims to help the government design better policies for multinational companies to operate within, and how best to harness that investment to generate growth, jobs and wealth.
Selected because of its strong position as a leading and successful foreign investor in the country, Unilever Vietnam is the market leader in many of its categories. Brands sold by Unilever Vietnam cover our whole portfolio in foods (Lipton, Knorr), home care (OMO, Surf, Sunlight) and personal care (Clear, P/S, Sunsilk, Ponds, Lifebuoy and Dove). It is also a substantial taxpayer in the country, with total sales representing 1% of Vietnam's GDP (gross domestic product), and directly employing 1,200 people and creating up to 8,000 indirect jobs.
The study looks at the impact of Unilever Vietnam in three key areas since it began operating in the country in 1995:
- impact of operations: The most important impacts that Unilever Vietnam makes on society are those through its direct business operations
- impact through the value chain: Wider direct and indirect impacts along the value chain. The study focuses on those small and medium-sized enterprises that manufacture Unilever Vietnam's products, together with suppliers, distributors and consumers
- voluntary contributions : Voluntary contributions made to the community and wider society, often in partnership with not-for-profit organisations.
According to the report, "the company's social and community strategy aims to use its core competencies, including its brands, scale, people and market presence, to help address the country's key social concerns and problems." It highlights several key findings:
- Unilever Vietnam is a long-term investor, who has been deeply rooted in the economy, having strong forward and backward linkages and, by and large, serving domestic consumers. The company recognises that it will prosper if Vietnam grows well and vice versa.
- The Unilever Vietnam case is a real model of a constructive partnership and efficient collaboration between a multinational company and local businesses, which results in a win-win situation for both sides.
- Through coaching and training by Unilever Vietnam personnel, the small and medium-sized enterprise partners obtain necessary skills, experience, techniques and working discipline to become even more efficient and competitive.
- 'Trickle-down' effects may be far-reaching, and are not only confined to capacity-building and technology transfer but also affect social and environmental areas. For example, where good conduct, influence and partnership requirements by the foreign invested enterprise have had the effect of raising awareness and improving the performance standards of local partners.
- By incorporating selected national priorities into the business agenda and implementing them, Unilever Vietnam has achieved a double target of advancing both national and corporate agendas.
- Unilever Vietnam does not forget to serve the needs of the poor majority who live in rural areas. The company has developed and is implementing a strategy to serve them based on detailed studies. Despite tremendous challenges, Unilever Vietnam is determined to be successful in this aspect of its business.
A key role
Pham LanHuong of CIEM, who is the team leader of the research, says: "Unilever has proven you can successfully incorporate a social agenda into a company's business agenda, helping to contribute positively to the socio-economic development of the country."
Marijn van Tiggelen, then Chairman of Unilever Vietnam, explains why socio-economic development is critical to Unilever as a business: "If Vietnam prospers, Unilever Vietnam prospers. Improving the well-being of the Vietnamese is central to Unilever Vietnam's growth and we are very proud to have played an active role in the overall socio-economic development of the country."
The research involved in-depth interviews with government officials, retailers, consumers, employees and other beneficiaries of the business.
This was the third time Unilever had been the subject of such research internationally, following on from studies by Oxfam in Indonesia and INSEAD international business school in South Africa (see download).
More recently, Oxfam conducted a two year research project, ’Labour Rights in Unilever’s Supply Chain’
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, which was published in early 2013. Oxfam used our Vietnamese operations as its main case study and made six recommendations for our business. These are based around supporting workers’ livelihoods, providing human rights training within the organisation, implementing more ways in which workers can raise areas of concern and working closely with suppliers and partners to ensure standards are met.
We are reviewing our Vietnamese supply chain in the light of the recommendations.
The report also has implications for our business globally. We are studying how we can promote sustainable livelihoods for all our workers and for those in our value chains, including reviewing our use of temporary workers. See Respecting human rights for more.