Construction crane transforms into a phoenix, symbolizing corporate restructuring in Hanoi.

Is Corporate Restructuring the Answer? Unpacking Vietnam's State-Owned Construction Sector

Jordan Keane in Business & Economy August 2025 • 4 min read.

"A deep dive into the challenges and opportunities of restructuring state-owned enterprises, with lessons for businesses worldwide."

The restructuring of state-owned enterprises is a frequent topic in academic and business circles. While much has been written on the subject, less attention has been paid to the unique challenges faced by these organizations in emerging economies. This article will focus on the specific case of Vietnam, a nation that has undergone significant economic reforms since the late 1980s. We'll delve into the complexities of corporate restructuring within the country's state-owned construction sector, using VINACONEX as a case study.

Since the 'Doi Moi' (renovation) policy was introduced in 1986, Vietnam has transformed its economy from a centrally planned system to a market-oriented one, albeit with socialist characteristics. This transition involved restructuring the state-owned sector and opening the door to private enterprise, driving integration into the global economy. However, as Vietnam continues to grow and compete internationally, its businesses need to adapt to global standards of efficiency and cost-effectiveness.

Corporate restructuring is no longer an option but a necessity for survival and growth. State-owned enterprise (SOE) restructuring in Vietnam aims to concentrate state ownership in core industries while reducing state involvement in smaller enterprises. This involves converting SOEs into modern businesses capable of competing with multinational corporations. This article will explore the problems and issues related to the restructuring of VINACONEX, a state-owned construction company, and propose potential solutions.

What are the Key Challenges in Restructuring a State-Owned Construction Company?

Construction crane transforms into a phoenix, symbolizing corporate restructuring in Hanoi.

Organizational restructuring involves major changes to improve a company's efficiency and effectiveness. It means rearranging resources for better performance, whether it's through financial restructuring, portfolio adjustments, or operational changes. Corporate restructuring is about survival and proactively adapting to industry changes.

Miller and Friesen (1984) suggest that changes in the environment, technology, organizational growth, and leadership often drive restructuring. Massimo and Delmastro (2002) highlight the importance of adapting to advanced manufacturing technologies and modern human resource practices. King, Covin, and Heeley (2003) emphasize that a dynamic environment influences a company's strategies and its performance.

Financial Restructuring: Changing capital structure, recapitalizations.
Portfolio Restructuring: Refocusing on core business areas and changing the diversity of business.
Operational Restructuring: Reorganization and changes in business-level strategies.

A study was conducted with 398 respondents within VINACONEX to understand the key issues in its restructuring process. The results highlighted several important factors. The majority of respondents agreed that the restructuring was driven by the urgent need to overcome recession or avoid bankruptcy. They also emphasized the importance of focusing on core business areas related to the construction industry. This suggests that VINACONEX's restructuring was primarily a defensive move aimed at improving competitiveness and efficiency.

Moving Forward: Key Takeaways for Successful Restructuring

The study on VINACONEX offers valuable insights into the challenges and opportunities of corporate restructuring in state-owned enterprises. By understanding these lessons, businesses can increase their chances of success in navigating similar transformations and achieving sustainable growth in today's competitive global market.

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Everything You Need To Know

What are the primary goals of State-Owned Enterprise (SOE) restructuring in Vietnam, and how do they contribute to the country's economic development?

The primary goals of State-Owned Enterprise (SOE) restructuring in Vietnam are to concentrate state ownership in core industries and reduce state involvement in smaller enterprises. This shift aims to transform SOEs into modern businesses that can compete with multinational corporations. By doing so, Vietnam seeks to improve efficiency, attract foreign investment, and integrate more deeply into the global economy, ultimately contributing to sustainable economic growth and aligning with global standards.

How did the 'Doi Moi' policy impact the economic landscape of Vietnam, and what role did it play in the context of corporate restructuring, specifically within the construction sector?

The 'Doi Moi' (renovation) policy, introduced in 1986, was a pivotal moment that transformed Vietnam's economy from a centrally planned system to a market-oriented one. This transition included significant restructuring of the state-owned sector and opened the door to private enterprise. For the construction sector, this meant that companies like VINACONEX had to adapt to a more competitive environment. The policy's impact necessitated corporate restructuring to meet global standards, drive efficiency, and reduce costs, thereby ensuring survival and facilitating growth.

What specific types of restructuring were essential for VINACONEX, and how did these changes aim to improve its performance and competitiveness?

For VINACONEX, restructuring involved several key areas. Financial Restructuring, which included changes in capital structure and recapitalizations, was crucial for stability. Portfolio Restructuring, focusing on core business areas, allowed VINACONEX to streamline its operations. Operational Restructuring, with reorganizations and adjustments in business-level strategies, was implemented to enhance efficiency. These changes aimed to overcome recession, improve competitiveness, and align VINACONEX with global standards, ensuring its survival and growth in the competitive global market.

Based on the research conducted with VINACONEX, what were the primary drivers behind its restructuring process, and what key issues did the company face?

The study within VINACONEX revealed that the restructuring was primarily driven by the urgent need to overcome recession or avoid bankruptcy, which underscored the importance of improving competitiveness. Additionally, the research emphasized focusing on core business areas related to the construction industry. Key issues that VINACONEX faced included adapting to a market-oriented economy, competing with multinational corporations, and meeting the demands of global standards. The findings suggest that these challenges necessitated a defensive approach aimed at efficiency and ensuring long-term sustainability.

How can the experiences of VINACONEX provide valuable insights for other businesses globally that are undergoing similar transformations, and what are the key takeaways for achieving successful restructuring?

The experiences of VINACONEX offer valuable lessons for businesses worldwide navigating corporate restructuring. Key takeaways include the importance of understanding the drivers behind restructuring, whether it's to avoid bankruptcy or improve competitiveness. Focusing on core business areas, like the construction industry for VINACONEX, is crucial. Businesses should also consider financial, portfolio, and operational restructuring. Adapting to changes in the environment, technology, and leadership, as emphasized by Miller and Friesen (1984), is also vital. By learning from VINACONEX's challenges and strategies, businesses can increase their chances of successfully navigating similar transformations and achieving sustainable growth in today's competitive global market.