Why Vietnamese SMEs Underpay for Strategy, Then Overpay for Execution Mistakes

We have sat in this meeting many times. A founder, somewhere between the second funding round and the third product line, has two quotes on the table. One covers a full brand strategy engagement. The other covers a logo, a website, and a set of templates from a production studio, at a fraction of the price. The founder taps the first quote and asks the question we have learned to expect: “Can we skip this part and go straight to the design?” It is a fair question. The design is visible. The strategy is a document. And the budget is finite.

So the strategy line gets cut, the visible work ships, and for a while everything looks fine. Then, somewhere around month eighteen, the same founder comes back. The website needs rebuilding because the sales team stopped sending people there. The packaging is on revision seven because nobody ever agreed what premium meant for this brand. Three account managers are presenting three different companies to the market, all with the same logo.

Here is the pattern underneath all of it: every brand budget pays for strategy. The only variable is when. Pay at the start and the money buys direction. Skip that payment and the same money leaves anyway, later and larger, dressed up as correction.

This runs across the Vietnamese SME sector at a scale that makes it a national cost rather than an agency complaint. Vietnam has more than 900,000 active enterprises, over 97 percent of them small and medium sized, together contributing around 45 percent of GDP. When a segment that large keeps buying execution before direction, the waste compounds across the whole economy.

The instinct behind the pattern is rational, though. That is what makes it stubborn. So before we get to the receipts, it is worth understanding why cutting strategy feels like the smart move in the room.

Four forces are at work, and none of them involve bad judgment.

The first is that procurement logic prices artifacts. A logo has a market price you can Google. A packaging design has one too. A positioning decision arrives as a PDF, and a PDF looks like something the team could have written on a good afternoon. Buyers compare what they can see, so the deliverable with physical form wins the budget and the thinking behind it gets valued at zero.

The second is cash. SMEs make up nearly 98 percent of Vietnamese enterprises but hold under 30 percent of total operating capital, and SME lending reached only about 17.6 percent of outstanding credit in 2024. A company running on thin working capital spends on what ships this quarter. Strategy pays back over years, and a tight P&L has no patience for years.

The third is supply. Vietnam has one of the region’s deepest pools of affordable design talent. That abundance is a genuine advantage, and it also anchors the visible price of brand work low. Strategy has no equivalent street price, so when it shows up on a quote, it reads as markup.

The fourth force is the founder themselves. In most Vietnamese SMEs the founder is the strategist, whether the org chart says so or not. Paying an outsider to make brand decisions feels like paying twice for the same job. And here is the thing: the founder usually does hold the strategy. In their head. In fragments. Unevenly distributed across whoever has been in enough meetings. What never gets bought is the version everyone else can execute against.

Each force is real. Together they produce a market that treats direction as a luxury and correction as a cost of doing business. Vietnam’s own business history shows what that trade costs, and some of the receipts are painful to read.

Start with trademarks, because they put a hard number on the gap between deciding early and correcting late. Registering a mark in a target market costs a filing fee and a few weeks of paperwork. It may be the cheapest strategic decision in all of branding. Some of Vietnam’s proudest brands skipped it, and paid in years.

Trung Nguyên entered the US in 2000 through its American distributor, Rice Field, which then quietly registered the Trung Nguyên trademark with US authorities. When the company went to register its own name in 2001, it discovered the name was already taken, and found itself unable to advertise in the market it had just entered. Founder Đặng Lê Nguyên Vũ called it a huge loss, a blow that came out of the blue. Getting the name back took roughly two years of filings and negotiation. Two years of a blocked market, legal fees, and a founder’s attention, against a filing that would have cost less than a single shipment of coffee.

You would expect the lesson to stick. Two decades later, ST25 rice won the World’s Best Rice award, and its creator never registered the name abroad. Four US companies then filed to trademark it in the American market. The product had already done the hardest part. It won on quality, on the world stage. The unprotected name handed the commercial upside to whoever reached the filing office first.

Phú Quốc fish sauce shows the ending nobody wants. Thai businesses registered the name and exported the sauce to the United States and the European Union, and Vietnamese efforts to regain the rights came to naught. The correction window closed for good. A name built by generations of families on one island now earns for someone else in two of the world’s largest markets.

On paper these are trademark cases. Look closer and each one is the same event: a market entry executed before the groundwork for that entry was done. The shipping happened on schedule. The deciding never did.

Trademarks show what happens when groundwork gets skipped. Món Huế shows what happens when execution money arrives faster than proof.

Anyone who lived in Saigon through the 2010s remembers the chain. By 2015, investment totaling 65 million dollars had funded a seven-fold expansion of Huy Vietnam’s outlets, from 14 restaurants in 2014 to 110 by the end of 2015. Close to a hundred new locations in a single year, each with its own fit-out, staff, and lease. Meanwhile accumulated losses reached 107 billion dong as expansion costs outran revenue. When the chain closed overnight in October 2019, suppliers gathered outside the headquarters holding banners, investors who had put in more than 70 million dollars since 2013 took the founder to court, and more than 1,500 people lost their jobs.

We want to be fair here, because sophisticated readers know this story has layers. The lawsuit alleges fraud, irregular transactions, and a falsified financial report. Governance failed alongside everything else, and no positioning workshop prevents fraud. But one strategic lesson stands on its own, separate from the courtroom: tens of millions of dollars bought physical scale before the format had proven it deserved scale. Execution spending has no natural ceiling. Only a strategic gate gives it one, a tested model, a defined proof point, a decision about what must be true before the next tranche deploys. Without that gate, capital converts directly into square meters of unproven concept.

Most SMEs will never raise 70 million dollars. The mechanism scales down without changing shape. Ten new SKUs launched before the first three found their buyer. A second city entered before the first turned profitable. A rebrand rolled across every touchpoint before anyone tested whether the new position converts. Same missing gate, smaller invoice.

The cost of skipping upstream decisions has a mirror image, and someone measured it. McKinsey tracked the design practices of 300 publicly listed companies across countries and industries over five years, scoring how rigorously each treated design and customer decisions as management decisions. Companies in the top quartile grew revenue 32 percentage points faster and shareholder returns 56 percentage points faster than industry peers over the period, and the result held across medical technology, consumer goods, and retail banking.

The detail that matters for a budget meeting sits below the headline. Differences between the fourth, third, and second quartiles were marginal. The market disproportionately rewarded companies at the top. In other words, half-committing to upstream rigor bought almost nothing. The return concentrated entirely among companies that treated brand decisions with the same discipline as revenue and cost decisions.

This also explains something xolve hears often from founders who feel burned by past investments in branding. A little strategy, bought reluctantly and applied partially, performs about as well as none, and the owner concludes strategy does not pay. That reading mistakes a dose-response curve for a verdict. Below the threshold, it does not pay. At full dose, it doubles the growth rate.

Strip away the frameworks and the deliverables, and strategy, properly bought, does one thing: it removes decisions the company would otherwise make over and over.

A positioning decision touches the website, the sales deck, the packaging, the pricing logic, the hiring profile, and the media plan. Make it once at the top and every downstream execution inherits the answer. The web team builds against it. The design studio produces against it. The new sales hire pitches against it. Skip it, and each of those parties decides alone. The web vendor guesses. The freelancer interprets. The sales team improvises. Every guess that misses gets corrected at that party’s hourly rate, and the corrections never converge, because there was never a single answer to converge on.

That, at the invoice level, is what brand fragmentation actually is: the same decision purchased eight times from eight vendors, each version incompatible with the last. It also helps explain a symptom visible at national scale. Vietnamese brands continue to carry lower valuations than brands from several Southeast Asian neighbors, even as Vietnamese firms compete on quality and cost across the region. Brand value accrues to consistency compounded over time. A market that buys execution first keeps resetting its own compounding.

The standard way to evaluate a strategy quote is to compare it against a design quote. That comparison is broken at the root, because the two numbers buy different things. The honest comparison is against the cost of deciding twice.

The exercise takes an afternoon. List every brand touchpoint shipping in the next twelve months: website, packaging runs, sales collateral, trade booths, recruitment materials, campaign assets. Against each one, estimate what it costs to redo it once, in production fees, team hours, and delay. Add up the column. That figure is the exposure carried by every positioning and architecture decision left unmade, because unmade decisions still get made, implicitly, inconsistently, and per vendor. Every founder we have walked through this lands at several multiples of any strategy fee they have ever been quoted.

Then apply one sequencing rule: nothing ships until the decision it depends on is written down and signed. Written down matters more than it sounds. A direction that lives in the founder’s head has to be re-extracted for every brief, and every extraction is a fresh chance to drift. The document is the difference between owning a strategy and being the only person in the building who can approximate it.

None of this requires a heavyweight engagement to start. It requires the order of spending to change. Decide, then produce. The trademark filing, the market test, the positioning document, the message house, all of it belongs before the first invoice for anything visible.

Every company pays for strategy exactly once. Pay early and you buy the decision. Pay late and you buy the same decision, plus the full cost of every version that shipped without it.