American involvement in Vietnam, part II: prospects for U.S. business in a new era

Business Horizons, March-April, 1995 by Clifford J. Shultz, II, William J. Ardrey, IV, Anthony Pecotich

Nevertheless, American corporations will have difficulty converting existing brand loyalties in the electronics industry, for example, or perhaps even in the personal computer industry. Still, American firms have (at least) two advantages over other players. First, many American products are simply perceived to be superior to many other non-American products. Second, the Vietnamese government is keen to establish mutually beneficial commercial ties--and therefore implicit political ties--that will enable the United States to serve as an important counterbalance to the emerging political clout of historical regional nemeses China and Japan.

This tendency for the communist Vietnamese government to see America as a potential political ally may seem extraordinary (and more than a little ironic) to most Americans. Yet to the Vietnamese, the realpolitik of a new era requires good relations with the United States. Twenty years after the fall of Saigon, such vision is both economically and politically expedient. Consequently, some projects have been earmarked specifically for American concerns. For example, Vietnam has long favored U.S. investment in its oil fields; it keeps an eye on China's claims to some choice fields and again welcomes U.S. investment, as much for strategic political reasons as immediate economic value.

Other Opportunities

Finally, the authors have observed a rapid growth of import-export businesses and cash businesses such as hotels, restaurants, and car rentals, many of them managed by Viet Kieu. These companies are reshaping the commercial and physical landscape of urban Vietnam because they often provide services to other investors and deep-pocketed expatriates, and because the return on investment is relatively quick. Generally, however, companies would be well advised to think in terms of long-run returns on investment rather than aiming for the "quick hit."

One of the most striking outcomes of Vietnam's renovation is a feeling of rebirth shared by almost every Vietnamese we have encountered. Indeed, the eagerness of the people to improve their country, their enthusiasm to learn how to accomplish that goal, and the role they expect American business to play in the process are remarkable. With the mutually beneficial support of foreign partners, the nation's prospects are promising, and most Vietnamese consider American businesses to be among the most desirable partners. Many sources say American investment is welcomed for its own sake as well as to balance Chinese and Japanese investments in the region, but investors should also note that most Vietnamese genuinely like Americans as well as American products.

Before the embargo was lifted, a steady flow of businesspeople, U.S. lawmakers, diplomats, and academics visited the major cities and assured themselves that (a) Vietnam was committed to reforms and (b) the benefits to U.S. firms outweighed any ideological differences with the Vietnamese government. Nevertheless, business managers with high expectations may be disappointed if they expect quick returns from their investments. Prudent investors have learned that respect for the following factors is required for any successful operation.