Doing business in the new Vietnam - Column

USA Today (Society for the Advancement of Education), July, 1994 by Llewellyn D. Howell

"Your Indochina no longer exists. It is dead," a girl tells her adoptive French mother in the film "Indochine." The Indochina of the 1930s - Vietnam, Cambodia, and Laos - was at the incipient stage of yet another revolution to throw out the foreign trespassers and make one more attempt to build a Vietnam for the Vietnamese. The soul of the real Indochina finally expired in flames in 1954.

Several new Vietnams have arisen from those colonial ashes. One was the Vietnam of conflict and war that lasted for more than 20 years after the departure of French colonial power. Another was an austere and retributive totalitarian state, focused strongly on cleansing itself of the foreign influences that had determined its destiny for hundreds of years. Those two Vietnams have shaped American thinking much more than the thousands of years of history that formed the underlying context for any of the Vietnams that have come in recent decades or will arise in the 21st century.

Now, those Vietnams are dead as well. That they exist no more is evident to anyone who walks the streets not only of Ho Chi Minh City, but also Hanoi in 1994.

By 1986, 11 years after closure was reached on the last of the foreign-dominated governments of South Vietnam, the Vietnamese government began implementing measures to alter radically the direction the economy had taken under a rigid Marxist philosophy. Almost overnight, vibrant entrepreneurial activity reappeared throughout the nation, although much more strongly in the south. Investment and property laws quickly began changing and messages of welcome were communicated to foreign investors throughout the world.

Vietnam and the Vietnamese government have recognized the need for an interrelationship with that world of foreign influence they so strongly fought for so many years. They also have reflected a confidence and sense of independence that probably has not existed in Vietnam since before the coming of the French. Once the door to the outside was opened, it was not just a crack, but nearly all the way. With the 1994 lifting of the U.S. embargo of Vietnam, it might be argued that now the door has been taken off its hinges.

While there has been a surge of U.S. firms into the Vietnam market since the lifting of the embargo, much remains to be done for American companies to capture a substantial share of either the investment opportunities or the sales market. While U.S. businesses were forced to sit on the sidelines during the period of the embargo, companies from other countries have jumped into the Vietnamese market, including some that America ordinarily would not have considered to be its rivals. Among the top 10 investing nations in Vietnam, as of mid 1993, were Singapore and Malaysia, both of which have been the targets of U.S. investors in the past. Now, they have become competitors of American businessmen in those parts of Asia that are the production, resource, service, and sales opportunities of the next decade.

Much opportunity does remain, if only Americans can break through the stereotypes that have been shaped by many decades of isolation and opposition. In the Ho Chi Minh City area, the largest potential market in Vietnam, nearly I 00% of homes are wired for electricity. More than 60% contain color televisions, slightly fewer own radios, and nearly 50% have VCRs. More than 75% of households in Ho Chi Minh City own a motorcycle, and 80% have bicycles. All of these represent sales and service opportunities for U.S. companies that thus far have not been capitalizing on this market.

Vietnam's people tend to be industrious, highly skilled, welleducated, and determined. Under its new free market orientation, Vietnam again has jumped into the forefront of agricultural production. It now is the world's third leading exporter of rice. Other natural resources remain untapped, but human resources seem to be critical in the nation's future.

It is important to be clear that business ventures in Vietnam aren't without their risks and difficulties. A number of obstacles still pose challenges. Banking and financial institutions remain weak and inadequate. They must be strengthened, including efforts by foreign institutions. Infrastructure also is inadequate and weak throughout the country. American road building companies especially are being sought by the Vietnamese government.

The legal structure remains weak despite regular efforts by the Vietnamese government to bolster it and make it more secure in terms of investor needs. Land and equipment valuation has been a matter that has been addressed only in recent years, and much needs to be done. Trained management staff and focused industrial skills are areas that demand immediate consideration. As is the case virtually everywhere in Asia, corruption must be addressed, and American investors, in particular, must give concerted attention to problems that can arise in this situation.

Despite these difficulties and warnings from those in the business sector whose attitudes have been shaped so strongly by the years since 1949, the prospect for investment in Vietnam and progress by the Vietnamese are among the greatest in Asia. A 1993 East-West Center survey shows that U.S. companies focusing on Asia have established that only China, Indonesia, and Thailand exceed the opportunities to be found in Vietnam. While traditional investment targets such as Malaysia, Taiwan, South Korea, and Singapore all remain viable in many respects, the emerging Vietnamese market will be the highlight of the early 21st century in the region of the world that will dominate the future of the global economy.