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Vietnam, the middle way.

The art of distinguish oneself

Keywords: competitive intelligence, Vietnam, strategy of power, influence, globalization,

economic independence, lobbying

Abstract :
In the 80's, Vietnam leave of more than forty years of war, the country was exhausted
and faces famine. In 1986, Vietnam launched a process of economic transition the Doi Moi
(renewal). That's when the country is engaged in reforms to restructure its regulatory
apparatus, administrative and gradually transform a centrally planned economy into a market
economy maintaining socialist characteristics. Between 2000 and 2005, growth in the
Vietnamese economy was the second fastest in the world (8.4%), with foreign investment
which has tripled in size. These results are not coincidental. For years, Vietnam has
experienced war and is determined to take advantage of this "knowledge". Thus in 1997, the
Vietnamese Communist Party translated Christian Harbulot’s book, Tech offensive and
economic warfare. Vietnam wants to set up a quest for power coupled with a policy of
economic security. The state apparatus turns to this desire dear to marxism: cope with
contradictions. Indeed, the Doi Moi is the mix of market economy and socialism. Likewise,
policy of openness must also be pursued, accompanying an "economic patriotism". It is
therefore necessary to understand how Vietnam seeks to develop a strategy for the power to
extend its influence, coupled with a strategy of influence based on the competitive advantage
of the country in order to better negotiate, cooperate and thereby preserve the best its
economic security. This strategy power begins with a commitment of empowerment towards
China and expansion of its activities globally. If the economic issue is important, it is not the
only one. Thus, Vietnam wishes to scale up its diplomatic weight, and successfully, within the
UN organizations. After long ignored, Vietnam will fully utilize its network of expatriates
that are the Viet Kiêu in two different ways. In one hand, to attract their capitals and have
them invest in their country of origin. On the other hand, they will become a true broadcast
network of knowledge for Vietnam, particularly in sectors such as new technologies.
Vietnam’s entry into the WTO will drastically change its political development. It sets up
many administrative reforms to attract investors and to distinguish from its Asian neighbors.

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A genuine policy of seduction is also being pursued, particularly in the direction of the
European Union and the United States highlighting its competitive advantages. At the same
time, the opening of markets requires Vietnam to change the habits of its industries. They
must come together to reinforce one facing the power of the big foreign groups, as in the area
of the bank, they must also put in place a number of professional associations to advise their
member companies in their new mode of development as in distribution. If the future is not
yet written, Vietnam seems to have a number of weapons that will make him a country with
which it will take in the future.

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Vietnam, the middle way.
The art of distinguish oneself

Thailand plants rice, Cambodia looks at it make,

Laos listening it grow, Vietnam sells it.
Southeast Asia dicton

What a journey made by Vietnam in recent years! This maxim is the proof. There is
still a little time, the Thais were not in that sentence, and the Vietnamese were the ones who
were growing rice. In the 80's, Vietnam leaves of more than forty years of war with France,
the United States, plus some skirmishes with its bordering countries such as Cambodia and
China1. The country is exhausted and faces famine. Supported by the Soviet Union since the
70's, Vietnam has no choice but to reform itself when it suspended its help in 1985 with the
introduction of perestroika (reconstruction). In 1986, Vietnam launched a process of
economic transition the Doi Moi (renewal) on the occasion of the 6th congress of the Socialist
Party Vietnamese. That's when the country is engaged in reforms to restructure its regulatory
apparatus, administrative and gradually transform a centrally planned economy into a market
economy maintaining socialist characteristics.
During the five-year period 1986 - 1990, the national economy has been restored step
by step, the annual GDP growth was of 3.9%. Between 1991 and 1995, Vietnam is out of the
economic crisis and the growth has become stable with a high rate (8.2% per year on
average). This growth was maintained in 1996 (9.34%) and 1997 (9%). For the same year,
ASEAN (Burma, Brunei, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and
Vietnam) as a whole has been unable to reach a rate of 4.9%. Between 2000 and 2005, growth
in the Vietnamese economy was the second fastest in the world, with foreign investment
which have tripled in volume and a significant reduction of poverty (58% of the population
considered poor in 1993, 29% in 2002 according to the World Bank). The number of sate
companies has been halved while the private sector is becoming more and more weight in the
national economy. These last 7 years, the number of private enterprises has increased from
15,000 in 2000 to 300,000 this year.

1
As a result of many Khmer Rouge raids late 1978 on border villages, Vietnam invaded Cambodia and installed
in Phnom Penh a government that is more favorable to itself. China supports Cambodia to attack then Vietnam
in 1979, but withdrew 17 days later after suffering losses estimated at 20000 men.

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(Billions of dollars) 2002 2003 2004 2005 2006 (p) 2007 (f)
GDP growth (%) 7,1 7,3 7,8 8,4 7,8 7,6
Inflation (%) 4,0 2,9 9,7 8,8 7,7 6,5
Public balance / GDP (%) -4,7 -6,4 -2,8 -5,9 -6,3 -5,5
Exportations 16,7 20,1 26,5 32,4 39,0 45,1
Importations 17,8 22,7 28,8 33,3 39,3 46,3
Trade balance -1,1 -2,6 -2,3 -0,8 -0,3 -1,2
Current account balance -0,7 -1,9 -1,6 0,2 0,2 -0,5
Current account / GDP (%) -1,9 % -4,9 % -3,4 % 0,4 % 0,3 % -0,7 %
External debt / GDP (%) 35,0 33,9 33,9 32,6 32,6 32,2
Debt services /Exports (%) 7,4 % 7,0 % 5,5 % 5,0 % 5,2 % 5,4 %
Reserve month import 2,0 2,4 2,2 2,6 2,9 3,3
(f) forecast Source : cofacerating.fr

And the forecast for Vietnam remain largely optimistic. Last July,
PriceWaterHouseCoopers ranked Vietnam 1st row of 20 emerging economies for investment
opportunities in the production.

Key indicators 2007 2008 2009 2010 2011 2012

Real GDP growth (%) 8.4 8.1 8.0 7.7 7.8 7.9
Consumer price inflation (av; 8.1 7.8 7.2 7.0 6.4 6.3
%)
Budget balance (% of GDP) - 2.1 - 2.4 - 2.6 - 2.9 - 3.1 - 3.2
Current-account balance (% - 1.7 - 2.1 - 2.3 - 2.6 - 2.0 - 1.5
of GDP)
Commercial banks' prime 11.5 11.7 11.3 11 10.8 10.8
rate (av; %)
Source : Economist.com

These results are not coincidental. For years, Vietnam has experienced war and is
determined to build upon this knowledge, reversing Michel Foucault as the aphorism of
Clausewitz "Politics is the continuation of war by other means. "2
Vietnam wants to set up a policy of economic security, coupled with a quest for
power. Thus in 1997, the Vietnamese Communist Party translated Christian Harbulot’s book,
Tech offensive and economic warfare3. The state apparatus turns this marxist desire to cope
with contradictions. Indeed, as we have seen the Doi Moi allows market economy and

2
Michel Foucault, Il faut défendre la société, Cours au Collège de France 1976, Paris, Gallimard, 1997
3
Christian Harbulot, Technique offensive et guerre économique, Paris, Editions Aditech, 1990.

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socialism to be assembled, policy of openness must also be pursued, accompanying an
"economic patriotism". But Vietnam must also be reconciled with its history and its people
including expatriate Viet Kiêu which has long been ignored, even rejected, because mainly
composed of South Vietnamese who have supported the Saigon regime. But Vietnam has now
needed them in its strategy of competitive intelligence networks.

We shall see how Vietnam seeks to develop a strategy for the power to extend its
influence in international markets, coupled with a strategy of influence based on the
competitive advantage of the country in order to better negotiate, cooperate and thereby
preserve the improve its economic security.

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I Vietnam, strategy for power

For a long time, Vietnam has been dominated first by the Chinese between the second
and the tenth century and then by France between 1859 and 1946 and then it is the beginning
of 30 years of war. Vietnam has always developed virulent nationalism, thanks to a strong
national cohesion, has always wanted to expand beyond these borders. If one takes the
definition of Raymond Aron, the power is the ability of a political unity to impose its will on
others4. Today, there is no question of war, but developing ways to influence international
opinion is more topical than ever. The desire for power is reflected in membership and the
rising power of Vietnam in a number of international organization, but also the mobilization
of its expatriate population, the Viet Kiêu.

1) How the Vietnam seeks to expand its influence

A) The relinquish guardianship of the "elder brother" from the North

Vietnam is aware that alone and isolated it can do nothing, especially against its
imposing neighbor China. China has always sought to dominate Vietnam, and if today the
domination is no longer the territorial5, a desire for economic domination and subjugation
remains. With the demise of the USSR, which has long supported and protected it from the
will of domination of its northern neighbor, Vietnam must find a way to counterbalance the
influence of China. He joined the Association of the nations of Southeast Asia (ASEAN) in
1995 hoping that this one could put pressure on China in the event of disagreement6. But
above all, this entry into ASEAN allows him to see that it has many shortcomings in its
educational system, leading to a lack of experts in international finance, computer science and
economics. These gaps prevent it from producing the necessary knowledge to the strategy of
economic and social actors in a national environment of globalization of trade and
competition. Vietnam will endeavor to catch up, particularly in new technologies.
The other discovery of Vietnam comes from the Asian crisis of 1997. Vietnam, even if
it was a country few incorporated into the regional economy, nonetheless felt the turbulence

4
Raymond Aron, Paix et guerre entre les nations, Paris, Calmann-Lévy, 1962.
5
Although even today, Vietnam and China are disputed part of the South China Sea, which is a major
hydrocarbon reserves including oil.
6
This strategy has worked at least once, since March 1997 the Vietnam fails to reduce Beijing on the
construction of an oil platform halfway between Vietnam and Hainan. She asked the intervention of ASEAN
which manages to reduce Beijing.

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of the Asian crisis7. And the collapse of many Asian economies makes him aware of its
integration in an interdependent world. In addition, China has shown solidarity with ASEAN
during the crisis by not devaluing its currency, and his political clout is reinforced within the
ASEAN which it is not a member. Vietnam then decided to establish a foreign policy
triangular between it, China and the rest of South East Asia whose goal is to preserve its
national interests. It then integrates Economic Cooperation for Asia-Pacific (APEC) in 1998.
On the occasion of the 70th anniversary of the Vietnamese Communist Party in 2000, the first
secretary of the Communist Party Lê Kha Phiêu, and thus the first man in the country, said:

"In this new era, we can no longer act as the nineteenth century… That's why it
should have mastered the new developments in order to propose strategies and
policies, and focus on economic development, in order to be able to guarantee a force
on alert, ready to respond to new developments complicated. "8

Vietnam is aware that if it wants to be able to develop its economy globally, it must
integrate the WTO. Indeed, pressures from China have already delayed a bilateral agreement
between the United States of America and Vietnam. Vietnam has signed its agreement with
the United States in July 2000, just months after China. Since its request for integration into
the WTO in 1995, Vietnam speed up the process and grew to become the 150th WTO
member in January 2007.

B) Winning an international recognition

Vietnam believes, rightly, that its influence can not be based solely on economic
progress, and that the diplomatic network is equally important. That’s why it develops an
unprecedented diplomatic activity in the UN organizations, reflecting the Japanese model.
Vietnam is then elected to the Intergovernmental Committee for the Safeguarding of the
Intangible Cultural Heritage. Vietnam becomes the only Southeast Asian member of this
committee. This one is responsible for the implementation of the UNESCO Convention for
the Safeguarding of the Intangible Cultural Heritage, adopted in 2003, largely at the initiative
of France. Its first task of preparing operational guidelines, particularly the mechanisms of
assistance and the criteria for entry. In the same year, Vietnam became the country's pilot

7
Cuong Lê Van, Jacques Mazier dir., L’économie vietnamienne et la crise asiatique, Paris, L’Harmanttan, 1999.
8
Nhân Dân, Hanoi, February 3, 2000.

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reform program of the United Nations9. Vietnam also actively campaigned for a reform of the
Security Council of the UN aimed at widening it and limited the possibility of using the right
of veto. By the same logic, October 18, 2007, Vietnam after an intense lobbying became a
non-permanent member of the Security Council of the UN for the term 2008-2009 and will
preside over the Council in July 2008. Remember that the presidency of the Security Council
is responsible for setting the agenda, directing meetings and propose open discussions on
topical issues.
Within this framework to promote its image abroad, Vietnam also decided to relax its
pressure on issues related to religion. Thus for the first time in 2005 the Vietnamese Buddhist
monk Thich Nhat Hanh is allowed after 39 years in exile to return to Vietnam to give lessons.
The State, at its request, even authorizes the translation and publication of some of his books,
until now banned in Vietnam. In the same context, for the first time in January 2007,
Vietnamese Prime Minister met the Pope to discuss religious freedom for Catholics residents
in Vietnam10.

But this diplomatic offensive to extend its influence is not enough to Vietnam. It has
another advantage in international markets that it has largely neglected, or even rejected, its
diaspora. Vietnam chosed to adopt a new strategy and relied on its expatriates, the Viet Kiêu,
to expand its influence and to gain in power.

2) The Diaspora Viet Kiêu, became a central part of economic development

The World Bank estimates that about 150 million people are expatriates in the world.
Recognizing the new role that these expatriates can play, the developing countries put in place
policies to capture the tangible and intangible resources that they can bring to their countries
of origin. The diaspora becomes a true instrument of competitive intelligence11.

9
The pilot program "A single United Nations" will include at least five countries. It is not intended to enhance
coordination, but to form a single entity in each of these countries. Experience Vietnamese include six agencies
(UNICEF, UNDP, UNFPA, UNIFEM, UNV and UNAIDS), and others should commit themselves to participate
or cooperate in the near future. The plan "A"single UN" proposes that the UN agencies have formed a single
team, in order to avoid fragmentation or duplication.
10
Vietnam is predominantly Buddhist (Mahayana), there is however a strong Roman Catholic minority of 4.5
million followers. The second in Asia after the Philippines.
11
Pedro Mendes Santos, Diasporas, Réseaux Sociaux et Intelligence Économique : La Valeur Ajoutée du
Capital Social Ethnique, Report of Master 2 under the Yann Bertacchini’s leading, 2007.

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A) A network that participates in the growth of foreign investments

There are about 3 million Vietnamese living in nearly 86 countries. The largest
communities are located in the United States (1.1 million), France (250000) and Canada
(200000). On average each year, about 500000 Viet Kiêu returning to Vietnam to see their
family. Over the past decade, the sending of foreign currencies by the Vietnamese abroad has
increased, the amount rose from 35 million dollars in 1991 to 1.75 billion in 2000, through the
banking system and companies money transfer. There are also an estimated 2 billion dollars
crossing through "suitcase carriers" during stay in the family12. This year, the journal of
Finance of Vietnamese Ministry of Finance estimates the annual income of Viet Kiêu in the
world at 30 billion, an amount greater than the national GDP, while the annual transfers of
Viet Kiêu in Vietnam would be the around 3 billion. In the last table on the index of
globalization, Vietnam is the 15th of 72 countries in sending money from the diaspora to their
country of origin13.
Since the law on investment in 1996, the Viet Kiêu have begun to invest in Vietnam.
Through the repatriation of capital to the attention of their families and the financing of small
enterprise or small family business, the Viet Kiêu play an increasingly important role in the
Vietnamese economy, even if the potential that it represents yet appeared until recently
underexploited. The Vietnamese government has taken measures to increase the flow, and in
1999, it decided to exempt from income tax individuals receiving foreign currency from Viet
Kiêu.

But another aspect to remember, beyond the payment or the attraction of foreign
investment, is the promotion of exports from the country of origin and penetration of
enterprises in the country of origin to the host country. Thus, in 2001, two clubs for
businessmen Viet Kiêu were established - one in Ho Chi Minh City and one in Hanoi - to
promote investments of the diaspora in Vietnam, creating opportunities for exchanges trade
between their enterprises and the Vietnam and finally encourage the transfer of know-how.

B) The cornerstone of knowledge transfer

Initially, the Vietnamese authorities were reluctant to this kind of initiative and has
discriminated against them, considering the Viet Kiêu at best as foreigners, at worst as

12
Far East economic review, September 21, 2000.
13
A.T. Kearney, Globalization Index, 2007.

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"traitors social imperialist from regime in Saigon." Their attitude has changed now aware of
the role they can take in the Vietnamese system. Thus in 2004, the report by Minister of
Foreign Affairs Nguyen Dy Nien stressed that the Vietnamese Communist Party always
claimed its 10th congress that:

"These compatriots abroad are an inseparable part and a driving force of the
Vietnamese people."

In recent years, about 200 intellectuals, scientists and experts in economic

administration were invited each year, either by the government or by local authorities and
various research institutes, as a teacher or as a consultant on projects scientific or economic.
For some people, motivated by a strong sense of patriotism, the desire is great to contribute to
rehabilitation of the country, supported by the feeling of having to pay something to the
nation. By creating first companies or subsidiaries in Vietnam, the Viet Kiêu have to a lesser
extent that foreign investors for the sole purpose of coming to a profit in Vietnam. Their
location is not only guided by the low cost of labor and the logic of profit. The ICT sector is
quite characteristic of this support Viet Kiêu to Vietnam's development.
The Vietnam believes, rightly, that its growth and economic independence through the
development of ICT in the country. According to statistics from the Department of Science
and Technology in Ho Chi Minh City, some 300,000 Viet Kiêu currently work in many areas
including edge industries or advanced technology. In the United States, 10,000 Vietnamese
are working in the Silicon Valley and many entrepreneurs in high-tech are Vietnamese. They
are the third foreign community working in this sector. A number of them decided to return
the country to develop and transmit their knowledge of the area. The Service of Ho Chi Minh
City of Science and Technology Policy also applies policy likely to use the knowledge of Viet
Kiêu, even if they have not returned to the country. For this service, the Viet Kiêu do not
necessarily need to work in an institute of Vietnam, but they can conduct their research in
another country and send the results. This may leave a blurred border with industrial
espionage.
This policy of "reinstatement" has accelerated since 2006 when Ho Chi Minh City has
launched a program of action to encourage Viet Kiêu to contribute to the development of their
hometown, with a range of policy priorities for them. Since June 2006, Ho Chi Minh City will
participate in up to 50% to the cost of transport of cultural products in their intent. This is one
of 9 regulations recently issued by the municipal People's Committee with the aim of

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encouraging contributions from them to build their hometowns. The Department of Justice of
the municipality has also been assigned the task of completing the formalities and solve the
demands of Viet Kiêu on matters relating to nationality, marital status, inheritance,
marriage… The Services Municipal Police and Customs also are required to perform the
activities of residence registration, the issuance of the temporary residency permit,
repatriation, Investment Viet Kiêu and customs formalities during visits. The committee in
charge of municipal affairs for Viet Kiêu is seen as a crossroads for trade between South
megacity and them. He is responsible for concentrating the knowledge held by the Viet Kiêu.
If Ho Chi Minh City was, as often, the forerunner in this area, the state has decided,
too, to participate in this political seduction of its expatriates. Since September 2007, the Viet
Kiêu are exempt from the visa requirement. Beneficiaries of this exemption are holders of
foreign passports with Vietnamese nationality or are of Vietnamese origin, as well as
foreigners who were married to Vietnamese or children of Vietnamese living abroad or finally
people Vietnamese origin who hold a foreign passport. The indictment visa exemption will be
valid for 5 years, and allow the Vietnamese holders of foreign passports to make multiple
entries in Vietnam. In a meeting with Viet Kiêu last July in Italy, the Deputy Minister of
Foreign Affairs, Nguyen Phu Binh, also chairman of the committee in charge of overseas
Vietnamese, has stressed that :

"The decision to exempt visa Vietnamese foreign nationals and their families
would encourage them to return to the country of their ancestors, including would
impetus their contributions to the work of building and developing the country."

During these multiple trips, the president of Vietnam Nguyen Minh Triêt meet
increasingly Viet Kiêu and encourages them to return regularly to Vietnam to invest, transfer
their skills and learning Vietnamese language to their children.

Vietnam has finally turned the page of the rejection of its diaspora and put in place a
real policy of resorting to it, with a will, making a network of resources and influence in the
whole world. But its main asset in which it struggles with other countries based on the
competitive advantage of the country in order to better negotiate, cooperate and thereby
preserve its best economic security.

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II Vietnam, between openness and protectionism

For the period 2007-2010, the international groups have marked Vietnam in the top 10
of the estimated global economies more attractive to businessmen. According to the annual
report of the United Nations Forum on Trade and Development (UNCTAD), the efforts made
by Vietnam, China, India and Indonesia in improving their infrastructures and the strong
growth their economies would allow the entire Asian region to attract more foreign direct
investment in the coming years.

1) Developing strategies of influence based on differentiation

A) An administrative reform to distinguish itself from its Asian neighbors

With its administrative reform and stability of its economic growth, Vietnam has
become a popular destination for foreign investors. The organization by the Vietnam of the
last Asia-Pacific Economic Cooperation (APEC) in late 2006, saw the presence of senior
leaders of member economies and more than 1,000 managers of multinational corporations. It
was an excellent opportunity to present the reform policies, strategies and the potential socio-
economic development of Vietnam. This lobbying has paid off since dozens of agreements
and contracts for several billion dollars have been signed. This was also an opportunity to
distinguish itself from its bulky neighbor, China. Thus, a survey by the Japanese Agency for
Trade Promotion (JETRO) found that 66.2% of Japanese companies operating in Vietnam
were profitable, compared with 54.2% of those that have operations in China. Robert B.
Zoellick, President of the World Bank, during his recent visit to Vietnam was of the view that
the Vietnam experience could be beneficial to other developing countries. And so, the
Organization for Economic Cooperation and Development (OECD) recently released the
ranking of countries facing the risk of loans. This time, Vietnam has seen a progression, from
the 5th group at the 4th group. It is noteworthy that last March, the Ministry of Finance sent a
delegation with the task of presenting, organizations risk assessment credits of the OECD, the
economic situation in Vietnam. End 2006, the agency already appropriations Standard &
Poor's has reassessed to lower the risk of loans to Vietnam. In March, Moody's has also
reassessed to lower the risks for government bonds in foreign currencies in Vietnam.
Vietnam has thus managed to be noticed in the transparency of information about
loans. In 5 years, the economies in the world have implemented nearly 500 reform measures,
including 200 in 2006. Following this trend, Vietnam is the 6th largest in the world for the

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transparency of information about loans. The report on the investment environment14 of 178
economies in the world, cited Vietnam in the list of economies that have undertaken extensive
reforms in improving information about loans. According to Sin Foong Wong, national
director of the International Finance Company in Vietnam, co-authored the report:

"Vietnam has reduced its gap with the economies in the region such as China,
Malaysia indicator in the launch facility business"15

The 2nd strong point deals with the fiscal priorities. If the normative level of taxation
is 28%, the Vietnamese government has implemented a program of priorities for enterprises
in terms of income tax. This program provides an exemption from income tax for 4 years for
companies, as of the completion of the first profits. For the next 7 years, the tax burden that
businesses have to pay that amount only half the normal level of income tax for a business.
The tax on corporate income remains at an estimated 10%, 15% or 20%, depending on the
sector, in the form of investment and the resort. However, aware of these shortcomings,
Vietnam has planned to continue many reforms. To become an industrialized country by
2020, the Ministry of Industry and Trade prposed 4 steps:
• First, the ministries must complete the legal system and management mechanisms.
There is a need to simplify red tape, reduce the length of the surrender of the license
for businesses, create a pleasant environment and equal opportunities to investors.
• Second, the country must focus on its products competitive. For example, the sectors
of textile and footwear will develop luxury goods and new models. As for the
processing sector, producers will be subject to the regulations on food safety. For other
sectors, new technologies are the basis of this development.
• Thirdly, it’s necesary to continue reform of state-owned enterprises, offer more
support to small and medium enterprises, mobilized more investment from all
economic components, especially from abroad.
• Finally, companies must improve their competitiveness by increasing productivity,
product quality and reducing some production costs.
14
World Bank, Doing business 2008, septembre 2007.
15
Ngân Huong, CVN, 2007/09/28. However, entrepreneurs lament the deadline for completing the formalities
tax, 130 days on average. The high cost for the launch business representing 20% of income per capita national
(640 dollars). For this indicator, Denmark ranks first, with zero percent. The percentage of Vietnam is more
important than China (8.4%), Singapore (0.8%), Thailand (5.6%) and Malaysia (18.1%), but less than the
Philippines (26.8%), Indonesia (80%) and Cambodia (190.3%). The current mechanism for a declaration of
bankruptcy for companies demand a lot of time (5 years) and money (15% of the total value of goods), but the
rate of recovery of property remains modest (18% of assets).

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But Vietnam has many other comparative advantages, particularly as compared to

other Asian countries. The first highlight of Vietnam concerning the workforce.

B) Many competitive advantages to distinguish itself from its Asian neighbors

The average wage of workers in factories is $ 200 per month, while managers or
engineers get about 1,500 dollars.Vietnamese employees work 48 hours a week. The payroll
taxes represent about 25% of wage costs. In China, the working week is 40 hours and social
costs amount to 50-60% of wages to the workers. Furthermore, according to Alex Bryant,
president of the organization East West Associates (EWA) Vietnamese workforce is well
educated and has a good sense of work. The average age of workers is 24 years and more and
more people of working age are able to use English as a 2nd language.
In addition to this advantage, Vietnam also has an infrastructure that is developing
very rapidly to meet the growing demands from foreign contractors. The Vietnamese
government is committed to developing the infrastructure, especially the water system,
electricity, port facilities and telecommunications. Thus, for a connection to the electricity
network, it takes an average of seventeen days in Vietnam, against twenty-three days in
Thailand. The installation of a telephone line takes nine days in Vietnam against a fifteen days
in Thailand. These last 2 years, Vietnam has invested about 10% of its GDP in infrastructure
development. Beginning 2012, improvements to seaports in deep water and maritime
transport are planned. The country's competitiveness would be enhanced as compared to other
countries in the region. This training will help investors to enter other markets of ASEAN,
China, but also the market for North American countries.
Last strong point, Vietnam has set up several industrial zones (IZ). The rental price of
land in these IZ is appropriate (20-25 $ / sqm) with a lease of 50 years. For IZ which have
modern infrastructure, the price is a little higher and reached 40 $ / sqm. Nearly 5.7 billion
dollars of capital were recorded in the IZ last year, double that of 2005. The southern
provinces of Bà Ria-Vung Tàu, Binh Duong, Dong Nai and Ho Chi Minh City are the most
attractive, with 213 projects for 2.58 billion dollars. This figure represents about 60% of total
foreign investment in the IZ.
All the spotlight allows Vietnam to distinguish itself from the major economic powers
such as the European Union (EU), which is not only an important partner in Vietnam's
external relations, but also an ally of trade and economic front row. The value of bilateral
trade, reached last year 10 billion dollars. The EU ranks 3rd in the list of countries and

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territories investors in Vietnam, with a total fund of 7.4 billion dollars. All quotas applied to
the Vietnamese textile products imported into the EU have been removed. The EU continues
to be an important trading partner of Vietnam and also the second major importer of
Vietnamese products, behind the United States. In 2005, the value of bilateral trade has
reached 8.1 billion, or 27 times more than in 1990 and twice in 2000, including 5.45 billion
exports. In the year 2010, the country table on 7.5 -8 billions of dollars in value for export to
the EU. A Vietnamese product which has a right of entry into the EU can then more easily
enter any other country in the world. Europe represents an important market for Vietnam for
various reasons. However, in addition to the benefits that the EU created to facilitate trade, it
is also considered the most difficult and led "the cradle of the trial of dumping."16 In 25 trials
involving these types of products imported from Vietnam, the third concerned the EU. The
Vietnam will set up a board of international trade early 2008, which will focus on the case of
anti-dumping. This council, is managed by the Chamber of Commerce and Industry of
Vietnam and facilities of global competitiveness, the armed wing of Vietnam to foreign
countries. It will include a consultative body, a technical assistance team, a group of experts
and lawyers, and an association of representatives. The council will create a website database
antidumping, offering consultations to companies and associations involved in cases of
dumping and train consultants. This Chamber of Commerce and Industry of Vietnam and
facilities of global competitiveness is more or less the equivalent of the Jetro in Japan or the
MOFTEC in China.
Europe is far from being the only courted by the Vietnamese leadership. The visits
abroad of delegations of the Party, state and government, particularly that of the United States
president, Nguyen Minh Triêt, have also helped to trigger new waves of investment in
Vietnam. Since the entry into force of the Agreement on Trade Vietnam-États-Unis, bilateral
trade continues to grow from 7.8 billion in 2005 to 9.7 billion dollars last year. In addition to
2.3 billion dollars in investments that put the United States at the 8th largest investor in
Vietnam, many contracts of bilateral cooperation between enterprises of 2 countries were
signed: the oil group Chevron and the oil and Gas Vietnam (PetroVietnam), between
Microsoft and the Bank of Agriculture and Rural Development of Vietnam, between
Motorola and the Group of Posts and Telecommunications of Vietnam (VNPT), between the
company and SSA Marine General Navigation Company seaborne Vietnam (Vinalines), the
Chamber of Commerce and the United States Chamber of Commerce and Industry (VCCI)

16
L.B. Hà, CVN, October 5, 2007.

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Vietnam… The President of the Council of Trade ASEAN-États-Unis, Matthew Daley
believes that Vietnam is a promising market not only for the import-export sector but also for
that service, said President's. According to him, in a little over a decade, the United States
could be included on the list of 5 leading investors in Vietnam.

However, this openness to globalization, in particular through its accession to the

WTO, led the Vietnam also put in place the means to secure its economy and companies face
the country and foreign companies.

2) Organize security of the assets of the companies

One of the consequences of integration into the WTO is opening up to competition in
the market for services.

A) Joining forces to defend the service sector

Thus, Vietnam allowed, as of April 1, 2007, the professional activities of banks with
100% foreign capital, foreign financial companies, companies leasing-finances.... Faced with
competition from the foreign banks, domestic banks are opting for alliances to expand their
market share. In addition to the alliances between banks and credit organizations are also
cooperating with the powerful economic groups to diversify their business. The creation of
the financial and banking groups in an economic holding was the theme of an international
seminar recently held in Hanoi. Indeed, the country still lacks a banking and financial group,
even modest in scope, said Vu Dinh Anh, of the Institute of Financial Sciences (Ministry of
Finance), adding that the fact that an economic holding to create a group specializing in
finance and banking meets international practice. The merger between business and the
banking sector, financial, it constitutes a good solution for competition at the national,
regional and global levels17. The Commercial Bank global oil stock (GP Bank) illustrates this
type of merger. This bank is the result of an alliance between the bank Toàn Câu and the
Group of oil and gas in Vietnam (Petro Vietnam). Founded in 1993 the GP Bank has been
able to install 18 branches throughout the country18.
Vietnam is expected to see the birth of 2 or 3 banking and financial groups, with the
merger of several large commercial banks. According to statistics, the money market and
credit of Vietnam includes 5 commercial banks-state, 35 commercial banks by shares, 6 joint

17
Thuy Tiên, CVN, September 18, 2007.
18
1 euro = 23 780 dong vietnamien (VND)

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ventures banking and 35 subsidiaries of foreign banks, not counting boxes of credit and
finance companies domestic and foreign. Four major state banks (Bank of Foreign Trade of
Vietnam, Bank for Development and Investment, Bank of Agriculture and Rural
Development, Bank of Commerce and Industry) took 81% of the market for loans in dôngs
and 53% of the market for loans in foreign currencies. The subsidiaries of foreign banks
accounted for 4% of the loans in dôngs and 20% of the loans in U.S. dollars. The Bank of
Commerce stock Saigon (SCB) has decided to establish a strategic cooperation with the
Agriculture and Agricultural Development (Agribank).
But the banking sector is not the only department concerned, the Vietnamese market
of insurance is just as subject to the new international competition. Vietnam's commitments
on the insurance industry on the opening of the market to foreign firms, made in the
framework of the WTO, will be effective from 1 January 2008. According to the Ministry of
Finance, the domestic insurance market has 37 branches, spread across all economic. There
are 3 state-owned enterprises, 16 companies, 4 joint ventures and 14 to foreign capital 100%,
which must be added 37 representative offices of foreign insurers. If Vietnamese companies
dominate at the moment the insurance sector other than life insurance (95% market share),
life insurance is however dominated by foreign companies who share 62.5 % of the market.
This is partly explained by the fact that only three companies have set up a management
company funds and 2 others just are publicly traded. Gaps which impair their ability to
mobilize funds. Before 2003, the insurance market had experienced a growth rate of 50% per
year. For 3 years, it is saturated with an annual growth rate of only 16%. The development
strategy in this sector expected to grow 24% per year. In 2010, it will contribute to 4.2% of
GDP, compared with 2.13% currently.
With this growing market, we see the growing presence of bankers. Beginning 2007,
the Bank of Foreign Trade of Vietnam (Vietcombank) and the Bank of Southeast Asia
(SeABank) have made their entry into the life insurance market. This trend is reflected in the
creation of insurance agencies dependent on banks and closer cooperation between bankers
and insurers. An obligation to cope with foreign companies. The GP Bank (Bank Global
Petroleum) should multilateral cooperation with the General Insurance Company oil.
Similarly, the Bank of Agriculture and Rural Development of Vietnam continues to cooperate
closely with the Insurance Company of Vietnam (Bao Viêt).

Beyond the services, the property market is also going to be increasingly challenged,
as large-scale distribution, which is in the line of fire from international groups.

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B) A lack of culture of mass distribution and intellectual property
In its latest study on the attractiveness of countries for global retailers, the firm AT.
Kearney was awarded in Vietnam the 4th place of his classification19. The estimated growth
of the distribution is 20-30% global retailers, including the total shopping malls, supermarkets
and superettes who are already 10% of total goods for sale. Prior to the entry of Vietnam to
the World Trade Organization, several major retail chains were already operating in the
country: Metro Cash & Carry (Germany), Bourbon (France), Parkson (Malaysia Lion Group),
Zen Plaza ( Japan), Diamond Plaza (South Korea) ... They currently hold 10% share of the
domestic market. Yet for the moment in this sector, foreign countries may not have that 40%
of the equity joint ventures. Beginning 2009, the creation of enterprises to foreign capital
100% will be allowed. Also Wal-Mart (USA), 1st worldwide distributor, Carrefour (France),
the 4th World Tesco (Britain), 6th World, South Asia Investment (Singapore) and Dairy Farm
(Hong Kong) are preparing their entry into the market Vietnamese. To prepare for this
change, the Vietnamese businesses wishing to improve their competitiveness.
In this context, the Association of Vietnamese businesses to large retailers in born on
October 16 last and includes 130 members. Its role is to advise the government in regard to
policies in the distribution sector. The Director General of the first group of distribution of
Vietnam Phu Thai believes that if Wall-Mart20 opens a chain of 10 supermarkets in Vietnam,
approximately 80% of Vietnamese businesses retail sales should submit their balance sheets.
Since 4 years, the model of alliance in the retail business has been applied by the group
Vinatex and the company Hapro. One example of success of the union is the creation of the
Company stock investment and development of the distribution network in Vietnam. This
company is the result of cooperation between 4 distribution companies: Hapro, Phu Thai,
Compagnie General for Trade of Saigon (Satra), Union of Cooperatives of Ho Chi Minh City
(Saigon Co.op). The entry into the WTO need to accelerate this reaction to the strike force
foreign companies. The Ministry of Industry and Trade has prepared a strategy for the
development of domestic trade for the next ten years. According to the plan, 15 local
distributors would benefit from investments so that they can compete with international
giants, although some already have their own networks, as Saigon Co-op Mart, which is based
on 16 supermarkets and 12 shops. Continuing its expansion, it plans to show in 8 years
teaches his sign in almost all cities and towns of Vietnam.

19
A.T. Kearney, Growth opportunities, for global retailers, 2007.
20
Wall-Mart displays an annual turnover of 3 times greater than the gross domestic product of Vietnam.

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However, if the size and experience are an advantage, for many Western companies
the issue of intellectual property arises when they want to expand in Asia. It is indeed one of
the regions of the world where blooms the greatest number of counterfeits and where patents
are not always respected. In a surprising way, Vietnam raises the same question on
intellectual property, but in the opposite direction. Intellectual property plays a key role in the
competitiveness of products. But if the law on intellectual property is already in force, most
small and medium enterprises (SMEs) Vietnamese did not concern, this issue has never been
part of their concern. As yet, it is one of 3 areas of concern mainly the WTO. Currently, about
500 trademarks are present in the Vietnamese market, half of which are owned by companies
with foreign participation. Yet more than 80% of domestic companies have not submitted
their marks, not focusing for the moment that production and sells. Marketing,
communication is also absent from the culture of these companies. Also, in order to enrich the
knowledge on the subject of SMEs, the Association of Vietnamese intellectual property has
launched a price of Vietnamese products conform to WTO rules. To compensate for this
weakness, the Vietnam builds on the brands and labels. It separates into 3 categories: product,
company and nation. What is not without problems for SMEs who underestimate the
importance of intellectual property, both in the territory and abroad. According to the
Department of Intellectual Property - Ministry of Science and Technology -, only 8,000 of the
200,000 companies have registered their trademarks protected labels on the domestic market
and 1,000 in the international market. However, some setbacks begin to alert the others. But it
is too late for some specialties already recovered Vietnamese rice Nàng Huong, mango Phu
Lôc, coffee Trung Nguyen Duy Loi hammock…

The strategy of Vietnam to resist foreign companies based largely on a strategy of

consolidation, but also the creation of professional groups whose purpose is to advise the
government, but also transmit knowledge and practices to those members to resist to the wave
of foreign investors, which is constantly sweeping.

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This strategy for power has resulted in the willingness of Vietnam to free itself from
China. If this is not completely achieved, an equilibrium in relations has emerged. At the
same time, Vietnam has sought to expand its activities globally. If the economic issue is
important, it is not the only grown. Thus, Vietnam wishes to scale up its diplomatic weight,
and successfully, within the UN organizations. Also in this context of international influence,
after long ignored, the Vietnam uses its network of expatriates that are the Viet Kiêu in two
different ways. In one hand, to attract theirs capitals or use them to boost their country of
origin. On the other hand, they become a real broadcast network of knowledge for Vietnam,
particularly in sectors such as new technologies. The entry into the WTO of Vietnam will
considerably development policy in Vietnam. It sets up many administrative reforms to attract
investors and to distinguish from these Asian neighbors. A genuine policy of seduction is also
being pursued, particularly in the direction of the European Union and the United States
highlighting the competitive advantages. At the same time, the opening of markets requires
Vietnam to change the habits of its industries. They must come together to reinforce to the
power of the big foreign groups, as in the area of the bank, they must also put in place a
number of professional associations to advise their member companies in their new
development pattern as in distribution.
If the future is not yet written, Vietnam seems to have a number of weapons that will
make him a country with which it will take in the future. This desire to distinguish itself is
also reflected in the establishment of a sustainable development policy as a vehicle for
growth. There ais still there a sharp distinction with China, which is often criticized in its
handling of ecology or more broadly by its attitude to global warming. With one hand,
industrial zones "green" to attract foreign capital. On the other hand, a policy of cooperation
in order to transfer a number of knowing, more specifically with France: as with the Agency
for the Environment and Energy Management (ADEME) to develop sustainable tourism.

January 2008

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