Chi Minh Economy
Ho Chi Minh City
was at the forefront of Vietnam’s economic growth,
when the government established a market economy at the end of the
1980s. This came after years of stagnation crippled agriculture
and commerce. The city looked to the Asian ‘tiger’
markets, such as South Korea, Japan, Thailand and Taiwan,
to find investors. Multinational companies from
Australia, Europe, and other countries in Asia recognized the advantages
of a cheap but hardworking labour force and companies, such as Coca-Cola,
opened plants near the city.
with other countries have thrived, especially the hotel
industry, where names such as Sofitel
and Novotel from France are well established. Several
international companies, such as banks
(Standard Chartered), accountants
(Arthur Andersen), and legal firms
(Deacons), set up offices, most are are based in
District 1. Consumer companies,
and Manufacturers such as Unilever,
are on the outskirts of the city in the industrial zones of Long
Binh, Amata, and Bien Hoa.
With a yearly economic growth of around 8% and low inflation, the
economy was given a further lift in 1995 when Vietnam
became a member of ASEAN (Association of
South East Asian Nations). They also re-established diplomatic
relations with the United States. When other Asian economies
declined in 1997, the effect was
felt in Vietnam, which benefited most by investment from Asia. Contracts
were cancelled and projects delayed, such as oil exploration by
Total, Texaco and Shell. Although Vietnam did not suffer as much
as many of the other Asian economies, it was a period of
reassessment. International companies who were planning
to invest began to look elsewhere.
The crisis added to the problems of getting established in Vietnam,
in particular the corruption and bureaucracy where
a licence to operate can take years to obtain. The benefits of a
diligent and educated workforce were outweighed because it was now
easier and less expensive to invest in Thailand or Indonesia. The
government solved its predicament by allowing foreign-owned
companies lower cost utility charges and the provision
for paying wages in Vietnamese currency rather than US Dollars.
Side by side with many other Asian nations, 2000 was the start
of a recovery from the financial crisis and as a result,
unemployment was reduced slightly to 6.5%, almost
the national average of 6.4%. Major local companies that have contributed
to the improvement include Bach Tuyet Cotton Co,
Vietnam Dairy Co (Vinamilk),
Ba Nhat Bamboo Co-operative and Canumina
Vietnam signed a bilateral trade agreement with
the USA that allows exporters into the world’s
biggest market on equal terms with its regional competitors. This
agreement was ratified in May 2002. The USA also supports Vietnam’s
bid to join the World Trade Organization.
Most senior business people in international companies can speak
English but it is not common in small companies. It is crucial to
make appointments for meetings. Both hands should be used to give
and receive business cards.
Vietnamese hosts usually present their guests with gifts, such as
lacquer ware. Visitors should bring a gift characteristic of where
they are from. Vietnamese business people are generally very formal,
so small talk is inevitable prior to conducting business. Vietnamese
people never like to say no to any request, so arrangements and
contracts should be double checked. As a socialist country, women
in a business situation are equals and great respect is extended
to an older person, which is also reflected in the language.
Long lunch breaks are a legacy from the French, so visitors should
not schedule appointments between 11.30 am and 2.00 pm, unless invited
to lunch. Alcohol is rarely offered at a business lunch.
Offices open between 7.30 am and 8.00 am
and close around 5.00 pm or 6.00
pm. Most offices open on Saturdays but this has changed
in some cases with the introduction of a 5-day week.
As contact with international business increases, Vietnamese business
people are becoming more formal in their dress. However, because
of the very hot weather it is quite acceptable, and practical, not
to wear a suit jacket. There is a lot of after-work socializing
but this is usually within the ex-pat community.