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Last updated : Nov 2009
Ho Chi Minh Business Profile
Ho Chi Minh Business Overview - TravelPuppy.com
Ho 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.

Joint ventures 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 Rubber Co.

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.

Business Etiquette

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.