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Business Traveller

Vietnam: A Country Profile

Aired August 14, 2005 - 08:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, CNN ANCHOR: The race is on. Vietnam is pushing ahead into the 21st century. The country is doing business with the rest of the world, but can Vietnam go the full mile? And should you be onboard?
On CNN BUSINESS TRAVELLER, Vietnam, a country profile.

Hello and welcome to CNN BUSINESS TRAVELLER. I'm Richard Quest, this month reporting from Ho Chi Minh City in Vietnam.

There is on old saying amongst the locals, that Vietnam is a country and not a war, and as a country it's a pretty impressive one at that. Consider this, for instance: economic growth this year is once again expected to be over 7 percent. And amongst developing nations, that puts it near the top, second only behind China. Vietnam is also about the join the WTO, possibly by the end of this year, which is all impressive stuff when you think that just 30 years ago this year it ended its war with the United States.

Today's Vietnam, very different. On every street corner just about, international companies are moving in. And that's why we're here, to ask whether you should be moving here as well.

The gates of the Independence Palace in Ho Chi Minh City. Before we look at the future of Vietnam, it will be helpful if we look at the past, in particular, the event of the 30 years ago this year. Back then, Ho Chi Minh was called Saigon and an event was to take place that would change the history of this country for the next three decades.

It was April 30, 1975.

(BEGIN VIDEOTAPE)

(voice-over): The tanks of the Communist north rolled into Saigon, ultimately unifying Vietnam and ending what this country still calls the American war. 58,000 Americans died. An estimated 4 million Vietnamese soldiers and civilians were killed, but this war was not to be Vietnam's last. Two more generations of conflict with two of its regional neighbors were to further isolate the Socialist republic.

In 1978 Vietnam invaded Cambodia to remove the Khmer Rouge government and in retaliation it was itself invaded by China in 1979. A decade later, ravaged by war and hunger, the Communists introduced its own version of perestroika, known as doi moi, hoping to encourage international investment. This largely proved a dud. Corruption and bureaucracy together with the Asian economic crisis in the late '90s forced many investors to abandon Vietnam.

Around the time of Vietnam's withdrawal from Cambodia, relations between the United States and the country started to thaw.

BILL CLINTON, FORMER U.S. PRESIDENT: And so from the bitter past we plant the seeds of a better future.

QUEST: The Clinton administration lifted its trade embargo in 1994, normalizing trade relations the next year. Trading between the United States and Vietnam rose from $451 million in the middle of the decade to $6.4 billion by 2004.

June this year marked an historic visit by the Vietnamese Prime Minister Phan Van Khai to the United States. Three decades on, Vietnam does not forget its past, but it's looking towards its former foe as an important part of its future.

(END VIDEOTAPE)

Now both Vietnamese and foreign tourists come to Kuchi (ph) to explore to war sites, all it's the B-52 giant bomb craters which litter the area or the explore the 250 kilometers of tunnels that are here, the veritable rabbit warren of tunnels that were used by the Vietcong as part of their guerilla tactics. They would come out and attack and, using the tunnels, simply disappear.

The Kuchi (ph) tunnels and the war are an inescapable part of Vietnam's past and we must never forget that many people died on both sides in this area.

For Vietnam, though, time has moved on, and that means a new economy, a thriving economy based on trade with the rest of the world.

(BEGIN VIDEOTAPE)

(voice-over): It's the morning ritual in Hanoi's Ba Dinh Square, raising the country's flag, singing the national anthem, the Communist overtones one of the few signs of the country's roots.

But go around the corner from here, and Vietnam is veering in another direction, giving way to capitalism at break neck speed. To find out just how far the single party state is prepared to go, I head off to meet Vietnam's first ambassador to the United States after the American war.

(on camera): Is there not a contradiction between Communism and the capitalist moves being made by Vietnam at the moment? The two are inconsistent.

LE VAN BANG, DEPUTY MIN. OF FOREIGN AFFAIRS: We are trying to, you know, abandon the old way of, you know, socialism in Vietnam. The old one didn't work. And therefore we try to have some market economy into our society. So we are moving from the old one to the new one.

QUEST: But which investment do you really want? You don't just want Vietnam to become a factory, do you?

LE VAN BANG: Actually, you know, we have to do step by step. You know, the way of the industrialized country coming to Asia began in Japan and came down to Korea, Taiwan, Hong Kong, China and Vietnam. So I don't think that we can escape that way of development. In the beginning, we have to work on manufactured goods.

QUEST (voice-over): Manufactured goods, like shoes; more than a million pairs of sneakers a week leave Nike's 10 factories in Vietnam. Amanda Tucker has the task of ensuring Nike employs best practices.

AMANDA TUCKER, NIKE: The beauty is not the fact that there are a lot of workers. It's the quality of the workforce here. People in Vietnam have a wonderful work ethic. They're bright, interested in learning, and this country has a lot to offer.

QUEST: What's Nike's ambition for Vietnam?

TUCKER: Well, currently Vietnam is a through-put country, which means that we commercialize and manufacture products here. But we are looking in the future to do more of the research and design and development process also in Vietnam, as we do in other countries.

QUEST (voice-over): All of this requires a more skilled labor force. A tall order in Vietnam given that more than 60 percent of its workers are employed in agriculture.

The country has a literacy rate of 94 percent, which is high for a developing nation, and more than half of its 83 million population are below the age of 25.

Henry Nguyen is a returning Vietnamese businessman and is in no doubt that this is creating a strong consumer society.

HENRY NGUYEN, IDG VENTURES: I would actually see the bigger opportunities that you have for a product or service in this market. You know, I think the experience of mobile phone companies, whether it is Nokia or Samsung or others, or Motorola, whether it's the sort of motorbike manufacturers, like Yamaha and Honda and such, that this is an intense sort of consumer culture that's only starting to build.

QUEST: The difficult challenge is poverty and infrastructure. Only a quarter of the roads are sealed. And Vietnam suffers from a lack of deep water ports. That hasn't stopped large scale construction around Ho Chi Minh City and Hanoi, which bustles with new buildings and business parks. And Vietnam has already joined economic groups, such as APEC and ASIAN (ph) and hopes to join the WTO by the end of the year.

The World Bank is involved in 35 projects here. Its country director believes that Vietnam is moving in the right direction.

RAKES NANGIA, WORLD BANK: I see the transition to the market economy as stable, sure-footed and it certainly will be continuing without much cause for too much concern anyway. On the political economy side, I don't see a multiparty democracy emerging any time in the near future. It will happen over time, we hope. I think if we look at this as the model we were talking of the Asian tiger, it will probably be South Korea or Singapore.

QUEST: The United States may have lost the war, but it seems U.S. capitalism ultimately triumphed. And if the sound coming from the streets is anything to go by, it's making a lot of noise.

(END VIDEOTAPE)

The airline may be owned by the Communist government, but it flies a Western fleet and has a sophisticated frequent flier program called Golden Lotus Plus. It also has partnerships with Caf‚ Pacific and Korean Air. Who knows, Star One World or Sky Team could be on the cards.

And one other thought about Vietnam Airline: which U.S. carrier these days gives you a hot meal on a two-hour domestic flight?

When we come back, doing business in Vietnam, there is much you wouldn't expect.

(COMMERCIAL BREAK)

QUEST: Welcome back to BUSINESS TRAVELLER. It's a country profile on Vietnam.

I've flown two-hours north of Ho Chi Minh City. I'm now in the capital, Hanoi. That's the mausoleum housing the interred remains of the revered leader Ho Chi Minh. This is the sort of thing you expect in a Communist country.

If you're coming here to do business, though, you'll find Vietnam is a curious combination between Communism and capitalism, and you'll be crossing between the two all the time.

So here's what you need to know.

(BEGIN VIDEOTAPE)

(voice-over): Bells, smells and ritual. It's not your typical hotel lodge. Local monks deliver a traditional blessing as the giant U.S. chain, Hyatt, opens its first five-star hotel in Vietnam.

There are plenty of unusual practices that can be found here, as the German retailer Metro is finding out.

It gained its license to do business in Vietnam four years ago. By the end of this year, it will have seven stores across the country. Metro's Patrick Legho has this advice.

PATRICK LEGHO, METRO: First of all, you have to have a very good relation with the national authorities and local authorities. They have to believe in your concept. They have to believe in your added value to the market. That is a criteria.

We looked at the strategy for Vietnam and we saw that you cannot pre- pack everything. The market was not ready for it. So we wanted to stick as close as possible to the traditional way of purchasing, which is bulk presentation, customers can pick the products themselves, feel them, touch them, smell them. They are very knowledgeable about quality here.

Finally, you have to be patient. An investment here has to be seen as long term.

QUEST: For Metro, that meant going as for as giving fax machines to farmers, certainly not a quick fix. And with government regulation and red tape, international companies should expect to be in it for the long haul.

FREDERICK BURKE, BAKER & MCKENZIE: There are some cases where there is restricted areas, like retail distribution, telecommunications, banking, some things, services, that are regulated. But generally speaking, nowadays you can get a license to do 100 percent wholly foreign-owned company in most areas of the economy. So getting that license is actually much faster than it used to be. I mean, it used to take a year to get a wholly foreign-owned license. Now it takes a matter of weeks.

QUEST: As well as understanding the political and the business environment, understanding the culture is key, as cultural expert Zeek Tingock (ph) explained to me. Even shaking someone's hand is governed by rules and ritual. Don't get it wrong.

(on camera): Hello.

UNIDENTIFIED FEMALE: And they say hello. A very soft, week, not strong like American. Not like that. No.

QUEST: And what about as we're walking? I might pop my arm around somebody just to allow conversation. Is that rude?

UNIDENTIFIED FEMALE: It could be considered rude between men and women, especially Western men to a Vietnamese woman. They can think that maybe you have some kind of special emotional interest in her. That's very dangerous. So make sure that you don't do that to a Vietnamese woman.

QUEST: And at what point would you -- let's say you've made a friendship with a business contact. Would you ever give them a kiss on the cheek goodbye?

UNIDENTIFIED FEMALE: No. That could make a Vietnamese women look bad in other Vietnamese eyes, because we are influence strongly by Confucius, that we always have a distance between a man and woman. For example, I always keep at least a certain, like this, between a Vietnamese man and woman, like that. We never stand very close unless we are lovers. Yes, you should keep a distance then.

QUEST (voice-over): Understanding such cultural differences is the challenge faced by everyone.

It may all be a bit unconventional, but that's probably required. Be prepared to indulge in one or two as you find your feet.

(END VIDEOTAPE)

Now I'm sure you've had plenty of experience doing business not only in Asia, but perhaps in Vietnam. And I'd like to hear about it. Send me an email, particularly if you've considered doing business in Vietnam. It's the usual email address, Quest@CNN.com. And while you're about your computer, log on to our Web site. It's at CNN.com/BusinessTraveller.

With all those business meals you'll be eating, you will want to work it off. Get up early and get to Ba Dinh Square, where they do morning exercises. They start about 5:00 in the morning.

When we come back on BUSINESS TRAVELLER, I'll show you other things you can do in Vietnam if you have time on your hands.

(COMMERCIAL BREAK)

QUEST: The water puppets here in Hanoi are one of the absolute must- see things. They even give you a free fan to keep you cool.

Now, whether you're in Hanoi or Ho Chi Minh, there is plenty to do if you have time on your hands.

(BEGIN VIDEOTAPE)

PHAN VAN KUN (ph), WAR PHOTOGRAPHER: Hi. I am Phan Van Kun (ph).

My photograph is very famous now because when the Vietcong was coming, we shot in the tank from this garden and from the president's palace. Then I go in there, I shot some things for the last president.

30 years ago, this tank, I followed it. I been here early morning 30th of April, 1975. I took many pictures in the president's palace.

The next place I bring to you is a really good restaurant. This is my favorite. They have many foods (UNINTELLIGIBLE) and chow Vietnam. Wonderful. I like this because it is very good food, good price, and clean everything.

I come here a little bit for relaxing. This place, many memories in my life. All my colleagues and journalists, every day we were hardworking and relaxed at the nighttime here.

(END VIDEOTAPE)

QUEST: There is a definite art to crossing the road in Ho Chi Minh City. You just have to start off and hope that the traffic goes around you. Motorcyclist are easy. It's the cars that prove the big problems. And you don't want to let your concentration down for too long.

If all this is a bit too stressful, you'll want to get away, have a bit of a rest. How about a trip up the river?

(BEGIN VIDEOTAPE)

SHANTELLE STEIN, CNN CORRESPONDENT (voice-over): No more cramming into crowded tour boats. You can now get the authentic Mekong River experience, just a little more laid back and luxurious on your own private sampan.

A cruise guide will guide you through the six-hour cruise, which wends it's way through this fertile region.

The 30 meter bamboo boat provides the perfect way to discover Southeast Asia's longest river, a river which crosses from Vietnam into Cambodia and Lao. Looking around, it's hard to imagine that some heavy fighting during the war took place along these banks for it looks as tranquil and unchanged as ever. But the seemingly slow pace belies a place teaming with entrepreneurial spirit. Not even a river can hold back to flow of business here. Whether it's floating markets, mixing some cement or just catching a fish, everyone here is busy making or doing something.

The fertile Mekong Delta homes more than 18 million people. It is considered the breadbasket of Vietnam. Half the country's rice is grown here along with exotic fruit. $100 a person will buy you your own guide and a taste of local life. The sampan cruise can take individuals and parties up to 35 and are offered by two major tour operators.

(END VIDEOTAPE)

QUEST: Vietnam, an extraordinary country of contradictions and opportunity, and that is CNN BUSINESS TRAVELLER for this month. I'm Richard Quest, reporting from Vietnam.

Wherever your travels may take you, I hope it's profitable. I'll see you next month.

END

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