Some economic engines that are driving Vietnam

“Vietnam is one of the most compelling growth stories in the world.”

– John Engle, managing director of Singapore’s Blackhorse Asset Management, announcing a $400 million Vietnam investment fund last month

In addition to being the second-biggest source of Nikes (75 million pairs in 2006), Vietnam is the world’s largest exporter of cashews, the second-largest exporter of rice and coffee, and the fifth-largest shipbuilder. It also has a healthy share of higher-end garment production (Van Heusen, Perry Ellis, for example). Assuming the nation is able to address major shortcomings in areas such as skilled labor and management, roads, ports, electricity, education and agriculture, it looks to do even better, along with advances in tourism, airlines, steel and oil (in which San Ramon’s Chevron is a major player).

Two areas especially worth noting:

High tech. Vietnam boasts more than 18 million Internet subscribers, with cheap, if not always the smoothest Internet access, mostly in the cities. It is already getting some of the outsourcing action – from India, among others – but to bring more of its citizens into the high-tech age, the government, with the assistance of Intel and Microsoft, plans to subsidize some of Vietnam’s estimated 280,000 small private companies and 2.7 million family businesses with laptops and PCs. That is bound to please Hewlett Packard, which has been in Vietnam since 1996, cranking out PCs and printers via local subcontractors, and has seen its business double over last year, according to the head of HP’s Southeast Asia division. Last October, more HP inkjet printers started rolling off the line at a new factory – expandable to 120,000 square feet – in the Saigon Hi-Tech Park in Ho Chi Minh City. Meanwhile, Taiwan’s Foxconn is building a giant “electronic city” north of Hanoi, set to employ 300,000 people.

Then there’s “Line 6” at one of Nike’s subcontracted factories, which employs 20,000 people outside Ho Chi Minh City, and incidentally serves as Nike’s R&D world headquarters. The specialized production line is being used to perfect, on a much larger basis than currently exists, the digitally driven evolution of retailing, labeled “mass individual customization” in some quarters. My 10-year-old daughter, say, designs her own Nike online, clicks, and her design shows up on a terminal halfway around the world, where the desired shoe is manufactured and shipped directly to her door, or at least nearest Nike store. I haven’t told her about it yet.

“Viet Kieus.” Attracted by the growing economy, increasing numbers of the Vietnamese diaspora (an estimated 6 million Vietnamese live abroad, including more than 500,000 in California), are returning home with their skills and capital to open small and medium-size businesses – boutiques, online music services, bars, restaurants, office equipment franchises. Others are applying their Western know-how at Vietnamese corporations and local companies. “I have friends working in architecture, banking, oil, real estate – all from the U.S. or France,” said Nguyen Qui Duc, founder of KQED radio’s now defunct “Pacific Time,” who returned last year from San Francisco to live full-time in Hanoi. The Hanoi government is well aware of the Viet Kieus’ potential and, I was told, is working on a plan to grant them dual citizenship.


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