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INVESTING IN VIETNAM

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President Clinton's decision to lift the embargo on Vietnam in February followed an intensive lobbying effort by corporate America.

And in Vietnam, government trade ministers and members of the business community have been preparing for the day when Vietnam would more freely take a place in the Pacific Rim's economic food chain.Vietnam has been a closed book for Americans since the embargo began in 1975. There is a stereotypical image of Vietnam as a nation of poor farmers wearing rice hats.

The image is not incorrect, but it is incomplete.

The Vietnamese are also living in cities, shopping for electronics and renting videos to watch during the 22 hours of the day when the national broadcast network is off the air.

Many wage earners take home only $20 to $25 a month, but hands full of cash come out when there are new products to buy. Businesses wanting to sell in Vietnam see both its poverty and its potential in a market of 73 million people.

The list of American companies already established in Vietnam includes General Electric, IBM, Motorola, Carrier, Mobil, Gillette, Visa, Coca-Cola, Digital, American Express, Unisys, Otis Elevator, Pepsico Inc., KPMG Peat Marwick, Boeing, Microsoft, AT&T, Colgate/Palmolive, and Procter and Gamble. Many opened offices in Hanoi or Ho Chi Minh City while the embargo was still in place, counting on its demise.

"GE and IBM have been here forever," said Marianne McLaren, an American business consultant working in Hanoi. "They lobbied Washington the hardest. They let (Washington) know they were here waiting for the embargo to be lifted."

Japan, unaffected by the American embargo, is assembling Mazdas in a Hanoi suburb. Now Chrysler is looking for a production site. A string of European car manufacturers is also investigating joint ventures with Vietnamese investors: Peugeot, Mercedes Benz, BMW, Citroen and even Rolls Royce, according to Vietnam's Chamber of Commerce.

Joint ventures are very popular because they leverage Vietnamese money with foreign cash. Nguyen Van Thack, general director of Vietnam National Foodstuffs, activated a joint venture contract with Coca-Cola one month ago that has been in the works for five years. The joint venture is worth $20 million, 70 percent of which is American with 30 percent coming from Vietnamese. Thack is currently importing Coke from Bangkok and will break ground for a bottling plant 10 miles outside Hanoi later this month.

Vietnam's government initiated a shift to a market economy in 1986. It went through difficult stages similar to those seen over the past three years in Russia. Land is now leased to farmers who produce their own crops. The shift from collective farming to private farming has taken Vietnam from rationing food to being the world's third largest rice exporter. Its rice exports this year will include shipments of 100,000 tons to the United States.

Vietnam is trying to boost its other exports as well. But the country has a dismal infrastructure of roads, bridges, shipyards and communications networks. And there is little medium and heavy industry for the nation to build from. Those deficiencies will have to be remedied before Vietnam can effectively jockey for position with other developing Asian nations like China, Malaysia and the Philippines.

"You're dealing with a country that's trying to move into the 21st century from probably the 19th," said Sen. Bob Bennett, R-Utah, who, along with other senators, paid an official visit to Hanoi earlier this year. He encouraged President Clinton to lift the Vietnam embargo when he returned home.

"All of their infrastructure is old, and Russian, to the extent that it has any modern aspect to it. They don't want to buy any modern stuff from Russia, so you're talking about everything that a country of 73 million people is going to need to come into the 21st century. Seventy-three million people - that's bigger than France."

Working with what they have

The Vietnamese recognize the deficiency. But it has not stopped them from working with the industries they already have. Flower farming provides much of the wealth that is financing a building boom of mini-hotels in Hanoi's west suburbs. With the Coca-Cola project running, Thack said, his company plans to start exporting cashews, one of Vietnam's 10 largest exports.

The volume of rice exports shows Vietnam's ambition. Farms are so short on machinery that many farmers thresh their rice by spreading it out on the highway and letting the passing cars and buses run over it. Motorists oblige - swerving left and right across the road to hit the rice straw.

The United States is a latecomer to the Vietnamese market because of its absence during the embargo years. Taiwan and Hong Kong have each invested more than $1 billion in Vietnam, and a drive up most Hanoi streets shows Japan is eagerly feeding the market for electronics, appliances, motor bikes and the few new cars on the streets.

Differing cultures

McLaren sees other reasons for Americans to be optimistic about their chances for a share of the Vietnamese market: "They hate working with the Japanese and the Chinese," she said of Vietnam businessmen.

Vietnam began shopping for non-Russian cars eight to 10 years ago and started importing Toyotas, said Tran Thien Cuong, a spokesman for the Chamber of Commerce and Industry of Vietnam. "They offered a very cheap price. That means they anticipate the market will grow," he said. "But at the same time we got only one offer, so we had no choice." Vietnam saw the bitter end of the Toyota deal when car owners started getting gouged on the price of repair parts, he said.

"Sometimes it takes several hours (of talking) to know what is in their mind," Cuong said of negotiating with the Japanese. "Americans are very direct - to the point."

Being direct is helpful when conducting business in Vietnam - as long as you're not too direct. The Vietnamese consider that a fault. "It is not good. It is humiliating," he said, acknowledging that cultural understanding between business partners works both ways. "From our side, we have to learn also about your culture, your business trade and practice."

A Ministry of Science-supported enterprise called the Center for Support of Social Development Programs helps government and business leaders improve their cultural awareness and understanding of market economy practices. "Marxism is among the ideas the Vietnamese like," said Pham Huy Dung, the center's vice president. "But we are open to many ideas. If it's useful for the prosperity of the country, it is profitable for the country."

His center explores and recommends changes in both the economy and social policies. "Our findings try to always be objective and express the community view, even though it can be difficult for the authorities," Dung said.

Change can be unsettling for government authorities. Red tape can indefinitely tie up untried proposals.

Projects sponsored by government insiders, on the other hand, can sometimes move the fastest. "For a long time we have had a relationship with the United States," said Tran Phu Son, general director of Vietnam's books and periodicals monopoly. He has been importing Time and Newsweek magazines through Hong Kong and Bangkok since 1988.

Asked about government-sponsored deference to the embargo, Son's assistant, Nguyeh Chi Thang, said businessmen "find many ways to get together, like Romeo and Juliet."

Other statistics

Other statistics show the rate of growth in Vietnam:

- Prior to 1990, the greater Hanoi area, with a population of 3 million, had only 500 well-furnished hotel rooms. It now has nearly 5,000 and forecasts a total of 14,500 in six years. Competition is fierce, even among state-owned hotels and guest houses run by various government ministries, because all of the hotels bring in foreign money. Prices range from $20 a night for a budget room in one of many "mini-hotels" to $400 a night for the best room at the new Hanoi Hotel.

- Of Vietnam's 73 million citizens, only 150 owned personal computers in 1992. That number jumped to 1,000 in 1993 and is now estimated at between 3,000 and 4,000.

- The rapid pace of foreign investment has drawn concerns that environmental precautions will be overlooked, as has happened in other developing Asian nation. American singer John Denver lobbied Vietnamese government officials on environmental issues during an April concert trip to Hanoi. Denver's performance was the first post-embargo concert by an American singer.

- Bank of America recently became the first U.S. bank to lend money to Vietnam, lending $5 million as part of a block of loans planned for upgrading roads, ports and other infrastructure products. The country recognizes its new foreign business partners will only stay around if the country's infrastructure experiences a major overhaul. Seven U.S. firms are bidding on portions of a $317 million project to upgrade national Highway 1, the main road that runs the length of Vietnam. Japan is providing $35.4 million to build 36 new bridges along the road.

- French and Russian may still be the widest-known foreign languages in Hanoi, but American volunteers have been recruited to teach English to Hanoi's top doctors and to youngsters at a school for gifted children. Many stores have signs in English and restaurants have English menus. All of Hanoi's taxis calculate the fare in dollars, and finding a shop that lists prices in dollars is a sure sign that a tourist hotel is close by.

Dung said the Vietnamese haven't forgotten their war with America and recognize the war may make some Americans hesitant to trust the Vietnamese. The Vietnamese have had to make peace with old enemies or they wouldn't be able to do business with the French, who occupied all of Indochina until World War II and then returned only to be driven out in 1954; the Japanese, who occupied Vietnam during World War II; the Chinese, who invaded Vietnam's northern border in 1979; and the Americans.

"It's time to forget the past," Dung said. "Because of the Vietnam War, maybe the American people know in a very wrong way about the Vietnamese people. We will try to enlist them in a better way."

*****

Additional Information

Series on Vietnam runs through Friday

"Vietnam: Coming to terms" is an extensive series exploring a tiny Asian nation whose history changed America and the world. The multifaceted presentation will continue daily in the Deseret News through Friday.

- Wednesday: Foreign invasion, not just what Americans call the Vietnam War, has shaped the history of this nation, but its traditional culture flourishes amid a new "American war" culture.

- Thursday: Postwar atrocities and the hope for a new life convinced thousands of Southeast Asian refugees that the perils of the high seas and unknown fortunes of foreign lands were but a small risk compared to life as they knew it. Many of those refugees, of course, have built new lives in Utah.

- Friday: Movies, for better or worse, have no doubt shaped our opinions of Vietnam. Deseret News movie critic Chris Hicks, himself a Vietnam veteran, explores their effect. Meanwhile, Steve Fidel asks why Vietnam veterans, with poignant images of the war still fresh in their minds, are returning to that foreign land.

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Vietnam War: 1957-1975

Photo: Lt. William L. Calley

Vietnam War: Important Dates

1967

April 15

Thousands jam the streets of Manhattan in peaceful anti-war march--largest in the nation's history.

April 28

Gen. William Westmoreland addresses U.S. House of Representatives and pledges that American forces under his command will "prevail over the Communists."

October

"Stop the Draft" protesters join forces in Oakland, Calif., during a week of bloody anti-war demonstrations across the nation.

Oc. 23

Demonstrators numbering 30,000 assemble outside the Pentagon to protest U.S. involvement in Vietnam.

1968

Siege against U.S. base at Khe Sanh begins.

Jan. 30

North Vietnam and Viet Cong launch a major campaign against South Vietnamese cities. The Tet Offensive, while only marginally successful militarily, becomes a psychological turning point in the war.

March 16

U.S. troops, let by Lt. William L. Calley, massacre more than 100 civilians at My Lai.

May

The North Vietnamese regroup and launch a second offensive--Tet II.

May 13

U.S. and North Vietnamese representatives begin peace talks in Paris.

Aug. 28

Demonstrators converge in Grant Park to protest defeat of the peace plank at the Chicago Democratic Convention.

Nov. 1.

President Lyndon Johnson halts all bombing and other U.S. attacks on North Vietnamese.

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Vietnam: At a glance

An ambitious economic reform program known as "dio moi," begun in the late 1980s, has dramatically lowered inflation and increased exports of rice and manufactured goods. It has also moved more workers into the private sector.

Capital: Hanoi

Government: Socialist republic under the direction of the Communist Party. the National Assembly has about 500 deputies drawn from 40 provinces.

Area: 128,000 square miles. Slightly larger than New Mexico (121,593 square miles)

Elevation: Highest-- Fan Si Pan 10,312 above sea level.

Population: 73,000,000 (1994 estimate). 78% rural, 22% urban.

GNP per capita: Below $200 (U.S.)

Work force in the private sector: 88% (1989)

Chief products: Agricultural--rice. Manufacturing--cement, fertilizer, steel, paper products, textiles. Mining--coal.

Monetary unit: Dong ($1 equals approx. 10,000 dong)

Life expectancy: 63 years (1990)

Adult literacy rate: 88%

Average Vietnamese: Man--5 feet tall, 120 pounds. Women slightly smaller.

Religion: Major faith is Mahayana Buddhism, with strong Confucian and Taoist influences. There are about 6 million Roman Catholics and smaller groups of Muslims, Hindus, Protestants and other sects.

People: 90% ethnic Vietnamese. There are 57 minority groups including Chinese, Cham, Khmer, Thai, Hmong and Muong.

Language: Vietnamese

Largest City: Ho Chi Minh City (Saigon) approx. 4 million people.

Climate: Hanoi-- Average temperature in January, 63 degrees, June 85 degrees. 72 inches of rain annually.