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Thursday, 30 December 2010

Why Vietnam will not be the next China…

When I am asked about my experiences and opinions about operating in Vietnam, the most common reaction I receive is that it’s just like China was 10 or even 20 years ago. And yes, there are numerous points of comparison from the speed of development to the opaque business environment, even consumer tastes and trends.

But there is also the matter of simple math. After all, a population of 87.5 million versus a population of 1.3 billion carries such different weight in terms of consumer power, human resources, and sheer mass.

It’s living right in the middle of it all where the differences become most apparent. Vietnam is hardly China 1.0. After all, the paths of these two nations diverged in 938AD and Vietnam’s developmental path has been marked by a significant difference, colonization. And whether that was the French, Japanese, or the Chinese themselves, Vietnam has only had intermittent periods of independence during its thousand-year history (1,072 years to be accurate).

Where China has seen itself evolve from an empire to an economic superpower, Vietnam has discovered a new-found sense of self almost overnight. And Vietnam is still in the midst of finding it’s own identity. And that is the crossroads Vietnam stands at today. From where we were yesterday, where do we want to be tomorrow? And how will we get there?

There doesn’t appear to be the clear direction or momentum that China has had. In 1990, plans were announced to make the Pudong New Area the Financial District of Shanghai. The government declared a New Open Economic Development Zone creating an environment that was welcoming to the foreign investments needed as well as investing in the infrastructure necessary to create a thriving city in and of itself.

Instead Vietnam is marked by seemingly random growth, a take what you can/let’s just get it done mentality, a wariness of investing in the long term, and an evident fearlessness when it comes to long-term consequences. Maybe this is due to the incredibly young population? Maybe this is a remnant of the post-war environment? Regardless it can seem like you are amongst a population caught up in a mad dash for success, filled with a sense of living for today and without a thought for tomorrow.

And while there have been varied opinions of Vietnam as a developing market, companies wavering between unbridled enthusiasm and extreme caution, there is no doubt that this is a mouth-watering opportunity. With a population over 87 million people and rising, it’s still one of the youngest countries in the world and the population is growing by almost a million people each year. The population has proven to be incredibly open to new products and services while clamoring for recognizable brands. Accordingly, retail sales topped $39 billion US dollars in 2009 according to govt. estimates.

So instead of touting Vietnam as the next China, let’s start focusing on what the next Vietnam will be.


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