I attended an Asia Business Conference two weekends ago thanks to a great friend of mine and thanks for the invitation! Jie you rock! The conference got me thinking on many paths about Asia and the world economy.
During our trip in December 2006, Vietnam was accepted as a member of the WTO. I remember back in December 2001, I was in China when the same event occurred and the economic acceleration took off in that country. It is natural that we do an economic analysis of Vietnam and look for common parallels with China. Could Vietnam be the next China on the rise?
ChinaAs China has enjoyed a long sustained growth from substantial foreign investment, the cost of doing business in China is slowly increasing. The whole notion of investing in China is the low cost to manufacture goods. Everyone focuses on the positives of China and I think this country has done heck of a job as a nation on the rise to become a world power for the rest of our lifetimes. However, my major concern is on the large gap between the rich and the poor. The cities have prospered while the majority of China is still in poverty with low yielding agricultural farms. The country also prides itself on appearances, cleaning up Beijing solely for the Olympics instead of it being the right thing to do. It is similar to a seller selling their home and taking the easiest way to make the home look nice, but not necessarily solving some of the key problems. Also China needs to evolve to a self sustaining economy and not so dependent on foreign investments. How can this country not only be in manufacturing but also generate enough wealth for consumer spending?
Vietnam the Next China?Simply being in Vietnam I would say that this country has a long way in following the path of their Communist counterpart in China. The positive here is that there is a country’s success story to model after. With more and more foreign investment moving from China to Vietnam are they ready for the challenge?
First off, the Vietnamese government themselves need to commit by example or at least in appearances to be fighting for the people and not for themselves. Corruption is the number one issue and it starts with the top and those values will be passed down to the people. This would mean instead of sticking money into their own pockets to use it to build up the infrastructure of their country. Instead of giving the best opportunities to their own children they need to pass these down to the people. My two cents, the leadership won’t be able to put aside their own corruption to better their country. If you look at the mighty city of Saigon, you will see that the run down city is not funded by the government. Without the mighty government behind an economic revolution, companies will find it hard to trust their investments in this country. But anything is possible in a communist country and change can be driven quickly without any voting!
Secondly, it is extremely difficult to compete with China in the manufacturing sector. Even for a cheaper price, money is not everything. Time and quality are all important factors and China’s core competency now is manufacturing and will Vietnam be able to compete?
This leads us to the third item that needs to change, the Vietnamese people’s mentality. Vietnam reminds me much of Taiwan, a country of small business owners. Yet the business mentality is extremely different. There is no honor in business and a person’s word means very little including family members. We had our hotel room given away although we had reservations and also we saw the same manager 2 days before and he reminded us that we would be staying there. For sure another person came and offered more money and ours was then sold. We had dress makers with 1 week lead time not even start the outfits until we showed up and still barely got it done before closing with us micro managing every step of the way. Never once in my year and a half in China did I ever have such types of things happen. Integrity needs to return to be able to grow this country to the next level. If a people can be shown the incentives as to the riches if commitments are upheld this group of entrepreneurs can prevail.
SummaryThe potential is unlimited if the government and people change their mentalities. This won’t happen overnight and these changes will be extremely difficult. My money is on China at this point and I feel Vietnam has many obstacles to overcome before it can pull this country out of poverty. First off somehow up high has to give a darn. =)
On a drizzly weekend in the bay area two hopefuls battled in the “Bay Area Open” http://www.bayareaopen.org/ at Smash City in Milpitas. Frank and I have been training on an off for about a year now to compete in tournaments. This was our first together and first ever since probably college. The day started bad for me as my alarm didn’t ring and I had to jam out within 10 minutes but we still made it on time. There were 44 teams in our division and the battle was not going to be easy. We battled hard in our first game but lost to a group of nationally ranked, Smash city trained partners with a spectator group of about 30 cheering for them. Disheartened we did not allow this first loss to bring down our spirits.
The first loss put us in the battle for the third place trophy. We took our game one frustrations on our second opponent and they paid dearly with a huge loss. In our third game we continued to battle and also delivered yet another win. The theme of the day was to conserve energy, eat power bars, eat beef jerky and drink Gatorade. We also minimized warm ups so we would be fresh in the game.
