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In Vietnam, Ho Chi Minh meets H&M

Posted on: January 17, 2019

Communism and Capitalism co-exist as the country makes a transition


By Sonia Sarkar

The morning sunlight pierces the windows of a glitzy skyscraper and falls on a colourful billboard featuring Uncle Ho — that’s how the people of Vietnam refer to the communist revolutionary leader, Ho Chi Minh. Both skyscraper and billboard are in the heart of Saigon city and reflect two contrasting realities of Vietnam today. One depicts the growing consumerism, the other is a reminder of the country’s communist legacy.

Vietnam has a single-party socialist republic framework. The general-secretary of the Communist Party of Vietnam is the party leader and head of the politburo and holds the highest position in the one-party system. But here’s what’s happening — the communist regime is embracing corporatisation.

Visitors at Ho Chi Minh Mausoleum

 

Visitors at Ho Chi Minh Mausoleum Image: Sonia Sarkar 

There’s corporatisation in education, information and communications technology, infrastructure, oil and gas, railways, ports and healthcare. Foreign advertisement and PR firms have joined hands with local companies and entered the local market. Mid-market clothing brands such as H&M and Zara made an entry in 2017. Foreign F&B companies such as PastaMania, Chamichi, and Hokkaido Baked Cheese Tart and GS25 are hot favourites with locals now. Singapore realtors Maple Tree and Kepple Land, the Republic of Korea’s confectioners’ Lotte and Walmart equivalent, Emart, and Japan-based retailers Aeon and Takashimaya-VNA are making huge investments.

According to the manager of Pan-Asian financial services firm, Dezan Shira & Associates’ business intelligence department, Maxfield Brown, the Vietnamese government has prioritised divestment of state-owned enterprises and deregulation of restricted business lines across a wide range of industries over the last few years. It continues to simplify investment procedures, open up sectors to foreign investment, provide incentives for investors and integrate itself further into the global economy through a strong network of free trade agreements.

Brown says, “Recent legislative reforms such as Vietnam’s Law on Investment and Law on Enterprise helped to solidify Vietnam’s commitments in the World Trade Organization (WTO) and reassured investors in the European Union and the US that Vietnam is fully committed to supporting foreign investment.” Indeed, several US companies such as Intel and Microsoft have invested in Vietnam, though the overall investments are much less compared to the foreign direct investment or FDI from Asian countries.

In 2017, FDI reached $35.6 billion, while disbursed capital reached $17.5 billion, a 10-year high, according to Dezan Shira & Associates. The top three investors were all Asian countries — Japan, South Korea and Singapore. Till September 2018, the total cumulative registered FDI in Vietnam reached $334 billion, with disbursement at $184 billion. As of October 2018, 57 per cent of the total FDI focused on the manufacturing industry, catering mainly to the export industry.

It seems a new class of young consumers has sprung up with the inflow of FDI. They work in advertising, PR, IT, education and retail sectors. Consumer spending has nearly doubled since 2010, leading to an explosion of local and foreign businesses targeting Vietnam’s emerging middle class. According to a 2014 survey by the US-based Pew Research Centre, almost all Vietnamese people — 95 per cent of them — now support capitalism.

Saigon-based advertising entrepreneur Do Kim Dzung says big economic changes have started changing their lifestyle. “Global giants such as Starbucks, McDonald and Burger King have started ruling our lives. English classes are on offer everywhere in the major cities, where speaking the language has become essential to grow professionally. The lifestyle of the urban Vietnamese today is no way less than anyone living in the West.”

The first time Vietman opened its markets to the outside world was in 1986 — that was the Doi Moi or economic reforms campaign. It joined the Association of Southeast Asian Nations (Asean) in 1995 and five years later it signed a trade agreement with the US, enabling trade to take off. From 2000 onwards, Vietnam approved the sale of state-owned companies. By 2006, it became member of the WTO, thus reaping its initial crop of foreign investments.

Today, the red flag dots the cityscapes of Saigon and Hanoi as do giant advertisements for luxury goods, commercial banks, real estate companies and telecommunication firms. A kilometre away from the Independence Palace, which became the citadel of the Communist Party after it was overtaken by soldiers of the People’s Army of Vietnam and the National Liberation Front of South Vietnam in 1975, stands the swanky Saigon Times Square.

A jewellery shop inside the premises of Ho Chi Minh Mausoleum

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