NEWS ANALYSIS : Champing at the Bit : U.S. Firms Are Eager to Get Into Vietnam With Lifting of Trade Embargo
When President Clinton announced the lifting of the Vietnam trade embargo Thursday, the U.S. business community applauded--ecstatically.
Thirty-four American companies, large and small, have already obtained licenses from the Hanoi government to set up offices in Vietnam. And countless others--including many in Southern California--have been waiting anxiously on the sidelines, revving their engines for the day when they would be able to start making deals and catching up with their Taiwanese, French and Japanese rivals.
But what’s striking about all this excitement is that as recently as 10 or 15 years ago, it would have been unthinkable. Not because of animosities left over from the Vietnam War, but because American business was much more insular than it is today, exploiting easy opportunities in its huge domestic market.
“I think maybe 10 years ago, there was more of a complacent attitude than there is today,” said Frank Brown, chief executive of Connel Bros. Co., a San Francisco trading firm with about $265 million in annual sales, which opened an office in Ho Chi Minh City (formerly Saigon) last month.
“But today, most U.S. manufacturers are well aware of the opportunities in Asia with the phenomenal growth going on there,” Brown said. “And they’re very interested in Vietnam, which is really ready to take off.”
It’s not Connel’s first venture in Vietnam. The company had a “sizable” business during the war. “It was easy then,” Brown said. “We dealt through the U.S. AID program, and we didn’t have to compete with the Japanese.”
But Brown still has high hopes of exploiting a niche market in specialty industrial chemicals, one of his company’s mainstays, as well as selling a range of other U.S. products.
“We predict that in three years we’ll have a major profit center there. It usually takes us that long just to break even in a new market,” he said. “I haven’t been this optimistic about a new branch office in a long time.”
Allergan Inc. in Irvine, the world’s biggest manufacturer of eye care products, has already registered some of its products with the Vietnamese Ministry of Health. “We are in the process of making a regional push into the Pacific Rim, so Vietnam fits into our marketing strategy,” spokesman Jeff D’Eliscu said Thursday.
Within minutes of Clinton’s announcement, Otis Elevator Co. said it would resume business in Vietnam after a two-decade hiatus. The company’s statement was followed by similar announcements by Coca-Cola Co. and United Airlines.
Despite the presidential decree lifting the ban on trade with Hanoi, a number of barriers to normal economic relations remain, said Irwin Jay Robinson, president of the Vietnam-American Chamber of Commerce.
Vietnamese manufacturers won’t have meaningful access to the U.S. market, for example, until Congress grants the Hanoi government most-favored-nation status, Robinson said.
He thinks that will happen eventually, but in the meantime the situation is a “one-way street.” The major significance of Thursday’s move is that American contractors can now compete for a share in major development projects in Vietnam, soon to be put to bid by the World Bank and other international lending institutions.
Fluor Corp., the giant engineering and construction company, is “in the process of evaluating business opportunities” in Vietnam, spokeswoman Deborah Land said. “Southeast Asia is one of our most active areas.”
Irvine-based Fluor is building two power plants in the Philippines, an oil refinery in Thailand and a chemical facility in Singapore.
But there’s much more than the profit motive involved, Robinson added.
“Vietnam is a very special case,” he said. “When I traveled around the country in the process of forming this chamber in 1992, I found a tremendous desire to do something to help Vietnam, to compensate for the guilt that many American businessmen feel for what we did to and in that country.”
John Bushby, a businessman and Vietnam veteran who last spring returned to the Southeast Asian nation for the first time in 20 years, said he also senses a mood of reconciliation.
“I know more veterans who want to go over there and do something positive, because basically that’s the only way to heal,” said Bushby, president of a financial services software company in Denver.
“But when you go over there now, you see our global competitors taking away our business,” he said. “Why is Evergreen (a Taiwanese shipping company) setting up the big container facility in Saigon and not an American company?”
But change is imminent.
Oakland-based American President Lines recently received a license to open an office in Vietnam. Branch licenses have also been granted to other major American companies such as Eastman Kodak, Motorola, Caterpillar and DuPont.
Now they’ll be able to sign contracts and start battling the regulatory process to get a piece of the action.
BankAmerica is ahead of the field of U.S. financial institutions. It has been operating a liaison office in Hanoi since 1992, taking advantage of a special waiver in the embargo that allowed it to handle family remittances for the Vietnamese American community.
Now that the embargo has been lifted, spokesman Jim Mitchell said, the bank is planning to upgrade its operation in Vietnam to a full-service branch offering financial advisory and capital market services, short-term trade financing, foreign exchange trading and correspondent banking.
United Airlines announced Thursday that it will begin scheduled service to Ho Chi Minh City “as soon as practicable.”
While half a dozen foreign air carriers serve Vietnam through Los Angeles International Airport, the end of trade barriers allows not only United but also competitors Northwest and American to fly there, said Kim Pham, owner of Kim’s Travel in Westminster.
Most of Pham’s business to Vietnam involves Vietnamese Americans, but she has also booked passage for former U.S. miliary veterans.
Travel World in Garden Grove, which last year arranged trips to Vietnam for about 15,000 customers, has secured licensing from the Vietnamese government. “We hope to be the first travel agency to bring Vietnamese visitors to America,” manager Michael Tran said. “We can set up an office there next week.”
But the eagerness to jump into the competitive fray in Vietnam is perhaps most notable among smaller U.S. companies.
Odetics Inc., a high-tech manufacturer in Anaheim, hopes to sell its broadcasting products in Vietnam. The company makes an automated tape library used to store and air commercials and news spots for television.
“Vietnam is an area of the world we’ve been waiting to open up,” spokeswoman Holly Barnett said. “We do well in emerging countries that are in the process of establishing communications paths and need the hardware to do so.”
Son H. (Sonny) Luu has been offering discount long-distance telephone services to Vietnam since May, 1992, when the Bush Administration relaxed the embargo to allow direct phone links.
But Luu’s Costa Mesa-based Pan Pacific Telecommunications Management has much more in the hopper.
“There are a number of projects we’ve been nourishing and are waiting to do,” said Luu, a native of Vietnam.
“We’d like to trade in telecommunications equipment, and we can offer our consulting services in negotiating offshore energy concessions,” he said.
The market also presents an opportunity for the computer industry. Ho Thanh Viet, whose company has developed a Vietnamese-language computer program, said he will definitely look into sales possibilities in Vietnam. “We have to weigh everything,” he said.
Times staff writers Susan Christian and Chris Woodyard in Orange County contributed to this report.
MAIN STORY: A1
Competition in Vietnam
While U.S. companies have been forced to sit on the sidelines because of the trade embargo, their global competitors have been making deals in one of the world’s fastest-growing economies. Foreign concerns have received government approval to invest nearly $5 billion, on paper at least. Actual inbound investment is believed to be much lower. Value of investment commitments as of June 30, in millions of dollars: Taiwan: $1,441 Hong Kong: 843 South Korea: 441 Australia: 426 Japan: 335 France: 325 Britain: 291 Ireland: 236 Singapore: 201 Holland: 196
Source: Vietnam State Committee on Cooperation and Investment
