Talk of Trade With Vietnam Puts Gleam in Southland’s Eye

The possibility of Vietnam becoming a full trading partner with the United States comes as good news to Southern California, particularly Orange County, home of the largest concentration of Vietnamese immigrants in the world.

Businesses owned by Vietnamese Americans will be among the first to benefit, observers say, because of their ties to the homeland.

Other local companies stand to gain as well, including engineering and construction services providers, such as Irvine-based Fluor Corp.; financial and professional services firms; and makers of electronics, medical instruments and machine tools.

“I think the market potential is excellent,” said Don Miller, president of the World Trade Center Assn. of Orange County.

Many experts warned, however, that some U.S. companies might be hesitant to invest in Vietnam because of the financial turmoil in other parts of Southeast Asia.

In addition, doing business with Vietnam will still be very controversial particularly within the immigrant community, which is deeply divided over the issue of normalizing trade while Communists remain in power.

Also, Vietnam remains a very poor country--per capita income is just $250 a year and about two-thirds of the country’s 75 million people are involved in farming.

To date, U.S. exports to Vietnam have been tiny, but they’ve been growing steadily from $7 million in 1990 to $616 million in 1996, according to the Commerce Department’s International Trade Administration.

Co Pham, president of the Vietnamese Chamber of Commerce of Orange County, said that the removal of trade barriers would allow Vietnam to export coffee, rice, coal, oil and other raw materials directly to the United States.

That would boost the country’s economy and give businesses and consumers money with which to buy American goods--and Vietnam will be in the market to buy just about anything American, he said.

“You name it, they need it,” he said.

Rockwell International Corp. in Costa Mesa is one of many local companies that see promise in Vietnam. The electronics concern sells automation systems to auto manufacturers, food processors, oil companies and other industrial businesses.

As Vietnam opens up and Rockwell’s customers begin moving into the market, “we’ll be there to support them,” said company spokesman Bill Mellon.

But Pham warned: “The first year, we should not expect a miracle between us and Vietnam.”

Many believe that the removal of trade barriers with the United States will help Vietnam gradually build upon its small base of American investment.

“Little by little, a few large American corporations have started to do business in Vietnam,” said Ken Ackbarali, a senior economist at the Los Angeles Economic Development Corp.

Bank of America, General Electric Co., Philip Morris Cos., IBM Corp. and Motorola Corp. have operations in Vietnam. Nike Inc. began manufacturing athletic footwear there two years ago, and its Vietnamese plants now handle about 10% of its total production.

Experts say that other U.S. companies will now be encouraged to set up plants there, where they can take advantage of cheap labor.

“Vietnam has the potential of being another Malaysia or other places in the Far East that essentially serve as manufacturing platforms,” said David Blake, dean of UC Irvine’s graduate school of management and an international trade expert.

“It could be clothing, sunglasses, surf wear--anything that involves significant assembly. This is another place to consider.”

Many business people believe the initial demand from Vietnam will be for low-tech products, and for construction and engineering services. Some companies, like Kingston Technology Corp., a Fountain Valley maker of computer memory devices, see little market potential for many years.

“They’re more concerned with the basics of roads and telephones,” said Kingston spokeswoman Peggy Kelly. “In terms of the high-level, corporate-supported memory market, it’s not there yet.”

But as Vietnam begins developing a more significant industrial base, Ackbarali believes that everything from computers to medical products to telecommunications equipment will be needed to help it modernize. Management expertise will also be in demand, he said, to assist in bringing factories and distribution systems on line.

“There’s a natural fit between our strengths as a modern industrial economy and their needs as a developing economy,” he said.

* OFFICIAL WORD: U.S. plans to lift the main obstacle to full trade with Vietnam. A1