[Marxism] Communist capitalism

Louis Proyect lnp3 at panix.com
Tue Apr 4 08:01:10 MDT 2006

St. Louis Post-Dispatch (Missouri)
April 24, 2005 Sunday
Communist Capitalism A full-speed-ahead economy had drawn investors from 
around the world and improved the lives of Vietnam's people.

By RON HARRIS Of the Post-Dispatch


Thirty years after the Vietnam War ended, Post-Dispatch reporter Ron Harris 
and photographer Andrew Cutraro visited Vietnam, a nation that has changed 
dramatically since the departure of American troops.

--- Nhat Luan Nguyen remembers that it wasn't long ago that the shoe 
manufacturing company he heads had only three employees -- his mother, his 
father and his uncle.

Now, Nhat's company, Pasteur Fashion Shoes, has 20 employees and a string 
of stores that sell his company's shoes exclusively.

Nhat, 28, isn't standing still. He is desperately seeking an introduction 
to Brown Shoe Co. in Clayton so he can try to persuade the company to buy 
his shoes and sell them in the United States.

And why not? Last year, Americans bought 50 million pairs of shoes from 
Vietnam, a country where 58,205 American service personnel perished.

Some people here call it communist capitalism. Others describe it as 
capitalist communism. And even others call it a socialist market economy. 
Whatever its name, it is the engine that has rescued this country from a 
failing economic system mired in unproductive state-run businesses and 
opened its doors to burgeoning trade that has dramatically improved the 
lives of its people.

Thirty years after the fall of Saigon, Americans are back -- this time, as 
investors instead of combatants.

"The economy has just boomed," said Thomas O'Connor, the head of a Chicago 
telecommunications company. O'Connor visited Vietnam nine years ago and has 
since opened an office and manufacturing facility in Hanoi, the nation's 

"The increase in the standard of living has been phenomenal," O'Connor 
said. "And it has been a groundswell up, not a trickle down. The city is 
cleaner and people seem happier."

Huynh Dinh Dung, 28, a sales representative, said people definitely are 
happier; certainly he is.

"In 1992, most of the people in Vietnam were poor," he said. "After the 
war, things were very bad. There was rationing. I remember standing in line 
with my mother to get food. "Now, the living standard is OK, not poor, not 
very rich. Just average living. We feel very safe, and people feel happy."

"Nonsocialist" socialism

Scores of economic statistics reflect the economy's growth and the rise in 
the standard of living for the average Vietnamese. Locally manufactured car 
sales have grown 30 percent annually since 2002, with 11 auto 
manufacturers, including Ford and Mercedes-Benz, building cars in the country.

In 1992, the nation's residents owned fewer than 400,000 motor bikes, the 
favored mode of transportation. More than 13 million motor bikes are in the 
country now.

In only 10 years, according to U.S. statistics, Vietnam has gone from one 
of the United Nations' largest recipients of food aid to one of the largest 
sellers of food. It ranks second or third annually in coffee and rice 
production. It is a huge world supplier of cashews, with 40 percent of that 
production -- 73 million pounds last year -- going to the United States.

Fueling the nation's dramatic economic growth is full-speed-ahead 
capitalism combined with a flurry of foreign investment that has created 
jobs that in turn have created a wave of consumerism that has created more 

Streets in Ho Chi Minh City (formerly Saigon), population 8.5 million, and 
Hanoi, population 5 million, bustle with commerce. Stores and shops seem to 
be everywhere. Streets are filled with constantly honking motorbikes 
carrying residents to school, work, stores, home or to leisure activities 
along streets lined with shops. Modern restaurants and bars are filled with 
Vietnamese, some driving the latest Lexus, BMW or Mercedes-Benz.

"It's ironic that it's named the Socialist Republic of Vietnam," said Henry 
Nguyen, 31, a Vietnamese-American who grew up in West Virginia and has been 
based in Hanoi for the past four years. He manages a venture capital fund 
for his parent company, International Data Group.

"This country is socialist only in name and political structure," he said. 
"You can feel the energy of people trying to buy and sell things. The 
country has already been growing at 7 percent a year, and I believe that we 
can expect that steady growth for as long as people believe in the 

Adam Sitkoff agrees. Sitkoff, who grew up in University City, heads the 
Hanoi chapter of the American Chamber of Commerce in Vietnam.

"It's one of the most nonsocialist countries I've ever been in," said 
Sitkoff, who traveled much of Asia while working for former President Bill 
Clinton's administration. "There are countries in Europe that have much 
more socialist policies than day-to-day Vietnam."

Coca-Cola and KFC

Vietnam began to crawl from under its economic shell in 1986, when the 
government decided to junk its state-subsidized economy and move toward 
open markets.

"They changed because it doesn't work, and everybody knows that," said 
Nkiolaj Maj Bentsen, who heads a Danish industrial design firm that has 
partnered with a Vietnamese advertising agency in Ho Chi Minh City.

"You don't have good products if you don't have competition."

Still, progress was slow until Clinton lifted the U.S. trade embargo in 
1994 and in 2000 signed a special trade agreement with Vietnam.

Since then, foreign investment has poured into Vietnam, much of it from a 
country that waged a bitter war against the nation -- the United States.

Four years ago, for example, bilateral trade between the two nations was 
$1.5 billion. Last year it stood at $7 billion.

American investment is everywhere. Conoco Phillips has invested nearly $1 
billion in oil and gas production. Ford Motor Co. has opened a plant just 
outside Hanoi, where it produces the Mondea, a Taurus-like sedan; the 
Escape, a small sport utility vehicle; and the Ranger.

Motorola is deeply invested in Vietnam, as is Liberty Mutual Insurance. 
Sheraton has opened two five-star hotels, and Hanoi -- home to the infamous 
"Hanoi Hilton" prison that housed captured Americans -- now boasts a 
five-star Hilton hotel.

Nike is the nation's largest private employer, with more than 50,000 
workers producing shoes through subcontractors at plants that ring Ho Chi 
Minh City. And if Nike is here, it's a sure bet that Coca-Cola and Kentucky 
Fried Chicken would be, and they are.

The United States is the fourth- or fifth-largest foreign investor in 
Vietnam, behind countries like Japan and Taiwan, says Sitkoff, even if the 
statistics don't show it.

"To get around the trade embargo, a lot of American companies invested 
through third parties, like maybe the Bahamas or some other country," 
Sitkoff said. "We figure there's almost $3 billion in direct U.S. investment."

Later this year, to solidify the bond between the two nations, Vietnamese 
Prime Minister Phan Van Khai will visit the United States and ring the 
opening bell of the New York Stock Exchange.

"It's a comfortable life"

What attracts America, Japan, Taiwan, Australia, France and other nations 
to Vietnam is an age-old formula.

"Right now, it's cheap labor that's reliable, loyal and retrainable," 
Ngyuen said. "The literacy rate is . . . (over 90) percent, so you have a 
well-educated society and people who have been living in . . . 
poverty-stricken conditions. Consequently, people are ambitious."

Ironically, Vietnam is doing so well that Akhil Malhotra of Washington says 
it's better suited for finding a job in his profession as an industrial 
designer than the United States. His skills weren't really needed in the 
old state-subsidized economy, but they're in high demand now. So he 
remained in Ho Chi Minh City after landing a job while visiting his mother 
and father, who retired from the World Bank in Hanoi in 1997 and remained 
there as a business consultant.

"I make a good salary," said Malhotra, 29, who hopes to remain in the 
country a few years. "The company gives me a nice house. You can get perks, 
like a car and an expense account. It's a comfortable life out here."

Nor has Vietnam's economic explosion been lost on investors.

"Imagine," said O'Connor, the Chicago telecommunications executive. "You 
can make a higher return on your investment in a 'communist' country than 
you can in a lot of capitalist ones."

Building boom

Signs of economic progress are everywhere: The microbrewery in suburban Ho 
Chi Minh City. The group of Vietnamese retirees taking a leisurely 
cross-country biking trip. Parental complaints of overweight Vietnamese 
children. Routine travel by Vietnamese in and out of the country. 
English-language and Vietnamese magazines and newspapers that show a 
renewed interest in fashion, dining and travel.

But nothing signifies Vietnam's progress more than the nation's building boom.

"Everything is happening so fast here," said Sitkoff, the University City 
native. "If you guys want to redevelop the Loop, it might take a year. We 
can do it here in three weeks, and we have."

In Ho Chi Minh City, the amount of new construction is astounding, with 
thousands of luxury, high-rise condominiums going up along a 20-mile 
stretch being called "New City." The price will range between, $117,000 and 

They are being built near recently completed villas that cost up to $500,000.

But if the building in Ho Chi Minh City in the south is impressive, a 
glimpse of construction in Hanoi in the north is staggering -- new 
hospitals, government buildings, huge shopping centers and tens of 
thousands of housing units all going up at the same time.

In southwest Hanoi, on land that just two years ago was rice fields or 
cattle-grazing areas, dozens of 30-story building cranes stand like a flock 
of giant metallic birds against the city's skyline.

Massive condominium projects and three- and four-story single-family homes 
fill the area. Some pre-planned neighborhoods, with row upon row of 
elegant, three-story homes, manicured lawns and carefully placed decorative 
sculpture, would rival upscale communities in the world's richest nations.

And land prices inside major cities have exploded. A square meter in 
downtown Hanoi or Ho Chi Minh City can run as high as $7,000.

All of this in a communist nation with a median per-capita income of less 
than $700 a year.

Hidden income

How can Vietnamese, who make such meager salaries, afford $60,000 
condominiums or $200,000 homes?

Many of the highest-priced homes are going to foreigners like the 
Brownrings, a South African family that moved to Ho Chi Minh City two years 
ago after the father found work at a British international school.

"Most of the people here are Koreans and Vietnamese officials," said 
Cameron Brownring, 14, as he strolled through the gated community of 
half-million-dollar villas, wearing a Detroit Pistons jersey.

Also, Vietnamese make far more money than is reported, observers say.

"A lot of the recorded economy is off the books," Sitkoff said. "A large 
number of Vietnamese are in business for themselves, and this is primarily 
a cash economy. Then you've got the people in the countryside who don't 
even use money -- you know, 'I'll trade you a pig for some grain' -- and 
that brings the official income number down."

Additionally, it is estimated that as much as $8 billion annually -- one 
quarter of the country's gross national product -- is being sent back to 
Vietnam by the 3 million Vietnamese who left the country during and shortly 
after the war.

But a great deal of that hidden economy is generated by corruption, from 
lower ranking government officials, like police officers, to vice prime 
ministers. In recent months, people have been angered by reports of 
sweetheart deals designed to line the pockets of high-level government 
officials and irritated by extortion by functionaries who hassle them on 
the street.

"It's the same in any developing country," Nguyen said. "If you're a 
customs officer and you don't think you're getting paid enough, you're 
going to figure out a way to pay yourself. It's a function of power and 
transparency. I just hope it doesn't get to a level where it cripples 

If anything, corruption has become the primary concern of Vietnamese, who 
resent laboring in an extremely competitive free market while others cheat.

Still, that hasn't dampened the enthusiasm of Nhat Luan Nguyen and his 
efforts to penetrate the U.S. shoe market.

"This is a good time," he said, sipping a beer at an upscale restaurant in 
downtown Ho Chi Minh City. "I like living in Vietnam because we do our 
business well, and in Vietnam, I feel comfortable.



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