[Marxism] Communist capitalism
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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
DATELINE: HO CHI MINH CITY, Vietnam
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."
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
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
"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."
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.
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
"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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