charvey in Vietnam

My New Blog

Hi Public,

I've started another blog to share experiences and ideas about leadership and management.  Check it out at chrisfharvey.com.

I'll continue to update "charvey in Vietnam" from time to time with pictures, personal thoughts and experiences of living in Vietnam.  Eventually if I stop being lazy I'll even post something other than pictures.  Requests from my Public are always welcome.  I serve the people.

Love,
charvey

 

Who Knew?

Recently I spoke at the "Vietnam HR Day" event in Saigon.  I had practiced my speech in English and planned to deliver in English with a translator. 

After my standard introduction and opening joke in Vietnamese ("I'm learning to speak Vietnamese, but often Vietnamese people have no idea what I'm saying" spoken in Vietnamese, always gets a big laugh) I began speaking English.  But then I started peppering my talk with Vietnamese phrases and a sentence here and there.  Then I switched entirely to Vietnamese, relying on the translator only for a few words or phrases.  I surprised myself and completed about 70% of the 15 minute speech in Vietnamese.

I thought this was pretty cool.

After the event, though, one of the major feedbacks was "It would have been better if you had spoken in English."

I asked if anyone had trouble understanding me.  "No, they understood everything you said."

Trời ơi. 

Once I thought about it, it made sense for two big reasons.  The first: A lot of peole in the room had spent years learning English.  When they see an American on stage they expect to hear English.  And all those years of work paying off by understanding a native speaker at a professional event is a good feeling.

The second: People said that I was more passionate when I spoke English.  I buy it.  Speaking English requires zero effort, whereas speaking tonal Vietnamese requires a big chunk of my brain's attention to get it right (internal dialogue: "oh boy make sure you use dấu nặng and not dấu hỏi here").

So, I'm gonna stick to English in future presentations.  I'm not going to stop working on my tiếng Việt though.  

Scary Price Controls

Over the past few years Vietnam has suffered several bouts of rampant inflation.  Some products have been harder hit than others, namely milk products and other consumables.  Understandably, rapid price increases on consumer staples are quite unpopular.

The Vietnam authorities have decided to try to control prices by fiat.  Recently, they issued something called "Circular 122."  Not only is it unclear, but it contains different treatment for state-owned and private-sector companies.  It also mandates disclosure to state authorities of confidential pricing information despite an unsettling history of similar disclosures finding their way into the press.  

In short, it's a step backward for Vietnam's economic development.  

Countless experiences in other markets have shown again and again that price controls have the opposite of the desired effect.  They increase burdens and lower revenue on the companies providing valuable goods and services, which ultimately cause those companies to reduce their output or get out of the business entirely.

The best cure for rising prices is encouraging unfettered and free competition.  My unsolicited advice for the authorities is to eliminate burdensome red tape and generally make it easier for companies to do business and create wealth for the benefit of Vietnamese society.

You can read a summary of Circular 122 here.  Read the full text of the European Chamber of Commerce's open letter to the Ministry of Finance here.  For a little background on price controls, click here.

 

Promotional Events

Vietnam's consumer culture is developing rapidly.  I see a promotional events all the time. 

Here's a pic from a Samsung 3D TV promotional display.  There were characters from the animated 3D film "Monsters vs. Aliens" and the ubiquitous young promotional girls.

I had to get a pic with these guys, they looked so great!

Here's a promo setup for Sony Vaio laptops outside a big electronics store near my house.  I snapped the pic on the way to work.  I like the girls' outfits -- kinda like sexy space stewardesses.  The smarmy expression on this girl's face is excellent.  I'm pretty sure she saw me take the pic and struck an appropriate pose.  A budding model for sure.

Simple Management Tips

I love to learn and improve my management and leadership ability.  Tonight I was looking for some new business cases to use in the VietnamWorks MBA class and stumbled across a very pithy and valuable article on the Harvard Business Review blog.  In my experience, this advice is right on.  Always good to be reminded of the basics.  Enjoy.

Read the original article here.

Eight Things Your Employees Want From You
11:53 AM Thursday March 4, 2010
by Melissa Raffoni

I often have to remind the dedicated, smart CEOs I work with that leading takes time and energy. Directing the feelings, attitudes, actions, and behaviors of a team is a big task. Often, I also hear the secrets of these CEOs' employees, about what truly aggravates them and what they love about their bosses. To keep top executives on track, I've created this list of what employees want their leaders to do.

1. Tell me my role, tell me what to do, and give me the rules. Micromanaging? No, it's called clear direction. Give them parameters so they can work within broad outlines.

2. Discipline my coworker who is out of line. Time and time again, I hear, "I wish my boss would tell Nancy that this is just unacceptable." Hold people accountable in a way that is fair but makes everyone cognizant of what is and isn't acceptable.

3. Get me excited. About the company, about the product, about the job, about a project. Just get them excited.

4. Don't forget to praise me. Motivate employees by leveraging their strengths, not harping on their weaknesses.

5. Don't scare me. They really don't need to know about everything that worries you. They respect that you trust them, but you are the boss. And don't lose your temper at meetings because they didn't meet your expectations. It's often not productive. Fairness and consistency are important mainstays.

6. Impress me. Strong leaders impress their staffs in a variety of ways. Yes, some are great examples of management, but others are bold and courageous, and still others are creative and smart. Strong leaders bring strength to an organization by providing a characteristic that others don't have and the company sorely needs.

7. Give me some autonomy. Give them something interesting to work on. Trust them with opportunity.

8. Set me up to win. Nobody wants to fail. Indecisive leaders who keep people in the wrong roles, set unrealistic goals, keep unproductive team members, or change direction unfairly just frustrate everybody and make people feel defeated.

Your job is to make it practical for people to succeed. When you do this, everybody wins.

For over a decade, Melissa Raffoni has worked directly with more than 100 CEOs as president of Raffoni CEO Consulting. She has served on the faculty at MIT's Sloan School and Harvard's Kennedy School. Melissa holds an MS in Corporate Strategy and Managerial Communication from the MIT Sloan School and a BA in Economics from Colby College.

Do I Not Bleed?

Westerners and Vietnamese ask me all the time "How do you work with and manage Vietnamese here?  Vietnamese are so different from Americans!"  Then they look at me expectantly, thinking I'll spin some anecdote about how inscrutable and mysterious Vietnamese people are.

This question always reminds me of Shylock's impassioned speech in Shakespeare's "Merchant of Venice." [I've taken a few liberties to suit the context.]

"Hath not an American eyes? Hath not an American hands, organs, dimensions, senses, affections, passions; fed with the same food, hurt with the same weapons, subject to the same diseases, heal'd by the same means, warm'd and cool'd by the same winter and summer as a Vietnamese is? If you prick us, do we not bleed? If you tickle us, do we not laugh?  If you poison us, do we not die?"

My point here is that I've found that Americans and Vietnamese are 95% the same in our humanity and only 5% different in our culture.  We only think that we're oil and water because we focus on the small differences and ignore the overwhelming similarities. 

In all the important ways we're 100% the same.  We both like to feel like an important part of a team.  We both like to feel appreciated.  We're both satisfied by meaningful achievement after hard work and sacrifice.  We both like to feel like we're constantly learning and moving forward in our careers.  These are human qualities.  They are not the sole province of any nationality.  I can relate to people here because they are human just like I am.  We both bleed when pricked.

Of course, there are some cultural differences and it's important to be sensitive and pay attention to them.  An example is learning to interpret the indirect communication style of Vietnamese.  But now I'm familiar with it and I can read the tea leaves just fine.  [I've even learned a bit about the subtle art of how things left unsaid speak volumes.]  But the cultural elements are peripheral to the central humanity that I share with my colleagues.  It's easy to relate to them.

So my answer is always "No, I find that people here are exactly like they are in America." 

Ads ads everywhere

I snapped this pic last week at Tan Son Nhat airport on the way to Hanoi.  Every seat back was covered with an ad.  More evidence that Vietnam has gone capita....erm, market-oriented in a big way.

This ad is for a bank.  There are an unbelievable number of banks in Vietnam.  I have no idea why, because I don't think the consumer and business credit market here is very developed.  Anyone know?

VietnamWorks Marketing Campaign

Today we launched the online component of our current "Success" campaign.  The site encourages our users to send us photos of them showing the emotions of landing a new job.  We'll choose one finalist to become the new face on the VietnamWorks home page.  Check it out! [in Vietnamese only].

 The captions in the pictures say things like "Hey mom, I'm about to start a new job!" and "I got a new job, yeahh!"  The idea is to capture the emotion and excitement of finding a new job.  It's a great campaign!

Old and New

I snapped this photo at the corner of Nguyen Du and Truong Dinh in district 1. It's a great example of the juxtaposition of "old Saigon" and "new Saigon."  Slowly but surely, decaying buildings and infrastructure are giving way to shiny new buildings and bridges.  It's changing the character of the city.  Of course, some will lament that something is lost, and they're right.  But something is gained too.  Change is unstoppable, and brings the good with the bad.  

It's a real shame, though, when historic old buildings are demolished to make way for plain-vanilla office towers (see Beijing).  The Society for Historic Preservation is a bit, ahem, underfunded in Saigon.

There are tons of similar-sized office buildings going up all over districts 1 and 3.  Judging from all the "for rent" signs, I imagine each new building contributes to the surplus of space on the market.  No doubt all this space will be absorbed over the next 2-3 years though.  I can feel things starting to pick up again, slowly but surely. 

I think the building on the left is a residential building. Looks like it's at least 50 years old.  What's your professional opinion, chu Mel?

POST UPDATE: Thanks to readers Tyler and Mel, the old building has been identified as the Meyerkord BOQ from back in the day.  I found this roughly 40 year old pic on the internet.  Looks like time has been unkind to the Meyerkord.

Corruption

I stumbled across an English-language news story on vietnamnet.vn quoting people speaking openly about corruption by government officials in Vietnam.  Although it seems common knowledge that corruption at all levels is endemic among officials, I didn't expect it to be discussed so openly.

The powers that be pay lip service to fighting corruption, but the unfortunate reality is that palm-greasing and shakedowns are so entrenched up and down the bureaucracy that it is nearly impossible to remove.  I've concluded that any time you hear of a top-level guy getting strung up on corruption charges, yeah the charges are probably true but the real reason he's in trouble is he stepped on the wrong guy's toes.  So they decided to sacrifice him on the altar of an "anti-corruption drive" to keep up appearances and kill two birds with one stone.  Nice and neat, eh?

Here's an example from Newsvine - Vietnam about some local officials who got busted.  It sounds cynical, but I wouldn't be surprised if their real offense was not sharing the loot with the right guys above them.

Here's a post I wrote two years ago when I heard about a corruption-fighting grandma in Hanoi.

Personally I haven't encountered corruption in Vietnam, but then my contact with officialdom has been nearly nonexistent.  I couple Western guys I know who married Vietnamese complained bitterly about all the palms they had to grease to get marriage licenses, birth certificates etc.  Usually the official will raise maddening bureaucratic obstacles, but then generously offer to "expedite" your request for a "fee" or "gratuity."  If you don't pay, they'll drown you in red tape.  It's petty and really makes people angry.

It's not just the government that has a problem.  Kickbacks are also a way of life across sectors.  Our salespeople are sometimes asked for an under-the-table kickback -- oops, "gratuity" -- in exchange for steering their company to buy our services.  We've decided not to do that, ever.  If we signal it's ok to pay kickbacks to win business, then we have no moral standing to demand our people not take kickbacks to favor certain vendors.  You can't have it both ways.  Besides, our service is good enough that we're confident to win against any competition paying kickbacks.  

Here's the story, below.  You can read the original here.

“Good and honest officials are regarded as fools”

11:36' 28/09/2009 (GMT+7)

VietNamNet’s readers write in to the Administrative Reform Forum with more ideas on improving government.     From Russia, reader Hong Son sends a story about his close friend who returned to Vietnam to get married. An official “suggested” that a gratuity of seven million dong could ensure completion of all necessary formalities. It’s obvious, Son said, that only when people are taught self-respect at school that it will be possible to have public servants who refrain from asking for things to which they aren’t entitled.   Reader La Ken from Hai Phong said that if the entire administrative system were computerized, it will be more effective, saving money and time for the people and harassment would be diminished because the people wouldn’t have to directly meet with officials. “By automating procedures,” he wrote, “we can cut down the number of government employees by two-thirds. Wages for government employees will rise while the state doesn’t have to pay more,”   Ken speculated that simplifying formalities is simple in other countries but difficult in Vietnam because officials who hold the power in the government system don’t want to harm their own self- interest.   Many readers propose that public services be privatized. They also suggest a standardized  recruitment policy, tighter discipline and reduced government staffs.   Tran Thi Dung from HCM City maintains that the current number of government employees ought to be slashed in half. “In addition, we should reduce the number of divisions and departments within government agencies by two-thirds. Within each division and department, the number of staff should be reduced so that all officials are always busy. Naturally, administrative formalities will be reduced and they will be paid a satisfactory salary,” Dung wrote.   Pham Thi Van from Da Nang questioned: “If an official deliberately takes risks that cause losses to his organization, how would it be if – as in other countries -- his boss has to resign?”   Promotions go to those who are clever at ‘building relations’   VietNamNet’s readers have not only analysed the phenomenon of harassment but also have pointed out the danger of relying on officials who are not good in their jobs nor of high moral character, but instead are just clever at “footwork” and good at building “good relations” with their bosses. Some comment how odd it is that pure and honest officials are regarded by their colleagues as “eccentric fools” and referred to as “idiots.”   A reader at nv.thieu54@... complains: “It is painful how often rich officials return to their home villages openly boasting about their talent in building relations with their superiors. They are proud because the whole village and their relatives admire and honor them as talented people – or so they seem, since they are richer than many who have high diplomas.”   Hoang Nga from Hanoi expresses frank criticism: “Don’t excuse immorality as the consquence of  low salaries. Many people live purely and keep their self-respect. It is regrettable that such officials are rare today and they may be thought of as “stupid” by their colleagues.”   According to Hoang Nga, cases of officials abusing administrative formalities to benefit themselves has become an “epidemic.” The perpetrators are not ashamed when they harass the people.   Some students now studying overseas told VietNamNet that the current situation discourages them from returning home to work. Nguyen Huong in London said that she is studying with some Vietnamese officials. Whenever they talk to each other, they always mention that this position is lucrative or that position is good for earning money or it is very easy to create difficulties for people who need their help.   Huong added that although the monthly salary of these officials is two to three million dong, they spend luxuriously.   “Let’s bravely change our policy entirely, like Singapore did. Don’t set up a long ‘roadmap” that will take many years to execute” Huong urged.   The prayer of nearly every reader is that the government will strongly commit to the reform of ‘administrative procedures’ and take resolute action.  Le Nhung

Becoming a Guru

Tonight I began writing down some personal goals.  Besides becoming a US Ambassador one day (one of my >10 year goals) one of my goals is to become a business and leadership guru in Vietnam.  I think it would be fun.  I'm passionate about leadership and business and enjoy it.  Why not?  Even if I don't get there, the journey will be a kick. 

I decided to take some action towards this goal recently by agreeing to write a monthly column on strategy and leadership in a weekly business magazine called "Doanh Nhan."  Here's the first article, to be translated into Vietnamese.

Focus on Value for Growth, Not on Price

Business managers in Vietnam often focus on price as the key to success.  I believe that this nearly exclusive focus on price limits the growth and profitability of businesses.

I know you're thinking "This guy is crazy.  Of course businesses compete on price!"  And you're right -- price is an important factor when customers make purchasing decisions.  But consider what happens  when business managers focus only on price to compete.   They spend all their time and effort getting their costs down so they can lower their price to to the bare minimum.  And what do their competitors do?  They cut their price too.  Both businesses start hitting each other with lower prices in an effort to gain the upper hand.  And the result?  A never-ending price war that lowers revenue and profitability.  Both companies have to cut product quality and service to keep from going out of business.  That means poor or no service, low quality materials, no staff training -- in short, low value products or services and small companies. 

There is a better way to beat your competitors while growing revenue and large, sustainable profits.  I call it "focusing on value."

You can also think of "focus on value" as "focus on solving the customer's problem."  After all, why does any customer choose to buy your product?   It's because your product solves a problem for them and they are willing to pay you to solve that problem.  Focusing on solving the customer's problem leads to improvements in your product that will save the customer time and money.  When you save the customer time and money, you make your product more valuable.  If your product is more valuable, your price can be higher than your competitors' prices and customers still will choose to buy your product (but only if your sales people must know how to communicate the value of your product, but that is the topic of another article!)

Let me give you an example from our business, VietnamWorks.com.  We help to solve a problem common to every company in the world -- finding the people they need to staff and grow their businesses.  I'm sure you can agree that the right person in a position creates a lot of value for a company.  On the other hand, the wrong person in a position destroys value.

Our competitive strategy is very simple -- we focus on solving our customers' recruiting problems better than our competitors.  In our business, solving their problems better means delivering many high-quality candidates, fast.  When they receive more high-quality applications they have more choice and are more likely to find the perfect person for that new marketing, sales or IT position that is critical to expanding the business and raising profits.  When we deliver the candidates faster we can get that perfect person into the customer's company faster to begin adding value to the customer's business.  After all, time is money. 

To ensure we can deliver value than our competitors, we focus on marketing, staff training and product innovation.  Marketing brings job seekers to our website, staff training makes us more efficient and creative and product innovation makes our website easier and more productive for customers.  All this results in delivering more value to our customers in the form of many high-quality applications.

In short, solving our customers' problem better and faster than our competitors creates huge value for our customers.  And we capture some of that value through our pricing strategy.  We do not offer the lowest price.  On the other hand, nearly all of our competitors compete with us solely by offering a lower price.  Some even give away job-posting services for free.  But they have been unsuccessful at winning much market share because their products are less effective at delivering candidates to customers.  After all, you get what you pay for.

If you are looking for ways to grow revenue and profitability in your business, you might consider spending some time to understand your customers' problems better.  What do they value?  Faster delivery times?  More flexible service?  A specialized product or service no one else is delivering?  After you understand their needs better, you can change your product to increase the value you provide to them.  If your customers understand the higher value of your product they'll be willing to pay a higher price for it.  Imagine that -- increasing revenue and beating competitors by increasing your price!  It's more realistic than you think.

Vietnam Talent Shortage

A friend of mine in the USA sent me this article today.  It's pretty accurate in my opinion.  Lack of human talent is absolutely the one of the biggest limiting factors in Vietnam's economic growth.

Universities in Vietnam are quite weak and produce graduates short of practical knowledge and, more importantly, critical thinking skills.  Rote memorization is emphasized over writing or application of knowledge.  Corruption and purchase of grades is not uncommon.  I've found that otherwise very smart people often have no idea how to state an argument, support the argument with point-by-point claims, then summarize the argument to make a compelling case.  These are basic thinking, communication and problem-solving skills.  We've had to teach them from ground up in our company, with some nice success.  One aspect I love about the Vietnamese is how hungry they are for knowledge and learning.

Firms struggle to hire skilled professionals in Vietnam

Wed May 13, 2009 8:04am EDT

By John Ruwitch

HANOI, May 13 (Reuters) - About a year ago, 2,000 of the best and brightest from five of Vietnam's top universities were invited to take a lengthy multiple-choice exam for a shot at a job at Intel Corp. (INTC.O).

The giant computer chip maker had broken ground on its biggest factory ever in Vietnam's commercial hub, Ho Chi Minh City, and the $1 billion assembly and test facility, expected to start operations this year, needed good engineers.

It was more than just another big project. The Intel investment would put Vietnam on the global tech map and help a rising star in the manufacturing world move closer to its dream of advancing up the value chain.

But the results from Intel's test cast a spotlight on one of Vietnam's biggest barriers to achieving that dream: its inadequate and inflexible higher education system.

A fraction of the students passed the written exam, covering physics, electrical engineering, maths and other topics. They were given an English test and just 40 made the final cut.

Than Trong Phuc, Intel's country manager for Vietnam, said he was not surprised by the results.

"Is Vietnam a literate society with good people with fundamental skills? Yes," he said. "But do these people already have knowledge about chip-making in place? No. So we have to start from the ground."

Company spokesman Nick Jacobs said the test was not designed for hiring but rather to "evaluate the competencies" of students and to be a starting point for dialogue with the authorities.

Vietnamese newspapers and websites reported on the result, though, and word quickly spread.

The Intel tale soon became a go-to anecdote in the foreign business community to highlight the education system's failings and one of the big problems when investing in the Southeast Asian country, a lack of skilled professionals.

DEMAND IS ENORMOUS

Among Vietnamese, public debate has blossomed about what many are calling an education crisis, especially at a time when some argue education reform should be a top priority as the government tries to right an economy buffeted by the global recession.

The higher education system remains a throwback to Vietnam's pre-reform days when the economy was small and centralised, ill equipped for the country's new realities.

"The demand for education at the post-secondary level is enormous. Demand way outstrips supply," said Jeffrey Waite, who follows education in Vietnam for the World Bank.

"The system is under enormous pressure to respond by expanding access, and there's always the risk of expanding access at the cost of quality ... Quality is of real concern."

One huge problem is staff. Political credentials remain at least as important in the selection of professors as educational bona fides, despite a clear need for better qualified teachers.

Less than 15 percent of teaching staff at higher education institutes have a doctorate, and that percentage has not changed in the past 10 years, Waite said.

Schools have little autonomy to tailor curricula and students are rewarded for memorisation skills, not critical thinking.

"I bet very few graduates could give a correct answer if they were asked 'what is a market economy?'," said one recent graduate who declined to be identified. "But you know what? They made us memorise the Investment Law which took effect in 1987."

The school system, like other facets of life in Vietnam, is also plagued with corruption. Plagiarism is reportedly rife.

Not surprisingly, the products of such a system are weak.

Only 30 percent of university and college graduates met requirements for their jobs, state-run VietnamNet quoted the Ministry of Education and Training as saying.

Between now and 2015, the two biggest cities, Hanoi and Ho Chi Minh City, will need some 4 million "high-quality" workers in fields such as information technology, tourism, shipbuilding and finance. Based on the current level and quality of training, at best 40-60 percent of demand could be met, it said.

In IT, Vietnam's universities and junior colleges mint 110,000 new engineers a year but only 10 percent become "effective employees", it reported.

TALENT DROUGHT

The talent drought is not limited to the tech sector.

"Whenever I talk to any company here, whether it's American or not, they say that finding good people is one of the major issues that they face," said U.S. Ambassador Michael Michalak, who has made education a top priority.

The Vietnamese government recognises the need for change. The question is whether or not it will come fast enough.

"The major challenge in this phase of development for Vietnam is really human resources," saidTon Nu Thi Ninh, a former Vietnamese ambassador to Brussels who is now working to set up a private university in the south, called Tri Viet University.

"You can have all the influx of investment and capital you want, but if you don't have the right human resources, in time you won't make it."

Companies, meanwhile, are forced to be creative in finding ways to fill their human resource pipelines.

Some foreign firms have partnered with Vietnamese universities. Many have their own training programmes. FPT Corp FPT.HM, one of Vietnam's top technology companies, even set up its own university in 2006.

Intel flew its 40 successful graduates to Malaysia for further training, and later this year will send 28 students to Portland State University in the United States on two-year, all-expenses-paid scholarships worth $2.24 million.

"They come back and the condition is they work for Intel for three years, which is not a long time," Phuc said.

The company has also donated PCs to Vietnam, trained teachers and offered $500 scholarships to 55 students domestically.

The government has been drafting and re-drafting an education strategy to take it through to 2020, but it has faced criticism.

One former senior education official was quoted as calling a late draft "unbelievably romantic". The start year keeps getting pushed back and it is unclear when the plan will be implemented.

The Ministry of Education and Training did not respond to requests for an interview with Reuters.

One critically needed change, some say, is the role of the central government, which must shift to one of broad oversight rather than micromanaging matters such as tenure appointments.

"It's like they want to have their cake and eat it. They know what they want. They want to have one or two of their universities to be top ranked in the world. But they don't want to give away what they have," the World Bank's Waite said.

(Additional reporting by Pham Hong Hanh; Editing by Alan Raybould and Megan Goldin)

Internet Startup Marketing Advice

Here's a short preso on marketing a startup.  It's from my former colleague at Yahoo, Sean O'Malley.  My favorite point in the preso is "The product *is* the marketing."  This is especially true on the internet.  Every website in the world is one click away from your desktop, so distribution is free.  If the product adds enough value to users it will market itself -- great examples are Facebook, LinkedIn and Google.

Sean's blog is chock-a-block full of insightful product and marketing advice for internet services.  Click here to check it out.

Startup Marketing

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Startup Survival Guide

Here's a presentation from Sequoia, a venture capital firm in Silicon Valley.  It should be required reading for all startups.  Slide 49 is particularly sobering.

Sequoia Capital downturn presentation

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BarCamp Saigon

Last weekend I gave a short presentation at the first "BarCamp Saigon".  It was organized by some expats and Vietnamese interested in the tech sector.  Most of the participants and presenters were technical, but there were a few business peeps such as myself.  I met some interesting people -- it was a little slice of Silicon Valley right here in Saigon!

My preso was about the ingredients of a successful web business.  I could talk for hours about this (I have *lots* of opinions, right sis?) but I had to condense down into just a few slides.  I used the screenshots in the preso for discussion.  I also took advantage of the occasion to promote our new professional networking site, Caravat.com.  ;-)

Bar Camp Ingredients Of Successful Web Biz Nov 2008

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VNW "Dreams" Campaign

On Monday we kicked off the "Dreams" campaign internally at VietnamWorks.  The objective of the campaign is to infuse a sense of mission among team members in the company.  We're not "just a business."  Our service really does help people achieve their dreams -- provide for their families, make their parents proud, take on new challenges, achieve greatness -- and I want people to understand that no matter what their work is, it brings dreams closer to the people we serve.  It's a great message that inspires me every day.

The Marketing team has been super creative in designing and executing the campaign.  I love their ideas!  They include a "Jumping Guy" contest [pics below, the Jumping Guy is part of our logo] and an audio contest to see who can make the most celebratory "Wowie I got a new job!!!!" sound. 

We began on Monday morning by having senior management line up at the front door and cheer wildly for team members as they entered the building. Then we thanked each one: "Thank you for helping people to achieve their dreams!"

Several people looked around them, trying to find who we were clapping for until they realized "Oh, it's me!!" and big smiles broke out on their faces.  Loc, from the Sales team, even began racing out the front door and offering his arm to women.  It was such a good idea I followed his lead.  Hilarious, and good fun!

Click here to see the Yahoo 360 blog that the Marketing team created.  It's mostly in Vietnamese but you'll get the idea.

The Marketing team did an outstanding job decorating the office.

Now for some Jumping Guy contest pics (there are many more on the VietnamWorks 360 blog).  We're having a contest and people can vote on the best ones.  Here's a great one -- I think Hong Phuong[?] -- it looks like she's taking off!


Thanh had another impressive jump.


I love Binh's beatific smile.

And yes, charvey.

A nice group shot of the Marketing Team.  More beaming faces.  Everyone had a blast!

Clouds on the Horizon

The buzz about Vietnam's economic growth has turned sour over the past few months.  Inflation seems out of control -- people at the low end of the economic ladder are really hurting as their incomes fail to keep pace with inflation in key areas like food and fuel. 

Macroeconomics is not my strong suit, but my understanding is that official policies have kept the dong, Vietnam's currency, artificially high.  Also, the leadership's policy of encouraging state-owned conglomerates like PetroVietnam (the state oil company) to enter new industries like real estate and banking is not a good idea.  By definition, investment decisions by state enterprises often are dictated by political -- not economic -- considerations.  Due to the easy access to capital enjoyed by state enterprises, capital that otherwise would flow to projects with a high return on investment instead flow to projects that are favored for political reasons [read: easy money].  That in itself harms economic growth.  But if the dong declines precipitously in value, then the loans taken by state banks from overseas lenders suddenly will become much more expensive to repay.  Bank failures may result and the flow of investment capital to productive projects will seize up, severely impacting FDI and growth.  The exact same thing happened in Thailand in 1997.

Fortunately, we haven't seen any impact on our business at VietnamWorks yet.  But I expect any economic slowdown would lag a financial crisis by a few months anyway.  I've got my fingers crossed.

- charvey

Vietnam Inflation Crisis Is Feared

Government's Moves 
To Curb High Rate 
Deemed Inadequate

By JAMES HOOKWAY
May 30, 2008; Page A6

Vietnam's accelerating inflation is threatening to morph into a full-blown crisis, and it provides a warning to other Asian countries trying to tamp soaring prices.

The government said this week the inflation rate in May was 25.2% on an annual basis, up from 21.4% in April and 14.1% in January. A slow government response was in large part to blame. When oil and food prices began to rise late last year, the State Bank of Vietnam, hoping to sustain growth, was slow to rein in inflationary pressure by raising rates or clamping down effectively on irresponsible lending. Efforts to control inflation proved ineffective -- such as a loosening of the currency's dollar peg, which backfired largely because of lending practices.

So far, economists say there is limited scope for Vietnam's troubles to infect other Asian economies. But Vietnam presents a worst-case scenario of what could happen if the region's central banks don't act swiftly to curb rising prices at a time when their economies -- unlike those of the U.S. and Western Europe -- are still showing robust growth.

After a building boom amid low interest rates and an export boom because of a weak local currency pegged to the dollar, Vietnam's economy has reversed course. The stock market's main index is down 55% this year, and the prices of goods are rising sharply.

Morgan Stanley, in a report Wednesday, warned that loose lending had created a banking crisis. It forecast that Vietnam's currency, the dong, could weaken dramatically against the dollar in the coming year.

On Thursday, Fitch Ratings lowered its outlook for Vietnam's sovereign debt to "negative" from "stable." The country's policy response to rising inflation "has been both too slow and too small," the agency said.

Many Asian central banks have made controlling inflation their primary policy objective in recent years. But relatively few are genuinely independent, making them subject to political pressure to maintain economic growth.

Some, such as India and China, have opted to mop up excess liquidity in their financial systems by imposing new reserve requirements on their banks rather than raising interest rates to levels that might do more to stanch inflation. Others are waiting to see whether larger harvests will ease food bills, which are 40% or more of the consumer-price index in countries such as Indonesia and the Philippines.

Vietnam's experience shows the danger of waiting too long before taking decisive action to head off inflation. "What's happening here in Vietnam is the Asia of 10, 20 years ago," said Spencer White, a strategist and member of the board at Thien Viet Securities in Ho Chi Minh City. "There's not much financial integration with the other Asian markets at this point, but it could damage the broader appetite for frontier markets."

A year ago, Vietnam was the darling of global investors. International banks such as HSBC Holdings PLC bought into local banks. Property developers from South Korea and Taiwan began work on huge developments to build office space in Hanoi and Ho Chi Minh City.

Global manufacturers also streamed into the country, partly to escape rising wage and land costs in China but also to tap a young and industrious work force who saw a glimpse of prosperity after years of war and stagnation. Foreign companies sought approval to invest $20 billion in the country last year -- a third more than in nearby Thailand -- adding to the inflationary pressure by driving up land costs, skilled-worker wages and office rents.

The country's biggest state-run enterprises began diversifying, hoping to become powerful conglomerates to compete with the foreign firms that began arriving in Vietnam following its accession to the World Trade Organization.

Some of Vietnam's senior leaders questioned Prime Minister Nguyen Tan Dung's determination to build up these new businesses, often with cheap loans from state-run banks. A former prime minister, Vo Van Kiet, wrote a public letter to Mr. Dung last year saying these were precisely the mistakes South Korea, Malaysia and others made in the run-up to the Asian financial crisis of the 1990s.

As inflationary pressures began to rise last year, some government economists say, the central bank didn't want to cut off the low-cost loans. "Much of the central-bank policy was driven by the government's agenda of promoting as much economic growth as possible while at the same time making sure that state-run enterprises would play a bit part in the economy in the years to come," a Vietnamese economist said.

People familiar with the situation say that, earlier this year, as higher prices sparked protests and strikes, Mr. Dung instructed central-bank governor Nguyen Van Giau to act more aggressively to contain inflation.

The central bank widened the range in which the dong could trade against the dollar. The idea was to free the local currency from a sliding U.S. currency and to enable Vietnam to better absorb higher oil costs. Instead, the move triggered panic among a population that for years used the dollar as a convenient alternative to the unwieldy Vietnamese currency, whose largest bank note is the rarely seen 500,000-dong bill -- worth about $30.

Some local banks refused to exchange dollars, and local stock prices collapsed as banks held on to their dong and refused to lend money to buy shares. Mr. Dung in March lowered Vietnam's growth target for 2008 to 7% from 8.5% to help focus the drive against inflation.

Since then, a global spike in food prices and a poor rice harvest have made things worse. The central bank expects Vietnam's current-account deficit -- the difference between a country's import and export of goods and services -- to hit 7.5% of gross domestic product this year, up from 5% in 2007. The current-account deficit in Thailand was 6.5% of GDP when it was forced to devalue the baht in 1997, triggering the Asian financial crisis.

The Vietnamese, meanwhile, have been draining bank accounts and buying gold instead. Some have also started hoarding dollars as a hedge against inflation.

Apartment prices in Ho Chi Minh City, the country's commercial hub, have fallen by half so far this year, local media reports say. Morgan Stanley estimates loan growth has been expanding at over 35% a year and exposure to the property market is about 10% of total loans.

Write to James Hookway at [email protected]

Business Wisdom Free of Charge

Lately I've been listening to Jack Welch's podcast from BusinessWeek.  For those of you unfamiliar with podcasts, they are free audio programs available for download all over the internet.  They are called "podcasts" because generally people download them through Apple's iTunes software for play on Apple's iPod.

Podcasts are like the audio version of public access cable.  There are people broadcasting their own shows on diverse topics like classical music, cooking, bee keeping, baseball, whatever.  You can bet that whatever topic you can think of there's a podcast for it.   Professional media uses podcasts too.

Each week, Welch and his wife Suzy pick a different topic on management or business and ruminate on it for 7-10 minutes.  Not only are the topics fantastic -- how to fire someone, qualities of a great leader, how to do performance reviews for maximum effect -- but listening to Welch is like sitting down for a personal chat with him.  The passion, experience and plain-talking wisdom gained from his 41 years of magnificent achievement at GE jumps out of the headphones in New York brogue.  If you are interested in business and management I highly recommend this podcast.

Luxury Goods in Vietnam

Vietnam Develops Taste for Luxury Goods

Sun Sep 23, 2007 12:53 PM EDT

vietnam, luxury, world-news

Ben Stocking, AP Writer

Images (showing 1 of 8 photos)

A luxury car is parked on a street in Ho Chi Minh City, Vietnam, in this May 23, 2007 photo. (AP Photo/David Guttenfelder)

A young Vietnamese girl and her father shop at the Gucci store in Ho Chi Minh City, Vietnam, in this May 24, 2007 photo. In a country whose peasant army once marched on flip-flops made from old tires, Gucci beach sandals priced at $365 can come as a shock. (AP Photo/David Guttenfelder)

Gucci employees sit at a table outside a Gucci shop and other newly opened high-end luxury goods stores in Ho Chi Minh City, Vietnam on May 24, 2007. In the two decades since Vietnam began implementing its economic reforms, known as doi moi, the nation's poverty rate has been cut in half and per capita income has doubled in the last five years. (AP Photo/David Guttenfelder)

Vietnamese women pass by a Gucci store in Ho Chi Minh City, Vietnam, in this May 24, 2007 photo. In the two decades since Vietnam began implementing its economic reforms, known as doi moi, the nation's poverty rate has been cut in half and per capita income has doubled in the last five years. (AP Photo/David Guttenfelder)

Burberry salesperson Vu Thuy Linh poses with a purse at a new store in Hanoi, Vietnam Aug. 30, 2007. Burberry opened their store in front of Opera House, rear, earlier in the month. The Luxury market is booming in Vietnam, where Ho Chi Minh's communist revolution exalted equality and the common man just a generation ago. (AP Photo/Chitose Suzuki)

A collection of belts are seen in a Louis Vuitton store in Hanoi, Vietnam, Aug. 31, 2007. The Luxury market is booming in Vietnam, where Ho Chi Minh's communist revolution exalted equality and the common man just a generation ago. (AP Photo/Chitose Suzuki)

A Cyclo driver waits for customers in front of a Louis Vuitton store in Hanoi, Vietnam, Aug. 31, 2007. The Luxury market is booming in Vietnam, where Ho Chi Minh's communist revolution exalted equality and the common man just a generation ago.(AP Photo/Chitose Suzuki)

People walk inside a luxury shopping mall in Hanoi, Vietnam, Aug. 30, 2007. The Luxury market is booming in Vietnam, where Ho Chi Minh's communist revolution exalted equality and the common man just a generation ago. (AP Photo/Chitose Suzuki)

In a country whose peasant army once marched on flip-flops cut from old tires, Gucci beach sandals priced at $365 can come as a shock.

But the luxury market is booming in Vietnam, where Ho Chi Minh's communist revolution exalted equality and the common man just a generation ago.

As the country begins to embrace private enterprise, its nouveaux riches are snapping up shoes at Gucci, handbags at Louis Vuitton and watches at Cartier, offering proof of how much the country has changed after decades of war.

"I sold a $4,000 leather jacket recently," said Do Huong Ly, a stylish young saleswoman at the Roberto Cavalli shop in Hanoi. "Our customers want people to know that they are high-class."

Not long ago, displays of wealth were frowned upon in Vietnam. Those tire-sandaled troops who bested the French colonial army and outlasted the Americans embodied frugality and egalitarianism. The revolutionary government snatched up the assets of the wealthy and redistributed them to the poor.

But since the late 1980s, a government that once micromanaged all economic affairs has been introducing free-market reforms and courting foreign investors, and with them have come new western styles and attitudes.

"Members of the new generation want to enjoy life and pamper themselves with luxurious things," said Nguyen Thi Cam Van, 39, who has purchased five $1,000 handbags at Louis Vuitton.

"If I can afford to buy something nice, it makes me feel proud," said Van, who works at Siemens and also consults for a Vietnamese import company. "It lets you show people your taste and style."

One of her friends has 50 Louis Vuitton bags, Van said. "I think five is enough."

Some of Vietnam's shopaholics are young people who work for multinational corporations but still live rent-free with their parents. Others work for powerful state-owned companies and many have made fortunes in Vietnam's small but booming private sector.

They indulge their urge to splurge at Dolce and Gabbana, Burberry, Escada, Rolex, Clarins, Shiseido and the like.

In the two decades since Vietnam began implementing its economic reforms, the nation's poverty rate has been cut in half, and per capita income has doubled in the last five years.

Still, most workers in this nation of 84 million people still earn just a dollar or two a day toiling in the farm fields.

Those working low-wage jobs find the new lust for luxury hard to stomach.

"The rich are getting richer, and the rest of us are struggling to make ends meet," said Dao Quang Hung, a Hanoi taxi driver. "The money they spend on a Louis Vuitton bag could buy several cows for a farmer's family and lift them out of poverty."

At the new Gucci shop in Ho Chi Minh City, the flip-flops are among the economy items.

The black-clad sales staff, looking fresh off a fashion show runway in Milan, offer a pair of golden, spike-heeled shoes for $765.

Across the hall at the Milano store, the display last year featured a $54,000 Dolce and Gabbana dress, one of just three in the world, according to marketing director Dang Tu Anh, who represents both stores.

The others, Anh said, were worn by film star Nicole Kidman and Victoria Beckham, the former Spice Girl.

Milano's best customers, Anh said, think nothing of dropping $5,000 on a handbag and a pair of shoes.

"If they can buy something luxurious, it proves they have money," Anh said. "And that's good."

Vietnam's older generation, shaped by the hardships of war, finds itself at odds with younger Vietnamese over the new consumerism.

"Now the younger generation in Vietnam is racing for materialistic enjoyment," said Huu Ngoc, a 90-year-old scholar and author. "Individualism is destroying our cultural identity. We may become richer but lose our soul."

The war generation wasted nothing and always saved for the future, convinced that catastrophe lurked around every corner. But opinion surveys show that the 60 percent of Vietnamese born after 1975 are very optimistic about the future — and determined to enjoy the here and now.

Van, for example, enjoys pampering herself at the salon with massages and manicures. But she lives in fear that her father, a college professor, will learn about her five Louis Vuitton handbags.

"I can't tell him I have these," she said. "And I would never tell him how much they cost. He would think that I was completely irresponsible."

Van's indulgences are modest compared to those of Vietnam's super elite, who tool around in the ultimate status symbols: a shiny BMW or Mercedes-Benz.

And pay cash.

"In America, you pay in installments," said Nguyen Hoang Trieu, luxury car dealer in Ho Chi Minh City, the former Saigon. "Here, you pay all at once, in cash. Sometimes people come in here with $400,000 in a suitcase."

Movin' On Up

When I arrived in Vietnam in May 2006, I was pleasantly surprised at the variety of goods in local supermarkets.  I could buy Washington State apples, batteries, my favorite cereals imported from the USA, Tide laundry detergent, shampoo, pots and pans, whatever, in a relatively modern environment without haggling.  The supermarket was small and cramped, and the aisles set haphazardly, but most things were there.  It was similar to the  supermarket where my mom would drag me as a kid in the '70s, although  a slightly smaller and more crowded version.

I was there again last weekend after a 3 or 4 month hiatus (I eat out a lot, plus I'm lazy).  Wow, the place is changing fast.  The store is bigger.  The aisles are taller and more orderly.  The meat section much bigger.  I even saw an elegant wine display rack that could have come from Whole Foods a swanky, high-end grocery chain in the USA.  And construction is still happening in one part of the store.  Disposable incomes are increasing rapidly in Vietnam and a lot of that extra spending is going straight to consumer goods.  Vietnam is a marketer's paradise -- totally virgin territory.  Rising incomes and the fact that choice and cool things to buy are a relatively recent phenomenon recent is fertile ground.  The sense of optimism and, yes, joy, is palpable as the country sheds 30 years of material privation.  It's exciting to see. 

Here is a pic taken from an escalator leading the second floor of the "Co-op Mart".

And here's a shot closer to ground level.  Note the promotional displays and Oral-B toothbrushes.  The woman in the conical hat in the foreground is a nice juxtaposition.  Turns your preconceptions of Vietnam on their ear, doesn't it?

De-luxe Apartments

Vietnam is on the move.  I am here in-country, and let me tell you this is the real deal.  Here's an interesting article in the Wall Street Journal Asia from Wednesday, May 30.  Btw, I can totally relate to the "electricians installing sockets upside down" problem.

Vietnam Aims for Image
As a Luxury Destination

By BRUCE STANLEY
May 30, 2007; Page B1

CHINA BEACH, Vietnam -- Paul Chong was searching for paradise on a beach in Vietnam.

Mr. Chong, the head of business development at Singapore's Banyan Tree Hotels & Resorts, came here on a weeklong mission last August to scout sites for a luxury resort. He had journeyed by car and plane up the coast from Ho Chi Minh City before arriving at a tiny fishing village near the central city of Da Nang. In a remote cove reachable only by rowboat, he and three colleagues explored a two-mile stretch of beachfront.

"We fell so much in love with the site that we didn't leave until it was pitch black," Mr. Chong recalls. In March, Banyan Tree won a license to begin building the Laguna Vietnam, a $270 million complex of hotels, villas and spas.

Each villa at the Nam Hai Resort on the South China Sea has its own pool.

The complex is the latest in a small but growing number of exclusive resorts planned or already open in Vietnam -- a country many Americans still associate more with farmers' huts and a war that ended decades ago than with a luxurious vacation.

Investors from the U.S., Canada, Singapore and Dubai are among those developing posh getaways here. Many of these new resorts are sprouting along the central coast, on or near China Beach, 20 miles of white sand where U.S. troops body-surfed and swigged warm beer on R 'n' R breaks during the Vietnam War.

With its powdery beaches, mountains, rare wildlife, French-inspired cuisine and world-class cultural sites, Vietnam could be the next top-drawer destination in Asia, on a par with Phuket, Thailand, or the Indonesian resort island of Bali, some international tourism industry officials say.

"It's so diverse. In one destination, you can do so much," says John Koldowski of the Pacific Asia Travel Association, a regional travel-industry trade group.

A number of the world's hoteliers seem to agree. For example, China Beach is home to the five-star Furama Resort Da Nang, where guests have included European royalty and Asian heads of state. Among its diversions: scuba diving, cooking classes and slot machines. "I think it matches any resort anyplace in the world," says Furama guest Fred Williams, a globe-trotting security consultant from Davie, Fla.

Mr. Williams, who says he was twice wounded in Vietnam as a U.S. Marine, was making his first trip back to China Beach -- Vietnamese call it My Khe or Non Nuoc -- since a day's respite after the 1968 Tet Offensive. "I remember playing volleyball and eating steak and baked beans on that very spot, over by that stand of pine trees, 40 years ago," he says, wagging a finger southward from his poolside lounge chair.

Then there is the nearby Nam Hai Resort & Villas, which set a new standard for resort opulence in central Vietnam when London-listed investment fund Indochina Capital opened it in December. The Nam Hai is managed by Global Hotel Management Ltd., whose founder Adrian Zecha has made his name operating luxury hotels from Malaysia to Miami. Each of the Nam Hai's 40 residential villas has a butler, a private pool and an ocean view; prices for the seven units still available start at $1 million. Daily room rates for the resort's 60 hotel villas begin at $550.

A three-bedroom villa at the Nam Hai Resort & Villas in central Vietnam

Four Seasons Hotels & Resorts of Toronto is completing a full-size model of one of the 80 rental villas it plans to manage on secluded Cham Island, a 25-minute boat ride from Da Nang, beginning in 2009. Dubai's Kingdom Hotel Investments plans a 150-room, $65 million luxury resort called the Raffles Da Nang, to open in 2011. Foreigners' ability to own 100% of a project and to lease property for 50 years were important factors in Kingdom's decision to invest here, says the company's chief executive officer, Sarmad Zok.

The resorts are catering to a swelling tide of foreigners, numbering 3.6 million last year, two-thirds more than in 2000, according to the Vietnam National Administration of Tourism. Americans were the third-largest nationality among last year's visitors, after Chinese and South Koreans. The Pacific Asia Travel Association forecasts a robust 7.6% average annual growth rate in foreign arrivals through 2009.

But while Vietnam remains popular with backpackers, it is now attracting a more affluent class of traveler. It had the second-fastest GDP growth rate in Asia in 2005 (only China's was faster) according to Thomson Financial. People are coming to Vietnam to do business and returning to take vacations. In addition to the natural and cultural attractions, Vietnam has a deserved reputation for safety and political stability.

There are some inconveniences for the traveler. Getting a visa to Vietnam takes time, and international flights, particularly to Da Nang, are limited.

And some environmentalists worry that uncontrolled beachfront development could degrade Vietnam's environment. Resorts need lots of water for showers and laundry and to sprinkle on lawns and golf greens. If they pump too much fresh water from natural aquifers, seawater can seep in and damage surrounding croplands. Overdevelopment of Vietnam's idyllic beaches poses an additional risk: Discouraging the very guests that a luxury resort is trying to attract.

Banyan Tree was already thinking of building boutique hotels in the former imperial capital Hue, 60 miles north of Da Nang, when it decided that Vietnam was "ripe" for upscale tourism and warranted a larger investment, says Mr. Chong, the head of business development. Now Banyan Tree is drawing up a master plan for what it believes will be Vietnam's first big integrated luxury resort.

Mr. Chong crawled over boulders and waded though mud to find the right site -- a beach called Lang Co, between Hue and Da Nang. The 516-acre property will include a golf course and more than 1,000 hotel rooms and villas.

Banyan Tree is watching closely to see how business fares at the nearby $56 million Nam Hai Resort & Villas. The centerpiece of the Nam Hai is a reflecting pool and three swimming pools that cascade gently toward an 875-yard beachfront. The resort's hotel villas boast sinks with a cracked-eggshell lacquerware finish and fully loaded iPods.

Frenchman Hugues Lamotte, a London fund manager, bought a three-bedroom villa here with his wife in 2005 when the Nam Hai had just broken ground. He wanted to be close to Hong Kong; Bali was too far and Thailand too hot.

"A lot of our friends who do not know Vietnam think we are very courageous. They think of Vietnam as being totally undeveloped," he says, gazing at the vast, empty beach beneath his seawall. The villa "has exceeded my best expectations," he says. He even bought a neighboring villa as an investment and persuaded three of his friends to do the same.

A remote location like China Beach doesn't make a developer's life easy. Building the Nam Hai proved a challenge in part because local craftsmen had limited experience performing up to the required standards, Indochina Capital Chief Executive Officer Peter Ryder says. Electricians occasionally installed sockets upside down. Finding enough staff who could speak English was also a problem. The Nam Hai continues to run English classes for people from nearby communities to ensure it has a pool of potential employees with a minimal competence in the language.

Still, the hurdles to building a luxury resort in Vietnam haven't deterred Indochina Capital from planning additional projects. One is a villa compound on Con Dao island, a protected marine reserve notorious for the "tiger cage" prisons that the former South Vietnamese government once operated there. (The cages are no longer used to hold people, but some have been preserved as historical artifacts.) Elsewhere in the South, near the city of Nha Trang, the Evason Hideaway & Spa at Ana Mandara pampers guests, but in a rustic, Robinson Crusoe-like setting, where they are encouraged to go barefoot.

Some developers, meanwhile, are trying to lessen their environmental impact by recycling bathwater to spray on grass and using renewable construction materials, among other efforts. And local Vietnamese officials say they are controlling the proliferation of hotels on China Beach. Da Nang, for example, has a comprehensive plan for sharing its seafront between resort projects and public beaches, says Le Tran Nguyen Han, the city's head of environmental management.

But Anneke Schenk, a guest-relations manager at the Furama Resort, questions whether any such plan can withstand pressure from developers and authorities eager to cash in on Vietnam's beachfront bonanza. She fears for the distinctive scenery of puttering fishing boats and Vietnamese doing tai chi exercises on the sand.

"Now is the best time to visit China Beach," she says. "In five years, it'll be just like any beach in Thailand."

VN Markets 30% Overvalued?

My friend Colin sent me this article on the Vietnam stock market from the Financial Times.  Interesting reading.  There certainly is a lot of anecdotal evidence that investing in Vietnam has become the hot new thing. 

"Booming" Rhetoric

It seems that the foreign investment community has discovered Vietnam.  That's a good thing.  Mildly unsettling, however, is the media's hyperbolic rhetoric about Vietnamese economic growth.  It feels just a bit frothy.  Check out some of the hyped stories that Matt Powell, Hanoi real estate maven, lists in his excellent blog Target: Vietnam.

Business is indeed booming in Vietnam.  But will it live up to all the rhetoric?  Maybe -- weigh the evidence and decide for yourself. 

• Jon Hoff has a great post about office buildings sprouting like mushrooms throughout Saigon in a recent entry of his blog It's the Final Word.  Well, maybe not quite like mushrooms, but there are an awful lot of active construction sites for swanky office towers.

• Dan Harris, international attorney and prolific author of the China Law Blog, has written several posts about Vietnamese growth and its similarities or dissimilarities to China.  Two insightful ones are Vietnam -- Tastes Like China Lite and China is the Next China, Now; Vietnam May Be The Next China Someday.
  
  
• Matt Powell cites the Deputy General Director of Chesterton Petty Vietnam speaking about positive trends in the Vietnam property market in this post.
  
  
• VietnamWorks' quarterly Employment Indicator Report is a meaningful gauge of strong growth in labor demand.  Bear in mind, however, that growth in VietnamWorks job and resume statistics is not only a function of Vietnam's economic growth, but also of VietnamWorks' marketing and overall growth strategy.
  
  
• Check out a post I wrote back in May and the accompanying WSJ article -- Vietnam: Hype or Reality?

You're Fired! Part II

Wow, what an enthusiastic response!  The show is pretty fun.  It is very Apprentice-like, with two teams that compete during each show, team leaders, interesting projects, the works. 

Last night the teams set up outside a supermarket.  They were given the same bottles of un-labeled soy sauce and told to think of a brand and a promotion for the sauce, much like a consumer products company would do for a new product launch.  Each team was given 500,000 dong (about $30) and told to create a promotional space with two tables, facing each other across a small plaza in front of the supermarket.  They sprang into action.  In typical Vietnamese style, in no time they both secured sound systems so they could blast music (ABBA's greatest hits, endlessly repeated, was the choice of the day) and their message.  It seems there are speaker rental shops on every block in every city in Vietnam.  The Vietnamese love everything at top volume, all the time.

Each team also had the idea to prepare a dish that uses liberal quantities of soy sauce.  They quickly secured plates, disposable chopsticks, serving dishes and the accompanying groceries.  A few people on each team feverishly decorated their displays with signs, balloons, flowers, etc.  One team found a few candelabras that lent a homey yet festive air to their display as dusk settled over a cool Hanoi evening.

Once each team prepared their dish they were ready to assault the shoppers entering and leaving the store.   Both teams had audio-enhanced barkers shouting out the joys of their brand of soy sauce.  (In actuality, both teams were given the same brand in unmarked bottles.)  ABBA blasted.  Each team sent out runners to pull people in.  Flocks of people descended upon both teams. 

One dish was "bun," or light noodles served with some leafy garnish and garlic minced into the soy sauce.  It was served cold.  The other was stir-fried beef with some kind of tasty Vietnamese vegetable.  Charvey tried both and found each delicious.  But then, a hungry stomach is easy to please.

At the end of the evening there was a clear winner.  Although customers liked both dishes, they recalled the name of one "brand" of soy sauce much more frequently than the other.  They also said they were more likely to try that brand.  The winning team had come up with a short and catchy name for its sauce and religiously stayed on message throughout the evening.  The other team employed some teenage crooners who sang sad love songs and attracted a giggling teenage crowd of the singer's friends.  Teenagers milling around a promotional booth for soy sauce aimed at mothers was not good.  One member from that team knew a famous actress and convinced her to come.  It would have been cool if she had cooked a bit and helped them promote, but she just showed up, chomped a few bites and left.  That didn't help them.

At the end of the evening, we judges adjorned to officially decide on the losing team and select two people to cut from that team.  It wasn't fun, because all the candidates promoted their hearts out and I didn't want to cut anybody.  We finally settled on the team leader and the woman who had pushed the poor promotional ideas.  It was tough, but that's show biz.  Unfortunately, I wasn't able to work in "You're fired!" in a smooth way.  I did speak some Vietnamese on camera when we interviewed four customers to ask their opinions on the soy sauce.  It would be cool if that makes it through the editing.

I learned today that we have committed to hire one of the winners.  Funny how the woman on the marketing team who is point on this project never told me that before.  No worries tho -- I would hire any of those women.  Go-getters and great attitudes, all.

The name of the show is "Uoc Mo cua Toi," or "My Dream."  I'm sure I can figure out a way to get it on YouTube when it begins airing on January 9.

You're Fired!

I've got a new gig.  No, it's not running a modeling agency (although I heard of a guy who founded one in Shanghai to meet girls but wound up with a hugely successful modeling agency).  It's as a judge on a "Apprentice"-like reality TV show in Vietnam.  I'm representing VietnamWorks.

I'm tapping out this entry from a hotel in Hanoi where the show is being filmed.  Today we followed the candidates around as they tried to sell postcards to passers-by on the street.  Just like The Apprentice, it included lots of personal drama.  Some candidates are rivals, some are bossy, some are more passive.  No Omarosa though, which kinda disappointed me. 

All the candidates are young women from 22 - 28, to increase the show's appeal to the sponsor's  demographic.  I can tell you, the future of Vietnam is assured in the hands of these young people.  They are kickass go-getters, smart as a whip and totally eager to learn and compete.   One candidate was so wound up, she fainted tonight when we announced her team won the competition.  Oi, the drama!

It warms my capitalist heart to see these young people honing their business instincts and strutting their moxie.  I have no doubt they all will go on to do great things.

And for those of you wondering -- I'm gonna try to sneak in a "You're fired!" on the show even though that's not part of the program.

Fresh Faces in Can Tho

Last weekend I went to the city of Can Tho, a major provincial capital in the Mekong Delta.  Some local companies had organized a jobs seminar for students at the University of Can Tho.  VietnamWorks was invited to attend, say a few words and sit on a panel.  Needless to say, we ruthlessly exploited the event to deliver our message, but in a friendly and added-value way for the  students.  Seeing all those fresh-faced youngsters grappling with existential job angst reminded me of my own college days.  Nice kids. 

Charvey giving a brief speech which contained several shameless plugs for VietnamWorks.  On the right, her face partly obscured by flowers, is Chi from Customer Care.  She was my interpreter, and fortunately was able to cover my inarticulate ramblings with an elegant Vietnamese translation.

Students of Can Tho laughing as one of their own went to the stage to practice firm handshakes and good eye contact.  Read the newspaper story in Vietnamese here.

After the event I had lunch with bigwigs from the University and other sponsoring companies.  I felt like I was at a fraternity party.  One guy was a dead ringer for a Vietnamese Chevy Chase, I swear.  A couple guys kept toasting me and saying "50%!" or "100%!" which means chugging half or all of your drink, respectively.  I was advised not to go toe to toe with men from the Mekong since they are legendary drinkers.  Sound advice that I ignored anyway.

Mmmm, yummy giant snails just like mom used to make.  I was served several of these by the host.  Actually, they were kinda tasty.  But once I thought of the slimy snail foot in my mouth (that was the chewy, rubbery part) my I had to suppress the gag reflex.  It's all in the mind.

Manufacturers Taking Flight -- to Vietnam

Another interesting read about Vietnam's economic development.  This one is from the LA Times and comes courtesy of my good friend Mark P.  Thanks Marky Mark.

Rattle and Hum

Here's another article from one of my favourite publications, The Economist.  It also points out the danger of too much state interference in wealth-creating private enterprise.

Although nothing is a given, Vietnam is indeed on the move.  Stand on any street corner in Saigon and you will hear the rattle and hum.

Source: The Economist – August 3, 2006  

Good morning at last

Aug 3rd 2006 |

HANOI

From The Economist print edition

An economic boom is accompanied by remarkable success in getting rid of poverty and raising life expectancy. 

SIGNS of rapid development are visible everywhere around Hanoi: from the flashy sport-utility vehicles on the city's roads to the dormitory villages of smart “executive” homes rising among the fields on the capital's outskirts. George Bush and other world leaders will see it for themselves when Hanoi hosts the Asia-Pacific economic summit in November. That meeting will take place in a new satellite-city, Tu Liem, which is now being built on Hanoi's south-western edge. The futuristic conference centre, with a distinctive wavy glass roof, looks almost finished. Nearby, a huge five-star hotel is getting a final coat of paint. Along Tu Liem's broad, four-lane avenues, some apartment blocks are already occupied, others are just steel skeletons. Between the building sites, cows and buffalo still graze in what was open pasture only recently. [charvey note: check out this post from another local blog, "Itsthefinalword," about rapid residential and business development on the southern outskirts of Saigon.]

Before starting its doi moi market-oriented reforms in the mid-1980s, the Socialist Republic of Vietnam flirted with real communism and came close to famine. Since then, a reform process that was uneven at first has gathered momentum. Recent economic growth, though not quite as stellar as China's, has been remarkable. In 2001-05 it averaged over 7.5%, reaching a peak of 8.4% last year. This year the government is going all out to hit an 8% target.

Since 1990, Vietnam's exports have increased faster than China's. Their growth shows no signs of slackening. Between January and July they amounted to $22 billion, a year-on-year rise of over 25%. Having alarmed the Brazilians by becoming their main competitor in coffee growing, Vietnam is now ramping up its exports of everything from shrimps to ships to shoes (the last prompting the European Union to announce anti-dumping tariffs last month). It has just become the world's largest exporter of pepper and aims soon to overtake Thailand in rice. It is even selling tea to India.

Foreign-owned factories are chalking up the fastest gains. The government's aim of increasing electronics exports by 27% annually should be boosted by Intel's recent decision to build a $605m microchip plant in Ho Chi Minh City. Though farmers' harvests are still rising, industry's still-higher growth rate means that agriculture's share of economic output continues to shrink—from about 25% in 2000 to 21% last year. By 2010 it may be down to 15%. 

This economic revolution is being accompanied by a social one. Though Vietnam is still, overall, one of Asia's poorest countries, with income per head behind India's, its recent growth has been impressively egalitarian. The Asian Development Bank (ADB) reckons that deep poverty in Vietnam—defined as a daily income equivalent to under $1—is now only slightly more prevalent than the average for South-East Asia, whereas in 1990 Vietnam's figure was more than twice the regional average (see charts). By this measure, Vietnam has overtaken China, India and the Philippinesand now has only slightly more poverty than Indonesia.

Life expectancy has jumped and infant mortality plunged since the 1990s. Vietnam does better on both these counts than Thailand, a far richer country. Almost three-quarters of Vietnamese children of secondary-school age are in class, up from about a third in 1990. Again, Vietnam has overtaken
China, India and Indonesia. 

The new five-year plan, approved at April's congress of the ruling Communist Party, is laden with targets for increasing output and improving infrastructure, with the objective of making Vietnam a modern, industrial nation by 2020. Of course, other Asian countries' leaders, from Malaysia to the
Philippines, declare similar objectives. The difference is that Vietnam's rulers seem to mean it—and their recent record suggests they might pull it off.

The April congress was preceded by a purge of high officials suspected of corruption—most notably at a road-building agency where some staff stole millions of dollars to bet on football matches. While Nong Duc Manh, the party's general secretary, has survived, the other two members of the ruling triumvirate—the president and prime minister—have since been dropped in favour of youngish, southern Vietnamese officials, seen as supporters of continued economic reform. 

Good times, bad times

Vietnam is on a roll and its prospects look good. But much could still go wrong. As Vietnam joins the global economy (it should become a member of the World Trade Organisation in the coming year or so) it is becoming more vulnerable to volatile commodity prices and fickle bond-market investors, whose gyrations are largely outside its control. The recent export surge has been helped by strong global demand and high prices for the things Vietnam sells, from rice to crude oil, but a world recession—or an economic bust in China—could cause a big slowdown. The government is racing to build enough power stations, roads and railways to keep the economy moving. Any delays in these would spell trouble. 

The communist government's continuing acceptance by ordinary Vietnamese rests largely on its success in delivering prosperity and better public services. If it fails to reduce corruption or produce jobs for the more than 1m young Vietnamese who join the labour force each year and the 1m villagers migrating to the cities, the country's social cohesion and sense of purpose would be in danger.

That makes it vital to accelerate the government's programme to restructure and sell thousands of state-owned firms. They are more graft-prone than private companies, and devour the lion's share of scarce land and credit while creating few new jobs. The private sector provides most of the growth in jobs and exports, but would do better still if it was not crowded out by the public sector. Le Dang Doanh, an economic adviser to the government, reckons that, but for the vested interests slowing down privatisation, Vietnam could now be growing at 11%, just like China.

Heavy Hand

Another interesting article by Wall Street Journal reporter James Hookway.  He raises an important point -- silly capital and resource allocation decisions by the government certainly do not help growth of the Vietnamese economy.  However, a massive oil refinery is going to get a lot of government attention in any country.  I think this piece reflects the usual journalist bias to portray every story they write as being more important than it really is.  This works in both up and down directions -- the only thing the media loves more than building something up is tearing it down.  These things go through cycles.

Mr. Hookaway makes a spot-on point about differences between the North and South though.  The South definitely is more freewheeling and pro-business, whereas the North is more buttoned down and government-oriented.  Southerners I've met think Northerners are uptight, and Northerners I've met think Southerners are crass and unsophisticated.

Old Habits Undermine Vietnam's Emergence

Central Planning, North-South Rivalry Threaten to Squander Foreign Investment
By JAMES HOOKWAY
August 9, 2006; Page A4

DUNG QUAT BAY, Vietnam -- Three decades have passed since Vietnam's north and south were reunified under communist control after years of war. But lingering tensions between the regions -- and the government's persistent commitment to central planning -- still threaten the country's budding economic boom.

Vietnam's gross domestic product has been growing 8% to 9% annually in recent years, making it one of Asia's most popular destinationsfor foreign direct investment. But much of the country remains poor,with per capita income of $638 in 2005 and the fruits of growth concentrated to a large extent in the south.

A long-delayed attempt to kick-start an industrial transformation at an undeveloped village in the middle of Vietnam's 1,500 mile-long coastline, far from the major cities of Hanoi and Ho Chi Minh, shows how regional tensions and central planning could stunt the country's long-term economic growth.

The Dung Quat Economic Zone used to be a sleepy fishing village on a thin spit of land between the South China Sea and the towering Annamite Mountains to the west. Today, the tiny town boasts wide new highways leading to the beach, a 200-bed hospital and a half-completed sports stadium. Scrub-covered land is getting cleared for a golf course and a roller-coaster theme park. In the middle of it all, the steady pounding sounds of jackhammers signal that construction of a $2.5 billion oil refinery is finally under way after years of false starts and arguments about whether it should be built there at all.

"Vietnam has the crude oil and the natural gas to power the refinery and make it a success, especially now that prices are high. But that's way down south, not up there in Dung Quat," says John Vautrain, a vice president at energy consultancy Purvin & Gertz Inc.

Would-be investors from France, the U.S., Malaysia and Russia have spurned the project during the past decade, leaving Vietnam to go it alone after prolonged delays. State oil company Vietnam Oil & Gas Corp., known as PetroVietnam, broke ground in November, and the refinery is scheduled to be finished in 2009.

The way Vietnam's leaders decided to build the country's first oil refinery here, far from major markets, offers a blunt reminder to investors: Despite the country's recent growth spurt, state-planned economics is still the order of the day. And that can hamper efforts to build the
power plants, ports and roads that Vietnam, which has 84 million people, needs to sustain its takeoff. At present, Vietnam lacks facilities to convert its own oil output -- about 18 million barrels of crude oil a year -- into usable fuels.

A decade ago, central planners decided that building a refinery should be a crucial part of the country's development strategy. The problem was deciding where to build it.

Southern Vietnam, which fell to communist rule in 1975 after years ofwar, was the logical place. It is closer to the offshore oil fields andhas one of the country's few deep-water ports where tankers can easily dock.

The south is also the locus of Vietnam's economic surge. Last year, Vietnam attracted $5.8 billion in pledged foreign investment -- just $2 billion behind India -- and much of it went to ventures in the south.

Steelmakers, textile factories and semiconductor manufacturers such as Intel Corp. have been drawn by southern Vietnam's low labor costs, its well-educated work force and more business-friendly local
governments, which erect fewer of the bureaucratic hurdles often seen in the north.

Overseas Vietnamese, many of whom trace their origins to the south, also prefer to channel their investments there. As a result, fuel-hungry Ho Chi Minh City and its surrounding provinces in the south account for 40% of Vietnam's economic output and 70% of its exports.

Political power, however, still lies almost completely in Hanoi, which wants to spread development around more evenly -- and doesn't hesitate to instruct investors where to put their money.

Though there is no political challenge to the unity of Vietnam, the strains from the wars against France and the U.S. and the division of north from south haven't entirely healed and continue to influence policy.

The Communist Party in Hanoi, analysts say, is wary of allowing the south to continue gathering a disproportionate share of the country's wealth at the risk of alienating people in other parts of Vietnam. So planners decreed that the refinery be built in the comparative isolation of the country's central coast.

Some analysts say Vietnam needs $45 billion to $60 billion to raise the standard of its infrastructure to that of nearby Thailand, to which Vietnam looks as a measure of potential economic development. Christopher Bruton at Bangkok consulting firm Dataconsult Ltd. is skeptical of Vietnam's ability to continue growing 8% or 9% a year without much greater spending for power plants, water supply, railways and a modern road system.

But execution isn't easy. The $2.3 billion government-sponsored Son La hydropower plant being built in the north of the country is criticized by some economists as unnecessarily expensive and another sign of Hanoi's determination to go it alone on controversial big-ticket projects.

Le Van Dung, director of the Dung Quat Economic Zone's investment-promotion center, predicts the entire project will create 20,000 jobs by 2010. Some 2,000 people have already found jobs helping to build the refinery.

The longer-term issue is whether Dung Quat can avoid becoming the kind of state-sponsored white-elephant project that burdens many developing economies.

While high oil prices have improved the margins in the refinery business, that doesn't guarantee success, says Alan Gelder, vice president of downstream oil at the London offices of energy consultancy Wood Mackenzie Ltd. "Only the right ones in the right places will be commercially viable," he says.

Sea Change at AOL

Wow, this is huge news: AOL has decided to offer its proprietary software and aol.com email addresses for free.  This means that canceling members can now keep everything they like about AOL except for Internet connectivity.  Free. 

It is impossible to overstate how huge an organizational and cultural change this is for AOL.  For years beyond the point it made sense, AOL pursued a "walled garden" strategy where *every* AOL feature (email, news, music, etc) was accessible only for paying members.  As the Internet evolved, these features became available for free elsewhere on the Internet, and often they were better (e.g. Gmail, Yahoo Mail).  Hanging on to the walled garden strategy kept many members longer, but it virtually ensured that when those members did cancel they would abandon AOL forever.  Over the long run it was a losing strategy that guaranteed AOL's demise before the decade is out.

Organizationally, everything at AOL was geared towards keeping members in the garden.  Whenever I would suggest that we offer these features for free, I would see eyes flash and tempers flare: "Heretic!  Burn him!!  Burn!!!!"  I'm joking, but this isn't far from the truth.  AOL's decision is like the Catholic Church acknowledging that the Earth revolves around the Sun and not the other way around.  It's been obvious to the rest of us for a long time, but for them it's a huge, huge, huge deal.

For those of you who don't know, I spent the last two years working on AOL's web strategy, AOL.com.  Before that I spent four years at Yahoo working on Mail and Messenger.  For my AOL friends reading this blog: "Kudos!  This new strategy means you can take the gloves off and really compete."  For my Yahoo friends: "Dismiss AOL at your peril."

This move means that top Time Warner management has woken up and smells the coffee.  For all its faults, AOL has a better understanding of how everyday consumers interact with technology than pretty much anyone else out there.

I'll be rooting for both companies from the sidelines, but I gotta admit that I historically favor the underdog ;-).

The Coca-Cola Kid

I saw this kid selling Coca-Cola to motorists at a stoplight in central Saigon today and had to snap a pic.  Embodied in this fresh-faced teenager is all the incredible change that is sweeping across Viet Nam.  I was thirsty too, so I bought a bottle.

A capitalist, consumer culture has taken root with a vengeance here.  It's almost as if the Vietnamese are in overdrive to make up for 25 years of economic stagnation.  Everywhere I see evidence of a burgeoning middle class and the trappings of wealth -- DVD shops (pirated, but obvious evidence of DVD players) , florists, photo studios, refrigerators, LCD HDTVs, glossy fashion magazines, etc. 

Yesterday I went to a Walmart-type store crammed with toasters, cookies, cell phones, audio equipment, shampoo, cosmetics, pots and pans, produce, a bakery (the Vietnamese bake excellent bread), clothing, stationery, rice cookers -- you name it, this place had it.  Except for the checkout girls wearing ao dais, It felt pretty much like any similar store in Des Moines or Milwaukee.  It warmed my heart. 

Some find it fashionable to bemoan the spread of wealth and market-based economies across the world.  "Everything is being Starbuck-ized!" they complain as they sip their lattes or Pinot Noir.  Certainly the free market has its ugly spots.  But I challenge any of those people to spend 40 years working from dawn until dusk plowing fields with a water buffalo and living in a dirt-floor house.  I'm pretty sure they would politely decline.  Instead, they would go to the local Whole Foods and drop a wad on overpriced organic produce and free-range chicken packaged in tidy, sanitized containers.  Just like the Vietnamese.

Here's the checkout area of the store I visited yesterday.  A security guy scolded me for taking this photo.  Maybe he thought I was working for the competition.

Some glossies for sale.  I see these stands everywhere.

Frequent sightings of the hammer and sickle offer a sharp reminder of the country's pedigree.  But with every passing day it seems more and more an anachronism.

People of Viet Nam, I salute you!

Vietnam is no China -- it's Vietnam

I just discovered that my lil' ole blog was mentioned in an article on the "China Law Blog" titled "China is the Next China, Now; Vietnam May Be The Next China Someday."  It contains the thoughts of Dan Harris, a Seattle-based lawyer specializing in international law relating to China.

Dan cites a relative lack of blogs about doing business in Vietnam as anecdotal evidence that there isn't a lot of business activity or interest in Vietnam.  I can see how the two may be correllated, but the lack of one does not necessarily imply the lack of the other. 

I've met many expats and a few Vietnamese active in the local business community.  There is lots of activity going on.  It may not be as frenzied as China (I've not been there yet) but Vietnam definitely is on the move.  For a very business-oriented Vietnam blog, check out "Target: Vietnam" by a Brit who works for a property management and development company in Hanoi.  Real estate is a pretty good barometer for economic growth.  I used to have a link to his blog, but took it down because he hasn't updated it in over two months.  Lots of interesting stuff though.

I haven't written much about business since most of what I know is on the micro-level and pertains to specific companies and industries.  It's  not information folks I know would want blasted into the blogosphere.  Writing on general business topics from time to time is a good idea though.  I'll try to do that every month or so.  See my earlier post titled "Vietnam: Hype or Reality?" about what feels like a growing frenzy for investors to pour money into Vietnam.  One friend here told me, "What do you do when the ducks are quacking?  You feed them.  Well, the ducks are quacking Chris."  They are indeed.

Vietnam: Hype or Reality?

Last night I had dinner with an American guy who works at an investment firm here in Saigon.  He's been in Vietnam for 5 years and it was interesting to get his perspective on prospects for Vietnam's rapid growth.  His general message was "Things are getting better, but don't expect Vietnam to take off overnight."  It seems like there are private equity groups who have launched funds and are hyping the market like crazy.  The hype may be outstripping the reality, but then again it may catch up.  Stay tuned.

Here's a Wall Street Journal article that appeared on May 24.

Vietnam Growth Lures Investors,
But Supply of Shares Is Limited

By JAMES HOOKWAY
May 24, 2006; Page C12

Increasing numbers of foreign stock investors are struggling to gain exposure to Vietnam's fast-growing economy -- and that is spurring ideas on how to get it.

Demand for Vietnamese shares exceeds the limited supply. So investment companies and analysts are creating funds and suggesting that foreigners invest in companies that do significant business in Vietnam but list their shares elsewhere.

After several years of slow progress, Vietnam has been generating some buzz. Last month Vietnam's top leaders excused themselves from the ruling Communist Party's congress to shake hands and be photographed with a pillar of the capitalist world, Bill Gates. The Microsoft Corp. chairman was in the country to put in a good word for Vietnam's high-technology aspirations. It was a potent piece of public relations, following closely on the heels of Intel Corp.'s decision earlier in the year to build a $300 million semiconductor plant there. Indeed, Mr. Gates was given a rock star's reception in Hanoi.

Since then, the U.S. has agreed on a trade deal that opens the way for Hanoi to enter the World Trade Organization, marking a move that will further open the Vietnamese economy, which expanded 8.4% last year and is expected to grow more than 8% this year.

The problem for investors hoping to piggyback on Vietnam's expansion is that the country's capital market is tiny and too prone to speculative flurries to provide attractive, reliable returns. The Vietnam Stock Exchange index, for instance, comprises just 36 stocks with a combined market capitalization of about $1.8 billion. The index has almost doubled since February -- showing a symptom, analysts say, of a lot of money chasing too few assets.

"There's no doubt that Vietnam is a compelling story. But the question is how to get some exposure without being sucked into a bubble," says a U.K.-based fund manager.

Foreign money tends to be invested in funds managed by local specialists such as Dragon Capital, VinaCapital Investment Management, PXP Capital and Mekong Capital. In the short term, that trend looks set to continue. VinaCapital, for one, is opening a new technology-oriented fund to enable foreign investors to get some exposure to that potentially lucrative slice of the economy.

Louis Nguyen, managing director of VinaCapital's technology practice in Ho Chi Minh City, says the goal is to invest in Internet and technology companies that, under Vietnamese law, multinational players such as eBay Inc. or Yahoo Inc. will need to form a partnership with to set up in the country. He hopes to raise $20 million to $50 million for the fund but may increase the figure if there is demand.

"Two thirds of the fund is subscribed already, so we are pretty pleased with that," Mr. Nguyen says.

While VinaCapital's approach owes a partial debt to speculation on Vietnam's growth, Merrill Lynch & Co. believes it has come up with an alternative: investing in a basket of stocks with strong exposure to Vietnam's boom but traded on overseas markets -- including companies as diverse as Malaysian budget airline AirAsia, Singapore-listed consumer-goods-and-property company Fraser & Neave Ltd. and South Korea's SK Telecom Co., which owns 27.5% of Vietnamese mobile-phone network S-Fone.

"These probably represent a much less volatile, and more diversified, way to build exposure while we await the process of more profound capital market development," Merrill Lynch strategist Spencer White wrote in a research report this month.

F&N, as the Singapore company is known, has exposure to Vietnam including property developments and a venture with Heineken, Asia Pacific Breweries.

Write to James Hookway at [email protected]