Japan set for Vietnamese trade. After 10 years, Japanese firms' patience pays off
Japanese businessmen are reknowned for their patience in developing markets for their goods. Perhaps nowhere has that virtue been tested more than in Vietnam. After a decade of waiting, Japanese businesses are suddenly finding an open door for them in communist Vietnam.
Last month, four years after submitting their request, Nissho Iwai, one of Japan's huge trading companies, was given permission to open an office in Hanoi. The Japan-Vietnam Trade Association, representing more than 80 major Japanese firms from banks to consumer-goods makers, received similar permission after waiting 10 years.
This past year trade between the two expanded by 26 percent. Although the total value is only a modest $250 million, Japan ranks as Vietnam's second-largest trading partner after the Soviet Union.
Japan's traders want to double their trade with Vietnam, experts here say.
``From a couple of years ago, [the Japanese] perceived a change in the atmosphere [in Vietnam], an opening to the West,'' says Tesaburo Kimura, of Tokyo's Institute for Developing Economies.
``We do not pursue a closed-door policy,'' agrees Vietnamese Deputy Foreign Minister Vo Dong Giang, speaking to journalists during a recent visit here.
When Vietnam was reunited little more than a decade ago, Japanese business circles were hopeful that a major market would be opened up to them. Trade expanded rapidly until the late '70s, when it collapsed under the weight of Vietnam's invasion of Cambodia in 1979 and Hanoi's decision to socialize the still-vibrant private business sector in the south. Japanese export credits were stopped. Trade levels dropped to half the postwar high.
The Japanese private sector kept up business contacts through small ``front companies'' (for the large trading firms) which specialize in doing business with communist countries. Only Nissho Iwai acted in its own name, for which it has been rewarded. Now other large trading houses -- Mitsui, Marubeni, and C. Itoh -- are expected to follow them into offices in Hanoi.
Economic ties began to turn around a few years ago, says Masumi Higuma of the Japan-Vietnam Trade Association. The major reason, he says, is Hanoi's economic liberalization policy since 1981-82. Private business has been legalized, market incentives provided, and foreign investment encouraged.
The trade association sent a mission to Vietnam this summer, the first since 1979. The Vietnamese, says Mr. Higuma, discussed a revision of Hanoi's law on foreign investments. The new draft, which he expects will be promulgated early next year, allows majority foreign ownership of a joint venture, even up to 99 percent. Foreign firms will be able to take out a large portion of their profits in dollars. Higuma expects this to increase interest in investment in Vietnam. Nissho Iwai is considering an offer to join in development of offshore oil fields.
The Japanese are cautiously sanguine about the future. They know that Vietnam is desperately poor and short of hard currency and marketable exports. ``Compared with China,'' Higuma says, ``Vietnam is very small.''
Still, the Japanese know a good investment when they see one. ``The population is very big, and their influence is also big in Southeast Asia,'' Higuma says.