As US Ends Embargo, American Firms Race For Market Share
One advantage: Many US products sold in Vietnam before 1975 are still there - and still working
THE ubiquitous American Jeep was once a symbol of United States involvement in Vietnam. Ironically, new models may soon ply Vietnamese roads again - this time for the sake of business, not war.
With the US economic embargo now history, Chrysler Corporation is interested in marketing modern Jeep Cherokees in Vietnam, according to a consultant who lists the auto maker as a client. ``What US car could sell better there? It's got name recognition from the American military presence,'' says Eric Rehman, a director of the Vietnam-America Trade and Investment Consulting Co.
General Motors Corp. might enter Vietnam, too. It quietly signed a deal last May to explore Vietnamese market possibilities. Soft drink corporations, the shock troops of US capitalism, are already battling for the nation's consumers. Pepsi Co. inflated a giant can in a Ho Chi Minh City square last Friday.
With the official end of 19 years of restrictions on US trade with Vietnam, American business is preparing to rush into a nation where US troops once did battle. Export-minded firms all across the US are excited about what some term the hottest emerging market in Asia.
The reality, however, is that the Vietnamese economy is decades behind that of nearby developing nations such as Thailand. To do well US firms will have to commit to years of spade work.
``There's a lot of euphoria today, but it's going to be a hard slog,'' says Robert Driscoll, president of the US-ASEAN Council, a group of firms doing business in the six nations of the Association of Southeast Asian Nations. ``Let's be realistic. Vietnam has a per capita [annual] income of $200.''
For the next several years, the Vietnamese market for foreign goods and services should hover at around $2.5 billion annually, according to a A US-ASEAN Council survey of firms in a variety of industrial sectors. Five years down the road this marketplace could reach $8 billion.
If certain economic sectors take off, these estimates could prove understated, says Driscoll. Offshore oil and gas exploration is particularly promising. Mobil Corp., in conjunction with three Japanese firms, is set to drill for oil in an offshore field it identified before the end of the war.
Rebuilding Vietnam's crumbled infrastructure alone could provide a $15 billion market within the next six years. Sectors that Vietnamese officials have said show particular commercial promise include banking, construction, agricultural equipment, tourism, and consumer goods.
Over 30 US firms already have offices in Hanoi or Ho Chi Minh City (formerly Saigon). They include large industrial firms, such as IBM and GE, as well as banks such as Citibank and Bank of America, which did business in former South Vietnam before the Communist takeover in 1975.
One fact that could help US firms in their race for market share is that many US products sold in the country before 1975 are still there and still working. Caterpillar Inc. estimates that several hundred of its large pieces of earthmoving equipment remain in Vietnamese use. Otis Corp. says that half of the 200 elevators it installed in pre-Communist Saigon are still in order.
Another factor in the US favor is that Vietnamese officials could well see US investment as a potential counterweight to the commercial influence of regional rivals Japan and China. But US firms are undeniably starting behind those of other nations which have been less reticent about trade with a former Communist foe. Non-US firms are already involved in some 850 Vietnamese projects worth almost $8 billion. A French company has already installed 250,000 phone systems; Vietnam's first undersea optical fiber system is to be run by Telstra Corp. of Australia.
The first cracks in the US embargo appeared under President Bush, who allowed exemptions for humanitarian projects, and gave the go-ahead for US firms to open Vietnamese offices and investigate prospects. Since then it has been clear the embargo would eventually be lifted, as US officials hailed Vietnamese cooperation on the bitter issue of searching for the remains of missing American servicemen.
Still, some veterans groups denounced President Clinton for his action in lifting the embargo. The National League of Families of American Prisoners and Missing in Southeast Asia called it a ``serious disappointment.''
[Just four days after the lifting of the trade embargo, Vietnam planned to turn over the remains of more Americans in a repatriation ceremony Monday at the Hanoi airport, Associated Press reported. The remains being handed over Monday were either excavated by US specialists or turned over to authorities by villagers in December and January during the biggest joint search effort since the end of the war.
[The US did not grant Hanoi most favored nation trade status, which would lower tariffs on Vietnamese imports to the US. And Clinton also withheld diplomatic recognition of Hanoi.]