Platt Perspective on Business and Technology

Vietnam, doi moi and the search for business and economic strength and global relevance 10: considering Vietnam in an interconnected global context 4

Posted in UN-GAID by Timothy Platt on May 7, 2015

This is my tenth installment to a series on Vietnam (see the UN-GAID directory, postings 34 and following for Parts 1-9.)

I stated at the end of Part 9 that I would (finally) more fully discuss the third point of discussion that I initially offered in Part 1 as a core topic area for this series as a whole:

• How other countries relate to and interact with Vietnam, and I add here how Vietnam in turn relates to those other countries.

I have touched upon this complex of issues at least briefly and by way of specific example, in many of the postings that I have been adding to this series up to here, as Vietnam does not exist in a vacuum for any of the areas of business and infrastructure development that I have been addressing. But I turn here to more directly examine Vietnam’s place in the global community of nations and its history in that, and with a goal of offering at least a few thoughts on Vietnam’s more immediately anticipatable future.

And at the end of Part 9 I also noted that I would discuss a topic area here that might at first glance seem to be something of a non sequitur to this discussion: Vietnamese tourism, and both by foreigners into that country and by the Vietnamese themselves. I will in fact start with an at least selective discussion of that set of issues as the details of that story that I would raise here, put the rest of this posting into a very specific context of perceived resource availability and perceived resource need – and of perceived disparity of access to resources and at all levels that tourism brings to light, and from a national level on down to that of the local community and to the levels of the individual and their family.

Vietnam is a poor country with a weak currency. The Vietnamese dong (currency symbol: đ) trades at an exchange rate of just over 21,000 to the single US dollar, as of this writing. So travel to Vietnam by foreigners can be very inexpensive and that country is a favored destination, and particularly for middle class Chinese tourists with discretionary income to spend – and income to spend that they would not necessarily want to fully report to their own Chinese government for taxation purposes. And others also flock to Vietnam, from Japan and South Korea for example for other Asian tourists, and from countries like Russia and Australia for Western tourists.

Some foreign tourists are frugal and have limited financial resources and certainly limited visible ones, carrying their travel possessions in back packs and seeking out the most inexpensive housing and food. But many and in fact most foreign tourists display what most Vietnamese would see as significant personal wealth, and both for the prices they pay for tourist lodging and when shopping and dining, and for the clothing and jewelry they wear. Vietnamese, as noted in Part 9 of this series, as well as in other places, do travel and certainly during Tet (Tết Nguyên Đán): the Vietnamese lunar new year. But they primarily travel and vacation within their own country as reversing the foreign tourist-route flow to visit and see countries like Japan, South Korea or Australia or the United States – another country that visitors to Vietnam come from, would be prohibitively expensive for them. And even vacation travel to their immediate neighbor: China would be prohibitively expensive for most Vietnamese.

Foreign tourism constitutes a significant source of foreign income flowing into the overall Vietnamese economy, and into a wide range of the private businesses that have increasingly come to collectively shape and define that overall economy. But foreign tourism with its displays of individual foreign wealth, coupled with an awareness of the cost barriers to most Vietnamese traveling outside of their own country, impact on Vietnam’s view of the larger world around them and their place in that larger global community. Vietnam is a small and poor country and that country and its citizens seek to change their standing in this.

And this informs and shapes Vietnam’s approaches and policies for more fully engaging with that larger world and at all levels – from that of the individual entrepreneur on up to the level of overall government policy, as only partly contained within the specific explicitly stated framework of their core economic reform program: đổi mới. And this brings me to the explicit issues and challenges of Vietnam’s relations with other nations.

Vietnam seeks to become a have nation, and one with a standard of living and a capacity to support it that matches those of the nations that their visiting foreign tourists come from. Ultimately, the strength of a nation’s economy is best measured in the lives of its people, and the quality of life they can realistically hope to achieve.

Vietnam trades with and does business with the world, and with nations and businesses that span much of it. And given its often turbulent history, Vietnam has had difficult relations with a range of countries that hold potential for being among its most important trading partners in this. The United States, China and Japan are just three nations that have actively fought wars on Vietnamese soil in just the past few generations, and the Chinese have militarily invaded at least portions of the North, adjacent with their border with Vietnam as recently as 1979 (see Sino-Vietnamese War.)

Russia has been one of Vietnam’s long-standing allies for generations now, and in recent periods first as the Soviet Union and then more recently as a now post-communist Russia. And that has among other things made Vietnam something of a pawn at times in the ongoing and long-standing conflicts that have taken place between Moscow and Beijing, and certainly since Mao’s communist revolution in China. The main reason why China invaded Vietnam in early 1979 was because the Vietnamese had invaded Cambodia in 1978 in an attempt to end the genocidal rule of the Khmer Rouge there, with the threat that regime posed to Vietnam itself for its expansive ambitions. And China’s Deng Xiaoping saw Vietnam as playing the role of a Soviet Union controlled puppet in this action, and they saw this incursion as a blatant attempt on the Soviet Union’s part to gain a greater foothold in Southeast Asia that would challenge and threaten Chinese influence there, and in territories directly flanking their own southern national border.

At the same time, Vietnam has a long history for trading with and has doing business with the world too. I first made note of Hội An in Part 7 of this series as a now silted in former trading port that has become a major tourist attraction, with Đà Nẵng: a larger port city just to the north of it along the Vietnamese coast taking over as the major commercial trading port in central Vietnam. Quite simply, Hội An’s harbor could not be dredged or expanded in ways that would make it suitable for today’s larger commercial transport vessels and its port facilities could not be updated and expanded to handle newer and larger shipping containers and the road and rail transport systems that port-bound shipping would have to connect to, and still retail its historic charm. There is a reason why this now former port has been named a UNESCO world heritage site, and Hội An’s real value can be measured more in that than it can be in any possible current capacity for it to support modern shipping commerce.

But that is now; Hội An was for centuries, one of Vietnam’s principle commercial ports and it was in fact one of the primary Southeast Asian ports that the Dutch used when they dominated European trade with the Far East as a whole through their Dutch East India Company (Vereenigde Oostindische Compagnie, or VOC). To put a timeframe on this, the VOC was founded in 1602 under a grant that awarded it an initial 21 year monopoly for controlling all European trade with Asia, as just a starting point. And the Dutch, through this organization, opened up the Far East to Europe and the West, and Europe and the West in turn to the Far East.

Vietnam and the peoples of Southeast Asia, of course, already had well established trade relations with other Asian nations and peoples for centuries before this, and in fact through all of Asia’s long recorded history, and with archeological evidence tracing this trade flow and its accompanying cultural connectedness back even further than that. But my focus in this series and in this posting is on the more here-and-now, and more specifically on Vietnam’s relations with the world since 1986 and their initial shift to a supply and demand driven market economy as an opening up. And for purposes of this discussion, I focus specifically on two foreign countries that Vietnam deals with, at least as a starting point: China and the United States.

Vietnam and China have had a long and often tumultuous relationship, and with China essentially always seeking to dominate Vietnam and their other smaller Southeast Asian neighbors in general when they were not more directly ruling over them. I have already cited at least one long period of earlier Chinese domination over what is now the modern nation of Vietnam in this series, and their most recent 1979 military incursions into that country. And China is currently seeking to actively dominate their entire region, claiming hegemony over the entire span of the South China and East China Seas and sovereignty over islands in those waters long claimed by Japan, Vietnam and other nations as part of their own national territories. This means China claiming mineral and fishing rights and ownership over shipping routes in these waters. But even more than that, it means China under Xi Jinping’s leadership claiming dominating rights over all of their immediate Asian neighbors – and certainly in the contexts of any possible points of conflict or disagreement with them.

Vietnam fought their Resistance War Against America, or their American War at they also identify it (called the Vietnam War in the United States) with that conflict formally ending in 1975. And in the immediate years after that, all contact between the United States and Vietnam was broken off – until a reestablishment of relations was begun between these two nations in the 1990’s with that taking place at least initially on a more ad hoc basis. Then as a key turning point in this reaproachmont (see United States-Vietnam Trade Relations), a real opening up of trade between those countries was begun with the signing of the US-Vietnam Bilateral Trade Agreement of December, 2001. And the United States quickly became one of Vietnam’s most important and economically supportive trading partners.

I hold up these international relationships in specific and intentional contrast with each other. Both come from historical and even recent historical foundations of conflict. China still actively and I add very openly holds the prospect of future conflict with Vietnam over their head, even as Chinese businesses, including Chinese state owned and controlled businesses do business with that country and even as individual Chinese tourists stream into Vietnam to spend their money there. The United States has sought to put its confrontational past with Vietnam in the past and to move on from there in more mutually positive directions. The war between Vietnam and the United States was long and bloody, and recent enough to still be held in the memory of large numbers of living Vietnamese and Americans. But an increasing number of Vietnamese now hope to see the United States and those same Americans and their children as allies and as a buffer between them and a newly more confrontationally active China. And as a matter of protecting their own interests in the Pacific and in their relations with the countries of Asia, this would make sense from the United States perspective too, and certainly as long as trading with and being supportive of Vietnam, Japan and other Asian neighbors to China did not turn into a direct conflict with that China itself.

• This calls for a sometimes delicate balancing act where the United States would seek to productively and positively connect to both China and their neighbors, with trade and commerce serving as essential points of mutual interest and need in making that work.

And as a final note here, the challenges that I write of here as currently emerging out of China and for essentially all of their Pacific Ocean facing Asian neighbors, should be seen as creating positive incentive for all of those nations to more closely align together, and in trade and commerce and as allies in general – not to thwart China per se but to collectively support their own individual national areas of self-interest.

I am going to end this series at that point, noting that I will continue to write about China and its emerging policies under Xi Jinping’s leadership in my series China and its Transition Imperatives (see Macroeconomics and Business, postings 154 and loosely following for Parts 1-12 and for a supplemental posting: Part 12.5, and see Page 2 to that directory for a second, continuation supplement Part 12.6 and for Parts 13 and following.) Meanwhile, you can find this and related postings and series at the UN-GAID directory.

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