Located in Southeast Asia, the Socialist Republic of Vietnam is bordered to the north by the People’s Republic of China, to the west by Laos and Cambodia, and to the east and south by the South China Sea. The country is a mere 127,000 square miles but has a population of almost 86.2 million. The language is Vietnamese, and the principal religion Buddhism, although there are a number of small minorities, including
Confucian, Christian (mainly Catholic), Caodist, Daoist, and
Hoa Hao. In recent years, the country’s economy has been up and down, but average annual per capita income still is in the hundreds of dollars as the peasants remain very poor.
One of the reasons that Vietnam has lagged behind its fast-developing neighbors in Southeast Asia, such as
Thailand and Malaysia, is its isolation from the industrial
West, and the United States in particular, because of the
Vietnam War. From the mid-1970s, the country had close relations with the U.S.S.R., but the collapse of communism there forced the still-communist Vietnamese government to work on establishing stronger economic ties with other countries. The nation recently has worked out many of its problems with China, and today, the Chinese have become a useful economic ally. And Vietnam is well on its way in establishing a vigorous trading relationship with the United States. Efforts toward this end began over a decade ago, but because of lack of information concerning the many U.S. soldiers still unaccounted for after the war, it was not until 1993 that the United States permitted U.S. companies to take part in ventures in Vietnam that were financed by international aid agencies. Then, in 1994, the
U.S. trade embargo was lifted, and a growing number of
American firms began doing business in Vietnam.
Caterpillar began supplying equipment for a $2 billion highway project. Mobil teamed with three Japanese partners to begin drilling offshore. Exxon, Amoco, Conoco,
Unocal, and Arco negotiated production-sharing contracts with Petro Vietnam. General Electric opened a trade office and developed plans to use electric products throughout the country. AT&T began working to provide longdistance service both in and out of the country. Coca-Cola began bottling operations. Within the first 12 months,
70 U.S. companies obtained licenses to do business in
Vietnam. Besides the United States, the largest investors have been Singapore, Taiwan, Japan, South Korea, and
Hong Kong, which collectively have put over $22 billion into the country. Intel Corp, the world’s largest chipmaker, began operation of its $1 billion assembly and testing plant in 2010. The plant is expected to manufacture
US$120 million worth of products in its first year of operation, and the annual output will gradually reach $15 billion when it reaches full capacity. Over the past couple of years, Vietnamese authorities have acted swiftly to implement the structural reforms needed to modernize the national economy and to produce more competitive exports for sale in the global economy. In July 2000 the United States and Vietnam signed a bilateral trade agreement that opens up trade and foreign investment in
Vietnam and gives Vietnamese exporters access to the vast
U.S. market. The treaty, which entered into force near the end of 2001, resulted in dramatic increases in foreign direct investment from the United States.
As in China, many U.S. firms have found doing business in Vietnam frustrating because of the numerous and everchanging bureaucratic rules enacted by the communist government officials; but these concerns are beginning to subside with the induction of Vietnam into the World Trade
Organization on January 11, 2007. After 11 years of preparation, with eight years of negotiation, Vietnam finally became the 150th member of the WTO. As a result, Vietnam is experiencing continued economic stimulus through its liberalizing reforms. Overall, this opportunity may open the market to foreign investors who were unsure of the risks involved in entering Vietnam. Vietnam’s accession to the
WTO provides a context of greater certainty and predictability in the business and broader economic environment.
As one measure, Vietnam received more than US$85.5 billion in foreign direct investment in 2008 and 2009, exceeding the total of US$83.1 billion in the previous 20 years.
U.S.-based AES Corporation, a builder of power plants, invested US$2.147 billion in Mong Duong thermal power plant project in Quang Ninh province, one of many FDI projects across Vietnam in a range of industries and sectors. http://vietnambusiness.asia/ Questions
1. In what way does the political environment in
Vietnam pose both an opportunity and a threat for
American MNCs seeking to do business there?
2. Why are U.S. multinationals so interested in going into Vietnam? How much potential does the country offer? How might Vietnam compare to China as a place to do business?
3. Will there be any opportunities in Vietnam for hightech
American firms? Why or why not? 1. the government controls and interferes in businesses. Threats could be that political relations with the world could be affected in a higher percentage that could result interruption in American MNC’s production obligations. Vietnam has high inflation rate, high interest rates, infrastructure constraints, that could hurt American MNC’s reliance on such county. These issues would cause loss of control, higher costs, and delays.
1. In what way does the political environment in Vietnam pose both an opportunity and a threat for American MNC’s?
Vietnam is a one-party communist state, which means that controls production in the country. In addition, the government controls and interferes in businesses. Threats could be that political relations with the world could be affected in a higher percentage that could result interruption in American MNC’s production obligations. Vietnam has high inflation rate, high interest rates, infrastructure constraints, that could hurt American MNC’s reliance on such county. These issues would cause loss of control, higher costs, and delays.
However, Vietnam is one Southeast Asia’s fastest-growing economies and is estimated to become a developed country by 2020, which means Vietnam welcomes international investments to bring more businesses and competition, and become develop. This shows that Vietnam be committed to its promises towards international investments by providing a healthy competition.

2. Why are MNC’s so interested in Vietnam? How much potential does it offer? How might Vietnam compare to China as a place to do business?
U.S. multinationals are interested in going into Vietnam because it has low labor costs, ideal geographical location for transportation, and young generation. In addition, other countries such as China are becoming more expensive and restricted on foreign firms to operate or outsource; therefore, U.S multinationals are looking for alternative countries to operate their products. Vietnam as a communist country has less wealth and experience in openness to the international market.
3. Will there be opportunities in Vietnam for high tech firms? Why / why not?
There is still an opportunity for Americans as Vietnamese government is now working hard to attract U.S. investment. Their Government is becoming more innovative and encouraging all non-state economic sectors to expand investment that includes the U.S. There is plenty of chances for America to get benefit form this especially the ones which are high tech and U.S. has emerged to become the largest investor in Vietnam, accounting for 47.8 percent of total newly registered capital. (Vietnam Business News Online) Becoming the 150th member 1. In what way does the political environment in Vietnam pose both an opportunity and a threat for American MNCs seeking to do business there?
There are many businesses there already, but it is not as developed as its neighbors. Vietnam is not as established as other countries, in terms of trading, but it is on its way in establishing a trading relationship with the US. One of the treats for American MNC’s seeking to do business there is that the government could control and shut down there business like they did in the past, because of there ever changing bureaucratic rules. Even though it has been getting better it will always be a possibility. 1. Why are U.S. multinationals so interested in going into Vietnam? How much potential does the country offer? How might Vietnam compare to China as a place to do business?
U.S multinationals are so interested in going to Vietnam because of the potential that is has, it is not as developed as its neighbors, yet they are establishing stronger economic ties with other countries. Like China, Vietnam is producing and exporting globally, and in 200 Vietnam signed a bilateral trade agreement, giving them the opportunity trade foreign investments giving them access to the vast US market. 1. Will there be any opportunities in Vietnam for high-tech American firms? Why or why not?

Developing country, easy to mold innovative ideas.
U.S multinationals are so interested in going to Vietnam because of the potential that is has, it is not as developed as its neighbors, yet they are establishing stronger economic ties with other countries. Like China, Vietnam is producing and exporting globally, and in 200 Vietnam signed a bilateral trade agreement, giving them the opportunity trade foreign investments giving them access to the vast US market.
U.S. multinationals are interested in going into Vietnam because it has low labor costs, ideal geographical location for transportation, and young generation. In addition, other countries such as China are becoming more expensive and restricted on foreign firms to operate or outsource; therefore, U.S multinationals are looking for alternative countries to operate their products. Vietnam as a communist country has less wealth and experience in openness to the international market 1. In what way does the political environment in Vietnam pose both an opportunity and a threat for American MNC’s?
Vietnam is a still-communist government working on establishing strong economical growth with other countries. When the country became the 150th member of the World Trade Organization it portrayed that the country had a willingness to open strong political moves and trade doors while adapting outside rules and regulations. Therefore, investors from countries such as the United States could consider doing business in Vietnam. The opportunity is present however since Vietnam is a communist country, the U.S. could encounter challenges with holding power over their business; i.e. the Victimise government could potentially shut down any business already established in the country as they do not really seek an importance of being a multinational global image. In the end the government wants what’s best for the country. 2. Why are MNC’s so interested in Vietnam? How much potential does it offer? How might Vietnam compare to China as a place to do business?
Vietnam strikes an interest to the U.S. economy since the country is not as developed as its neighbors nor does it have international market experience in comparison to China, Thailand and Malaysia. Labor costs are much lower and restrictions on foreign outsourcing is minimal (in comparison to China); therefore U.S. investor seek Vietnam as an alternative country for producing, manufacturing and employing workers cost efficiently. 3. Will there be opportunities in Vietnam for high tech firms? Why / why not?
High tech firms can see opportunities conducting business in Vietnam as the country has a high percentage of young, well educated citizens. With lower labor costs and existing business from familiar companies such as Foxconn and Samsung; there is strong certainty presented that the Vietnam economic environment is expected to grow.