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Back to Vietnam
Nguyen Duy Binh fled Vietnam in 1975. Now, 30 years after the war, he’s back, running FedEx’s operations there—one of thousands of refugees going home to find success.
In April 1975, as the Viet Cong surrounded Saigon and laid siege to the city, Nguyen Duy Binh, an evacuation officer at the U.S. Embassy, stood with a checklist at Tan Son Nhat Airport trying to sort out the throngs of frantic Americans and Vietnamese scrambling to flee. When the end drew near and it came time for Binh to add himself and his pregnant wife to the exodus, he went home to get her. They boarded a bus crowded with evacuees, and Binh hid under the luggage so South Vietnamese military police, desperate to hold back any man who could stay and fight the Communists, would not drag him off before they reached the airport gates and the waiting C-130. The plane took off at 2 a.m. and Binh breathed a sigh of relief. He never imagined he would come back.
These days, when the 51-year-old Binh goes to Tan Son Nhat Airport with his checklist, it’s to supervise the 7 a.m. arrival of the daily FedEx plane. Binh is FedEx’s country manager in Vietnam, and he runs operations for neighboring Laos and Cambodia as well. Working his way up from counter agent, the job he landed upon settling in Alexandria, Va., Binh was sent back to Vietnam after he wrote a letter as a lowly ramp manager to FedEx CEO Fred Smith, urging Smith to start operations in his homeland and dispatch him to do it. A Vietnam veteran himself, Smith encouraged Binh to write a business plan. As soon as Washington lifted its trade embargo in 1994, he sent Binh to put the plan into action. Binh, the son of a widowed betel-nut seller in central Vietnam who taught himself English with the aid of a dictionary given to him by an American GI, was elected chairman of the American Chamber of Commerce last year and is one of the best-known businessmen in Ho Chi Minh City, the official name of Saigon. ‘It’s very rewarding, because you have a chance to have two countries to come home to,’ says Binh. ‘Part of me is U.S., and part of me is Vietnamese.’
He’s also part of a new American invasion going on in Vietnam 30 years after the end of a war in which 58,000 U.S. soldiers and three million Vietnamese lost their lives. Vietnamese-Americans are flocking back home to run the offices of American companies, fuel Vietnam’s version of Wall Street, start tech companies, open restaurants and cafés, snatch a share of an economy that grew 7.7% last year, and even retire, bringing their American-earned dollars with them.
They couldn’t be more welcome. As Hanoi officials work to transform the still-communist, heavily agrarian nation into a modern market economy, they are making it easier for overseas Vietnamese, known as Viet kieu, to obtain visas, buy property, even come back permanently if they want to. They get preferential treatment over other foreign investors. On New Year’s Eve the government threw a party at the former Presidential Palace for 600 of the most successful investors, out of an estimated 10,000 overseas Vietnamese doing business in bustling Saigon, at which Prime Minister Phan Van Khai invited them to bring even more technology and investment. ‘The leaders understand the important role the Viet kieu can play in the long-term development of the country,’ says Pham Chi Lan, a senior advisor to the Prime Minister on economic policy.
What’s different about Vietnamese returnees—as opposed to many of their counterparts in China and India who went to the U.S. for short periods of time to study or work—is that they have spent the past three decades becoming Americans. Fluent in Vietnamese language and culture, as well as adept at American business practices, they are the ideal modern-day compradors, those most able to act as the go-betweens for American business and Vietnam’s booming economy. The number of companies owned by Vietnamese-Americans increased 40% in 2004 over the previous year, according to government figures. And remittances from Vietnamese still living overseas amounted to a record $3.8 billion last year, a 45% increase over 2003. Such money frequently fuels entrepreneurialism among relatives who stayed behind, buying computers for Internet cafés and sewing machines for tailoring shops, helping propel economic growth. ‘In Ho Chi Minh City, the Viet kieu influence is tremendous,’ says Fred Burke, an American lawyer with Baker & McKenzie who has been helping multinational companies navigate through Vietnam’s legal thickets for more than a decade. ‘In terms of economic stimulus at a grassroots level, it is profoundly positive.’
Signs of prosperity are visible everywhere—in the luxury sedans that clog Saigon’s streets, in the skyscrapers that have altered the city’s skyline, in the outdoor coffee bars and Internet cafés packed with increasingly affluent Vietnamese, and in the upscale silk shops of Dong Khoi Street, where local clothing designers are developing a loyal clientele. It’s hard not to feel the enthusiasm. United Airlines launched the first direct flights from the U.S. since the war, and discounted fares on the daily run from San Francisco were sold out for months even before the first plane landed in Saigon Dec. 10.
Overall, two-way trade between the U.S. and Vietnam—much of it apparel, electronic components, and agricultural products—ballooned to $7 billion in 2004, up from $1.5 billion in 2001, when a bilateral trade agreement, the final step of trade normalization between the two countries, took effect. That’s double what U.S. officials had promised the Vietnamese during the negotiations, and Vietnamese officials were skeptical of seeing even that. The ranks of the American Chamber of Commerce in Saigon have since swelled by 25%, to 535 members. But America’s direct stake in Vietnam is harder to measure. That’s because investments by companies such as Coca-Cola, which operates through its Singapore subsidiary, don’t show up in government stats. Nor do the 120,000 people making $700 million worth of shoes and apparel a year for Nike, since they’re employed by South Korean and Taiwanese subcontractors. The U.S. Embassy, which does try to keep track of all this, says annual investment deemed ‘American-related’ more than doubled, from about $200 million in 2002 to $450 million in 2003, bringing total U.S. direct investment in Vietnam to nearly $3 billion in the decade since the trade embargo was lifted. In recent months American developers have been scouting for locations for large-scale tourism projects, including a 36-hole golf course and a five-star hotel on an island in the Tonkin Gulf and a Disney-style theme park on Vietnam’s scenic southern coast. They could spend as much as $3 billion in anticipation that the number of tourists will rise to more than three million this year, double the number in the late 1990s.
Yet those who have been here long enough remember the first time everyone got excited about Vietnam’s potential, when the Clinton administration lifted the trade embargo in 1994 and normalized diplomatic relations the following year. Back then the Hanoi government, afraid of out-of-control growth that might cause a Soviet-style collapse and bring down its communist political system, dragged its feet and discouraged investors. Lots of Viet kieu, along with other foreign investors, packed their bags and went home.
Now, with the Asian financial crisis behind them, Vietnamese leaders are getting serious, in part because they realize that competing with China in a post-garment-quota age is not going to be easy. So these days, getting a local business license takes only a matter of days—not weeks or months as it used to—and the application can be completed online. Vietnam is making legal reforms in order to join the World Trade Organization, which it hopes to do by the end of this year. It is improving the quality of its goods and designs in order to provide higher-end niche products, leaving large-scale mass production to China. It has made foreigner-friendly improvements in taxation, decreased its reliance on agriculture, encouraged its private sector to drive growth, and started tackling corruption. This time, many in the business community say, Vietnam’s takeoff may be real and lasting. ‘One government official told me,’ says FedEx’s Binh, ”We feel like we’re riding a bicycle as we lead the country forward. If we stop we’ll fall down, so we keep moving forward.”
Don Lam is part of that forward momentum. The 36-year-old founder of VinaCapital, a corporate finance and M&A firm, runs the $37 million Vietnam Opportunity fund that is traded on the London Stock Exchange and was up 30% last year. He’s now the leading figure on Saigon’s Wall Street. His ethnic Chinese family fled Nha Trang as boat people in 1979 and settled in Toronto. Lam’s mother got a job hanging dead chickens on hooks at a poultry plant, and his father became a mechanic in a steel factory. At night the mother and five kids accompanied Lam’s father on a second shift cleaning the steel factory so he could finish in time to catch a few hours’ sleep before going to work the next morning. Lam scrubbed the toilets. Eventually a family grocery they bought with their savings put Lam through college, and he joined Coopers & Lybrand. That firm sent Lam to open its Vietnam office in 1994; he left what became PricewaterhouseCoopers to start VinaCapital in 2003.
When he arrived in Vietnam, Lam thought he would be welcomed with open arms. Instead, he says, sitting in his 17th-floor office overlooking downtown Saigon, ‘the immigration officer at the airport gave me such a hard time because I didn’t put a $10 bill in my passport. People then didn’t trust the Viet kieu. They were envious of us, our overseas education, our expat salaries. I thought I had made a mistake. You’re in Canada, you feel like you don’t belong. And then people here didn’t want you here.’ Now, Lam says, ‘it’s totally different. The economy is developing. The income gap is not as wide. People trust the Viet kieu a lot more.’ And, significantly, the government cleaned up corruption at the immigration counter, installing cameras to catch infringers and notifying travelers they should lay off the bribes. ‘The government realized that its first impression was at the airport,’ says Lam.
That’s important when Viet kieu arrive bringing investment capital. ‘Every $1 million in investment creates 1,000 jobs,’ Lam says, citing a recent study on Vietnam’s economy. ‘So a $37 million fund invested in Vietnam is 37,000 people working, indirectly.’ Lam’s fund has invested in office towers and an insurance company, and in the food and beverage sector as well as in distressed assets. ‘We are helping multinationals enter the Vietnamese market, bringing awareness of Vietnam to the world, doing road shows, and talking about Vietnam’s achievements,’ he says.
That’s even truer for those in the technology field. The country manager for Intel, Than Trong Phuc, is also doing road shows, but his are in Vietnam to promote computer and Internet use. As one of the last people to clamber aboard a helicopter and be evacuated from the roof of the U.S. Embassy in April 1975, he grew up from the age of 13 in California, studied electrical and computer engineering at the University of California at Davis, and joined Intel, which eventually sent him back to Vietnam to run its Indochina operations. Now Phuc arrives for work each morning at the granite-and-glass tower where Intel has its offices, a short walk from the site of his dramatic escape 30 years ago. ‘There is a big gap between local culture and American culture,’ says Phuc. ‘The key to success is being able to bridge that, to adapt Intel’s values and culture to the local culture. Some things you keep, some things you change.’ What Phuc keeps is his integrity, he says, refusing to bribe officials or accept kickbacks from distributors. What he adapts are some Intel procedures, such as using petty cash to supply tea and water for office visitors instead of another designated fund.
‘Being Viet kieu, I want to help this country bridge the digital divide,’ Phuc says. ‘I want to take American technology and know-how and see how we can help Vietnam grow. I’m using Intel as a vehicle to help this country, and Intel is very glad to let me do that. I’m lucky to be in a position to have the tools to make that happen.’ It was at Phuc’s urging—along with Acer, Hewlett-Packard, and Vietnam’s two largest computer-assembly companies—that the Vietnamese government launched an affordable-PC campaign, offering desktops for $265 to $419. With ‘Intel Inside,’ of course. ‘I spent many sleepless hours convincing the government that this is good for Vietnam,’ Phuc says. ‘They’re struggling because they want to embrace technology, but they want to know, How is it going to change the system?’
One thing the government is embracing is a software industry that can make Vietnam an outsourcing competitor with China and India. And one of those trying to make that happen is Thinh Nguyen, founder and chief executive of Pyramid Software Development, which employs about 35 software engineers doing systems testing and development in a 50-acre software park about 40 minutes from Saigon. His clients include Renesas Technology, a semiconductor maker, and chipmaking-equipment manufacturer Novellus Systems.
Thinh left Vietnam as a teenager aboard a U.S. warship in 1975 and became a software engineer in Silicon Valley. After the end of the tech boom in 2001, he decided to relocate to his country of birth. About two-thirds of the Vietnamese tech companies competing in the outsourcing and software development field are run by Silicon Valley refugees like himself, Thinh estimates. ‘I want to bring the innovation and corporate culture from Silicon Valley to Vietnam,’ he says. ‘There’s a lot of good potential, and the costs are lower than India.’ Thinh can charge as little as $1,700 a month for each software engineer working on a project, compared with the going rate of $2,500 in Bangalore. ‘There are a lot of good engineers in Vietnam,’ he says. ‘What we’re missing is the marketing.’
Other Viet kieu entrepreneurs have been going into the restaurant and services industries. David Thai, 32, who left Vietnam as a toddler and grew up to become a Starbucks aficionado as a college student at the University of Washington in Seattle, decided to open a coffee shop. After experimenting with running a café in Hanoi, he opened his own Highlands Coffee outlet in Saigon in 2002. (This was just as Vietnam’s coffee exports were taking off; today the country is the world’s second-largest coffee exporter, after Brazil.) Thai says his biggest obstacle wasn’t the red tape that entrepreneurs face but earning the approval of his parents, who were aghast at the idea of their son’s choosing to go back to the country from which they escaped. ‘For my parents, it was like opening old wounds,’ he says. ‘They had to deal with their oldest son going back to Vietnam—and not just Vietnam, but Hanoi.’
Thai now has 22 outlets in Saigon and Hanoi and is opening a new one roughly every six weeks. He roasts his own all-Vietnamese blends at a factory outside Saigon and requires 40 hours of training for his baristas—a mere briefing by standards of top Seattle coffee roasters but a novel concept for Vietnam. His most popular cafés are packed with upwardly mobile Vietnamese drinking $1.65 double café mochas or $1.46 cappuccinos at all hours of the day, turning Thai into one of the most successful and best-known Viet kieu in Vietnam. ‘I’m one of those entrepreneurs who starts out, works hard, and gets everything he ever wished for,’ says Thai, looking haggard after arriving an hour and a half late to breakfast at his newest café at the colonial-era opera house in Saigon. ‘This is beyond my wildest imagination. I really did fall in love with Vietnam the first moment I landed here. People said, ‘You’re crazy.’ I said, ‘It’s my right. It’s my birthright.’
Thai’s fame is rivaled only by that of Bobby Chinn, a chef and restaurateur whose innovative fusion cuisine in Hanoi has drawn Hillary Clinton and just about every other American Senator, dignitary, or foodie passing through town. Chinn, who is half-Chinese and from San Francisco, quit his job on Wall Street, learned to cook, and then followed his father, who came to invest in Vietnam in the mid-1990s. While not a Viet kieu, Chinn symbolizes the kind of risk-taking frontierism that others are just starting to embark upon in Vietnam. ‘I was the first person to take a wine list and break it into varietals and by price,’ says Chinn, standing in the kitchen of Restaurant Bobby Chinn, where he has been known to throw dishes and his line cooks look upon him with both respect and fear. Chinn’s restaurant, once a gathering spot for Hanoi’s expat community, now draws increasing numbers of locals, who can be found relaxing on silk cushions beneath contemporary Vietnamese paintings, smoking the hookah pipes that come out after 10 p.m. when the lights dim and the music level rises. ‘I have the first loungey kind of bar in Vietnam,’ says Chinn. ‘I took art and lighting to a different level here.’
South of Saigon, workmen are tamping down the putty-colored dirt at what will soon be a California-style suburb, complete with tennis courts and swimming pools. The Saigon South compound is the latest project of developer Paul Hoang, a Viet kieu from the San Jose area who divides his time between Vietnam and California. Buyers can choose among ‘San Francisco style’ townhouses, ‘Santa Barbara style’ one-story ranch houses, and two-story ‘San Luis Obispo style’ ranches, ranging from $83,000 to $197,000.
With gardens, stainless-steel appliances, Jacuzzis, lots of picture windows, and front yards, the homes planned for these gated communities seem weird to Vietnamese who stayed behind and prefer urban houses fronting on the street. But three-quarters of Hoang’s homes were sold to Vietnamese buyers in California before local contractors broke ground on his development, and without anyone’s setting eyes on anything beyond a picture in a catalog. He plans to complete the first development this year and stresses that the gated community will have 24-hour security, a medical clinic, DSL connections, a supermarket, and quick access to a nearby hospital. ‘I’m building for the older people, like my parents,’ says Hoang, surveying the development, thick with fan-leafed palms, on a humid afternoon. ‘After they work in the U.S. for so many years, they get tired and want to come back and have an easy life. Some of them complain they don’t have enough money to retire in the U.S. They can have a very good life here.’
With an estimated 2.7 million Viet kieu living mostly in the U.S., Australia, and France, the potential for an impact on Vietnam’s housing market cannot be underestimated: ‘Vietnamese tradition,’ says Hoang, ‘is that when you die, you want to be in your homeland.’
Hoang’s company is a joint venture with the Ho Chi Minh City government that resulted from his reacquaintance with a childhood friend, now a government official, who stayed behind when Hoang left for college in California in the early 1970s. Hoang takes care of the paperwork on the Vietnam end, so all his buyers have to do is show up once the houses are built and obtain a key. Some are former soldiers who fought on the losing South Vietnamese side during the war. ‘They say that was the past,’ says Hoang. ‘No hard feelings.’
In fact, most people in Vietnam say, it’s only some Americans who retain the memories and guilt over the Vietnam war. Letting bygones be bygones is part and parcel of doing business in Vietnam today, and the invitation to the Viet kieu to be at the forefront is a clear demonstration of the country’s commitment to keep economic growth surging ahead. ‘All the Vietnamese-Americans I know have always wanted to come back and do something for their country,’ notes FedEx’s Binh. ‘Viet kieu investment is growing, and economic growth will help uplift the people of Vietnam.’ Thirty years after the end of the war, that’s an uplifting message indeed.