Trade Obstacles in China Make Vietnam Look Rosy
Vietnam is willing to work toward international standards, setting it apart from neighboring countries.
It is sometimes said Vietnam hates when people say it is like China, like a smaller brother. But what if, instead, China could be a bit more like Vietnam? With all of the trade and political strife that is currently plaguing Beijing’s relations with other countries, foreign officials would hardly be blamed for wishing it could be a little easier to work with their Chinese counterparts -- as easy, say, as it is in nearby Hanoi. China and Vietnam invite obvious comparisons because they each are ruled by a single, communist party; they both put curbs on the internet and internet companies; and they have high, export-led economic growth after beginning privatization in the 1980s, to name a few of the myriad similarities. But in Vietnam it is more common to see foreign partners make progress in their effort to solve bilateral disagreements, and that is the critical difference. And the comparisons between China and Vietnam are not just a theoretical or academic exercise. They affect the real-world decisions that companies are making every day, decisions on where to do business that could mean millions of dollars in trade. What makes Vietnam unique is its willingness to work toward international standards, even when the choice is difficult, said trade consultant Barbara Weisel. “Those policies are what we need to advance, to move to that higher stage of development,” she said at an economic forum this month in Ho Chi Minh City. “And that’s a very important shift that Vietnam made that is very different, and it distinguishes Vietnam from most of the other countries in the region.” She is among many who say Vietnam is benefiting as China loses investors. Firms are switching from China to Vietnam because Washington’s trade dispute with Beijing makes Vietnamese goods cheaper. And the “country’s close proximity to China makes it a worthy option for manufacturers looking at alternative locations in the Southeast Asia region because the operating cost in China has been continuously increasing in recent years,” real estate firm JLL said in a market analysis. Besides the trade friction, China has been butting heads with foreign nations on multiple fronts this year. It detained two Canadians after Ottawa arrested a Huawei executive in December. It forced Sri Lanka to fork over a port after the island country failed to repay debt as part of China’s One Belt, One Road global infrastructure initiative. And to the dismay of Washington, it continues to be North Korea’s biggest trade partner despite U.S. sanctions. When viewed through that lens, next-door-neighbor Vietnam gives the impression of a country that is more open and amenable to bilateral talks. That ranges from Hanoi’s support for the U.S. push to denuclearize the Korean peninsula, to its entry into one international trade deal after another. There is less frustration, less banging of heads against walls in order to strike a compromise in Vietnam. While Beijing blocks Facebook and Google, Hanoi has largely given up on doing so. While China requires foreign companies to share technology with locals, Vietnam is removing the 49 percent cap on foreign investment in listed companies. The comparison matters because the two countries diverge today, in spite of sharing so much in common for centuries. China ruled Vietnam for nearly a millennium, a history underlying their similar languages, food, Mahayana Buddhism, Confucian families, holidays, and folk tales. Their communist economies took a turn for capitalism around the same time, in the 1980s, and then folded into the World Trade Organization, in 2001 for China and 2007 for Vietnam. With their modern paths diverging, Vietnam as a smaller country has had less leverage on the world stage than China and relies more on global cooperation. It could be the reason Hanoi officials are willing to go to the bargaining table, even though it sometimes means they give up a little control, as in the choice to allow more labor unions beyond the union run by the government, or to open state-owned enterprises to more competition. In the most controversial policy of recent months, Vietnam plans to enact a cyber law that forces companies to store data domestically and take down online content ordered by the state. “We are working with the business community here,” Vietnam Deputy Foreign Minister Pham Quang Vinh said at the economic forum. “Even [though] there is a law, but there is an ongoing process of consultations between the government of Vietnam and the business community over here.” In other words, Vietnam has its plans, but it is also listening to opponents.