It is a contraction of gung-yeh ho-dzo , `industrial cooperation, 'and it caught on because it is easy to pronounce, as in 'Nam or the States .  'Nam by itself is no more derogatory or misleading than shortening airplane or telephone or gung-ho .
( ( ( ( ( ( ( ( ( It ( is ( ( a contraction ) ( of ( ( ( ( gung-yeh ho-dzo ) , ) ` ) ( industrial cooperation ) ) ) ) ) ) , ) ` ) and ) ( it ( ( caught on ) ( because ( it ( ( ( is ( easy ( to pronounce ) ) ) , ) ( as ( ( in ` ) ( Nam ( or ( the States ) ) ) ) ) ) ) ) ) ) ) . ) ` ) ( ( Nam ( by itself ) ) ( is ( ( ( ( no more ) ( ( ( derogatory or ) misleading ) ( than ( shortening ( ( airplane or ) telephone ) ) ) ) ) or ) gung-ho ) ) ) ) . )
(ROOT (S (S (NP (PRP It)) (VP (VBZ is) (NP (NP (DT a) (NN contraction)) (PP (IN of) (NP (NP (JJ gung-yeh) (NN ho-dzo)) (, ,) (`` `) (NP (JJ industrial) (NN cooperation))))))) (, ,) (`` `) (CC and) (S (NP (PRP it)) (VP (VBD caught) (PRT (RP on)) (SBAR (IN because) (S (NP (PRP it)) (VP (VBZ is) (ADJP (JJ easy) (S (VP (TO to) (VP (VB pronounce))))) (, ,) (ADVP (RB as) (PP (IN in) (`` `) (NP (NNP Nam) (CC or) (DT the) (NNPS States))))))))) (. .) (`` `) (S (NP (NP (NNP Nam)) (PP (IN by) (NP (PRP itself)))) (VP (VBZ is) (ADJP (ADJP (ADVP (RB no) (RBR more)) (JJ derogatory) (CC or) (JJ misleading) (PP (IN than) (NP (NN shortening) (NN airplane) (CC or) (NN telephone)))) (CC or) (ADJP (JJ gung-ho))))) (. .)))
It is considered derogatory to shorten the words airplane and telephone.
( It ( ( is ( ( considered derogatory ) ( to ( shorten ( ( ( the ( words airplane ) ) and ) telephone ) ) ) ) ) . ) )
(ROOT (S (NP (PRP It)) (VP (VBZ is) (VP (VBN considered) (ADVP (RB derogatory)) (S (VP (TO to) (VP (VB shorten) (NP (NP (DT the) (NNS words) (NN airplane)) (CC and) (NP (NN telephone)))))))) (. .)))