Foreign investment in Vietnam hampered by local policies

Wang Minghao at his plant Photos: Zhang Han

During the past four years, Wang Minghao (王明皓) crisscrossed Vietnam from northern Hai Phong to southern Ca Mau in search of a profit.

The 60-year-old has been toiling and moiling all year round except three traditional Chinese holidays when he is back to his hometown. When anti-China riots broke out, he was the only Chinese remaining at work in Huazhong Company, a subsidiary of China’s Pangda Automobile Trade Company.

Wang is concerned about the company’s plight. “I love my job. But there are many problems.”

Pangda, a listed enterprise focusing on auto trade, tapped into Vietnam in 2007. Huazhong is one of the bilateral partnerships that then Vietnamese Prime Minister Nguyen Tan Dung signed with China. It imports compartments from China and assembles heavy duty trucks in Vietnam, enjoying a lower tariff than directly importing trucks from China.

However, fortune ran against it. The launch ceremony was soon overshadowed by the 2008 financial crisis when Japan and the US scrambled to sell off second-hand vehicles to developing countries, which cornered the Vietnam heavy duty truck market.

When Huazhong finally crawled out of the financial crisis hole, it fell into another. In 2009, Vietnam lowered the tariff on imported finished trucks, making the price level with importing compartments. Huazhong’s wings were clipped.

“I have no idea whether it happens by chance or is a trend. Vietnamese always alter their policies and every change is against foreign investment,” Wang said.

As to auto industry, China normally tunes its policy once in five years while Vietnam makes changes every year only for its own benefit, Wang added.

The immature local market also thwarted Wang’s another idea of importing Chinese electric motorcycles to Vietnam.

The streets are replete with smuggled scooters, which sell at the same price as China’s online retailor Taobao. “There is no way to compete against smuggled things,” he said.

Chinese characters on the gate of Huazhong company have been removed during the anti-China riots.

Despite the anti-China violence relegated the 10,000-square meter factory to empty warehouses, Wang is still confident about the prospects.

“Vietnam has potential. Walking in an industrial city like Hai Phong, you barely see the elderly. The government’s support to boost population yields demographic dividends.”

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