Vietnam - Monday May 31 Vietnam Partners Visit

On Monday it was back to work. The team visited with Bradley LaLonde, founder and partner in Vietnam Partners, LLC an investment bank and investment company specializing in the Vietnam market. He was a founding member of the American Chamber of Commerce in China which we visited last week. He described his company as a boutique investment bank with offices in New York, Hanoi and Saigon (Ho Chi Min City). Vietnam has almost 90 million people, with 7 million in Hanoi and 9 million in Saigon. Vietnam’s trade (exports and imports) exceeds their GDP. Major exports include rice, coffee (number one in the world in fact..), pepper and seafood. More people have entered the middle class in Vietnam, and bank accounts have gone from 10,000 in 1995 to over 20 million today. 60% of the population of Vietnam is under 30. The people and the country have almost no debt, and got through the economic crisis almost unscathed. The country is, as Bradley puts it, more open than in China. Japan and Korea have invested heavily in Vietnam with most foreign direct investment going into Vietnamese exports. The banking business is booming here in Vietnam, as is the seafood export business. Taxes are a major problem. There are all kinds of taxes, that make the price of, for example, a General Motors car almost twice the price that is paid in the U. S. Vietnam partners are nevertheless invested in Chrysler Vietnam, and are opening up dealerships to keep up with the skyrocketing demand for cars in this country. They are also involved in residential real estate, which has also been booming. In Vietnam, a citizen may own a home “freehold”, but non citizens can only lease, and even then only up to 50 years after which, like in China, the property goes back to the government, or sell the property to a citizen “freehold”. Vietnam Partners manages two funds, one of which involves large institutional investors. V. P. takes a minority shareholder position in high growth companies that have a competitive or comparative advantage to other countries. They are also involved in bringing in brands like Bugatti motorbikes and Sea-Do personal watercraft, as well as furniture companies and farmed seafood companies. V. P also does consulting and advisory work with respect to regulations in Vietnam. They have created a platform for companies that would like to introduce products into the Vietnam market. Instead of investing in Vietnamese exporting (which V. P does to a smaller extent), V. P. goes the opposite direction, investing in importing and selling to the Vietnamese domestic market. Franchising laws have created an opportunity for franchisers to enter the market with a bit more ease. The biggest difficulty is in finding good managers to run the business. According to Bradley, the biggest opportunities are in the seafood, real estate, furniture markets, or consumer products and services that cater to the fast growing middle class. After this visit, we went to the Temple of Liturature. By this part of the day, the it was getting quite hot out. It is a heat and humidity that make you wet almost instantly when going outdoors. We had a nice dinner, and enjoyed after dinner cocktails at the top floor of the hotel with beutiful panaramic views of the entire city. Hanoi is a city that grows on you. I did not like it immediately, but after being here for some time, it really grabbed me.