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With a population of 88.8 million, Vietnam is the 13th most populous country in the world. Economic reforms introduced in the 1980s have helped this Communist country achieve significant economic growth including a doubling of the size of its middle class during the past five years.
Like China, Vietnam's nominally communist one-party system crushes dissent, keeps its military under tight control, and changes government policies and leadership slowly. While Vietnam offers an attractive environment for investment, the country is not without its drawbacks. In addition to widespread corruption, red tape and high inflation, Vietnam's infrastructure is still underdeveloped.
Regulatory and Political challenges
In order to retain command and control over the economy, the ruling party uses Vietnam's state-owned enterprises. Mismanagement, corruption, bureaucracy, lack of audit system, and inefficiency are common. The country has experienced bouts of macroeconomic turbulence in recent years—double-digit inflation, depreciating currency, capital flight, and loss of international reserves—that erodes investor confidence.
Vietnam is now losing out to countries such as Indonesia in terms of efficiency and value for its money. Inflation is on the rise as the dong currency has weakened and untrimmed borrowing by the state-owned enterprises has put a strain on the banking system and left banks heavily indebted. The issues of surging inflation, repeated devaluations of currency, a deteriorating trade balance, and rising interest rates undermine investor confidence in recent times.
Corruption and Bribery
As in many developing countries, corruption remains a problem in Vietnam, which a recent report ranks as the fifth most corrupt country in Asia. The anti-corruption organization Transparency International ranks Vietnam 116th out of 178 countries in its annual corruption perception index. A survey by the Vietnam Chamber of Commerce and Industry showed that half of business people admitted bribing officials to win contracts.
Intellectual Property Right (IPR) Protection
In Vietnam, the regulatory system to protect intellectual property rights was first put in place in 2005 through the Law on Intellectual Property. However, over the years, inherent deficiencies and administrative loopholes have severely undermined the efficacy of the system and made it difficult for owners of IPR and authorities alike to take action against infringers. Since the enforcement of IPR is low, very few cases make it to the courts.
Many counterfeit products that find a way into Vietnam originate from China. Counterfeiters use this country's warehouses as a great big transit lounge before boarding ships and flights to other destinations. The goods involved are mainly milk, fertilizers, cosmetics, electronic products, copies of DVDs and CDs, vehicle parts and medicines. Additionally, Vietnamese private workshops also manufacture counterfeit products and market them as genuine branded products. The prices of these products are relatively high in keeping with recognized global brand name products, but the information about the origin of the products is vague.
Restrictions on Use of Communication Media
Government maintains strong control over media and social movements. The government does not allow independent or privately owned domestic media to operate, and it exerts strict controls over the press and internet. Criminal penalties apply to authors, publications, websites and internet users who disseminate materials that oppose the government, threaten national security, reveal state secrets, or promote reactionary ideas. For example, since September 2011, all internet service providers in Hanoi have been required to shut down internet transmission at all internet retail providers from 11:00 p.m. to 6:00 a.m.
Skill and Talent Shortage
Limits to Vietnam's talent, both in terms of English and technical talent, will continue to constrain the growth of segments where these skills are critical. A recent survey by Grant Thornton, a global accounting and consulting firm, found that companies are more worried about attracting and retaining critical staff in Vietnam than anywhere else in the world. Once workers are trained and educated by a multinational corporation they quit and find other jobs. Many young people under the age of 25 are poorly educated and lack professional skills and are, therefore, unemployed.
Distribution and Logistical Problems
Running about 1,000 miles from north to south, Vietnam is primarily a rural country. Distribution of products becomes a challenge and requires innovative strategies. Transportation is also an area of concern. There is only one national road running from the north to the south. During and after floods the road often cannot be used. The only running railway running from north to south is no substitute. The sea offers a less expensive substitute, but harbor capacity is limited. Vietnam competitiveness is also under threat because power generation has not kept pace with demand, logistical costs and real estate.
Environmental Constraints
Since Vietnam is located in the tropical monsoon area in Southeast Asia, it is one of the most hazard prone areas in Asia Pacific Region. According to a 2012 World Bank report, major storms, flood events and other natural hazards result in annual economic losses equivalent to between one and 1.5 percent of gross domestic product (GDP). Seventy percent of Vietnamese people are estimated to be exposed to risk from multiple hazards, especially in rural communities. Businesses operating in these areas equally affected.
Human Rights Related Issues
The government of Vietnam continues to suppress political dissent and severely limit freedom of expression, association and public assembly. The government of Vietnam continues to expand control over all religious activities, severely restrict independent religious practice, and repress and arrests individuals and religious groups it views as challenging its authority. According to McKinsey Quarterly's Human Rights Watch Report (2011), Vietnamese courts remain under the firm control of the government and the Vietnam Communist Party and lack independence and impartiality. Vietnamese law continues to authorize arbitrary administrative detention without trial.
Final Words
Despite many challenges identified in this series of articles, Vietnam is still quite attractive to foreign investors. Vietnam has replaced China and Taiwan as the newest favorite location of companies setting up overseas operations owing to open economic policies, geographical position, political and economic stability, abundant and cheap labor, and huge consumer market. Opportunities and challenges identified in these articles will help the potential investors and exporters to formulate appropriate investment and risk management strategies to achieve their respective goals.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| 7921DT NTN | 105 | 145 | 40 |
| 7320BDT NTN | 100 | 215 | 94 |