Fred Burke has watched gleaming high-rises and Mercedes-Benz sedans replace squat shacks and bicycle taxis in this communist country that has embraced capitalism at a frenetic pace.
"It was just desolate," he said of conditions in 1991, when he first arrived in the Southeast Asian country after working in China. "The streetlights weren't on. There wasn't a coat of paint put on (buildings) since the U.S. military pulled out. There were literally lepers on the street. You could openly see people suffering from malnutrition."
The Bay Area-born partner at Baker & McKenzie law firm came to Vietnam not long after the government's doi moi economic reform began -- and before the United States lifted its trade embargo against the country of about 90 million people. The changes eventually set off a scramble to get rich. While still a nation with a lot of poverty, Vietnam has one of the world's hottest economies that has created a host of newly minted multimillionaires.
Burke, a Stanford University graduate who provides legal advice to domestic and international companies, recently spoke with the Mercury News about doing business in Vietnam. Here is a transcript of his remarks, edited for brevity and clarity.
Q You were among the pioneers to first go to China as it was opening up in the 1980s. Why did you move to Vietnam as China was beginning to explode with opportunities? and Shanghai most of the time from 1981 to 1991, when I started coming to Vietnam. Vietnam was just opening. I ended up getting sucked into Vietnam. We had hundreds of lawyers in China but we had no one in Vietnam. The climate is nicer and it's on a more human scale. People are very friendly here. People ask me, after the war, is there resentment? No. Americans are generally pretty outgoing and down to earth and doing good things here. It's always been an open place. It's not an entitlement culture where people expect the government to give them handouts. Every Vietnamese looks in the mirror and sees a millionaire. They want to better themselves and they want to work hard.
Q In the years you have been here, how has America's relationship with this country evolved? Vietnam finds itself between China, the emerging global giant, and the United States, the dominant super power.
A Nobody wants to be completely dependent on China for everything. There is obviously some tension with China. Everyone in Vietnam is nervous about China. But it's not the old Cold War, when you have to choose sides. Countries like Vietnam wisely chose a multilateral foreign policy so they can trade and be friends with everyone.
Q Describe your work as a member of the Prime Minister's Advisory Council on Administrative Reform.
A The first three years of that was a huge reform that dealt with existing administrative procedures. The idea was to suggest simplifications or elimination of red tape. In December 2010, they issued a list of 4,700 directives from the prime minister. Baker & McKenzie was involved with at least 300 of those. Some of the red tape was eliminated and we are continuing to implement these reforms to cut red tape. But frankly, there is a lot of skepticism about how effective it was. Meanwhile, government ministers were up to the same monkey business, creating new regulations that need to be vetted. Vietnam is suffering a trade deficit and one of the responses has been a bit of protectionism in the form of new regulations to protect local businesses from overseas competitors. You see some Vietnamese companies asking for protectionism.
Q It wasn't long ago that investors were stepping on each other to get a piece of the action in Vietnam. Are you seeing a pullback amid the global downturn?
A I don't see a lot of people pulling out of Vietnam. For a lot of these multinationals, their business in Vietnam is growing faster than anywhere else. I hear that again and again. Even though there are troubles here, it's better than everywhere else. There is also manufacturing coming in from China. Companies are finding China's coastal regions becoming expensive and they are looking for alternatives.
Canon started with a small factory here 15 years ago. Now it's their biggest printer factory in the world. Victoria's Secret is very big here. The garment sector isn't producing cheap T-shirts; it's high-quality work that takes a lot of skilled knitting. It's the same for the furniture industry. Clients come to Vietnam for the high-end furniture. The craftsmanship is here. Nokia just announced it is going to open up a big smartphone plant outside of Hanoi. Intel (INTC) (which opened a $1 billion chip factory in Ho Chi Minh City in November 2010) was a big coup. They've been investing here. They've been a good corporate citizen. The one thing that didn't meet their expectations was the education of engineers coming out of school, so they've put a lot of resources into training.
Q With so much focus on the economic problems of the United States and Europe, Asia is almost assumed to be the new frontier of economic growth and stability. Yet the Asian Development Bank has warned that Asia's rise is not preordained -- and that nations such as Vietnam, as well as China, will need to make tough political choices. Do you see dangers?
A Some people do. A lot of people believe their own propaganda that the world is beating a path to their doors. No matter what they do, the foreigners will keep pouring money in. On the other hand, I do think the Vietnamese government, if nothing else, is very quick to see when the tide is turning and make necessary reforms.
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