Vietnam is an emerging market in the South East Asian region and is becoming a promising land for foreign investors. Over the last five years the country has attracted a large amount of Direct Foreign Investment, that totalled $US18 billion to the end of 1995. The country is considered an attractive market with a large size and a high growth rate. However the political risk is still high despite the stability of the government.
Although Australian investment in Vietnam has increased since 1989, it is gradually loosing ground to other players, namely, New Industrial Countries (such as Taiwan, Hong Kong and South Korea), ASEAN countries (Association of South East Asian Nations), Japan and the United States of America.
A pilot study was undertaken to ascertain the opinions of some Australian companies about the Vietnamese market, their performance and company experiences, opportunities and problems faced, and attitudes towards the future. The survey results show that companies that have a first mover advantage such as Telstra, the ANZ Bank and others are doing well. Some manufacturers that can use cheap labour also have good performance, however many firms claimed that their Vietnamese average profit level is lower than for the company's operations in their home country. Only a few firms admitted that the performance of their Vietnamese operations was better than in their home country. Australian investors seriously complained about the ineffective local bureaucratic system and the under-developed legal system. Despite the emphasis found in much literature on cultural differences being described as a large hurdle in doing business between Western and Asian countries, almost all Australian investors who answered the survey did not see it as a large hurdle. Overall, the Australian investors who answered the survey rated the risk of doing business in Vietnam as moderate.
There are still many business opportunities for Australian companies in areas such as telecommunications, education, building and construction and professional services.