Destination, Vietnam

In early 1968, during the Vietnamese Lunar New Year, Hanoi launched the Tet offensive against U.S. forces in South Vietnam. The attacks marked the beginning of the end for U.S. involvement in Vietnam. This month, the Vietnamese will celebrate the Lunar New Year by bedecking stores with fake giant red firecrackers. And the U.S. will mark its own new beginning in Vietnam. Any day now, Administration sources say, President Clinton will lift the 18-year trade embargo against Hanoi.

Convinced that a gusher of trade opportunities is imminent, U.S. business interests are poised to launch their own Vietnam offensive (table). Their target: lucrative opportunities in a country expected to become Asia's next Tiger. "It's the moment everyone has been waiting for," says Sesto E. Vecchi, a partner in the international law firm Russin & Vecchi, which has an office in Ho Chi Minh City.

That moment has been delayed because liberalizing relations with Hanoi has been difficult for Clinton. His efforts to avoid service in Vietnam sparked criticism during the 1992 campaign, and the embargo has been a touchy issue for him ever since. White House advisers are bracing for blasts from families of soldiers still listed as missing in action. These kin fear their drive to press Hanoi for information will end. "We won't have any leverage any more," frets John T. Isaf of the American Defense Institute, a POW-MIA group.

But Clinton received some political cover on Jan. 27 when a bipartisan Senate majority, including former POW Senator John McCain (R-Ariz.), voted to sanction the move. And on Feb. 2, the Justice Dept. cleared Commerce Secretary Ronald H. Brown of allegations that he sought a $700,000 payoff in exchange for ending the trade ban. What's more, the President's international economic advisers, who see exports to such emerging nations as the key to U.S. growth, have been clamoring to end the embargo. It's time, says one top Clinton aide, "to just step up there and do it."

LATE-STARTERS. For years, American multinationals have had to wait on the sidelines as European and Asian competitors made inroads in the 70 million-strong Vietnamese consumer market. In late 1992, Washington let American companies set up representative offices, which established business ties but couldn't cut deals. Now, all systems are go--and none too soon. "It's almost now or never," says Irwin Jay Robinson, president of the Vietnam-American Chamber of Commerce, citing an influx of loans and grants to Vietnam from the World Bank and other lenders authorized last summer. "Within a matter of months, hundreds of thousands of dollars worth of contracts will be awarded."

Many U.S. multinationals have already enlisted business partners and conducted market studies in anticipation of the embargo's end. Three dozen American companies have received licenses to open representative offices in Vietnam, and another 15 await approval. The latest to receive a license is Eastman Kodak Co.--though locals already have set up unofficial Kodak minilabs.

General Electric Co. is ready to gear up immediately. John M. Trani, CEO of GE's $3 billion medical systems division, was in Vietnam in late January and met with Prime Minister Vo Van Kiet. Once the embargo is lifted, GE will help build two high-tech health-care centers. GE's power generation division also hopes to win contracts to help electrify the country. Vietnam should become one of GE's biggest markets within a decade, Trani told reporters on his trip.

Other American blue-chip companies are charging in, as well. Mobil Corp. is teaming up with three Japanese companies to begin drilling in offshore fields in the South China Sea. Coca-Cola Co. has signed a joint-venture pact for at least two bottling plants--and Western sources in Ho Chi Minh City say the company could be bottling within weeks. U.S. airlines are anxious to add Vietnamese cities to their routes. Even smaller players are diving in. BBI Investment Group, a Chevy Chase (Md.) company, is set to invest $100 million on a variety of deals, including hotel development.

But Americans trail foreign rivals. Six banks from France, Australia, and Thailand have branches in Vietnam, while BankAmerica and Citibank only have rep offices. Concessions in the rich Dai Hung oilfield, which Mobil discovered, were given to Japanese, France, Australian, and Malaysian players. And because of the embargo, Boeing Co. lost out on key sales to Airbus Industrie, which set up a $1 million school to train pilots and crew in Ho Chi Minh City.

Yet American companies are confident they can catch up. One reason: U.S. brand recognition is so high. During the war, American goods sold everywhere, and the Vietnamese still covet them. Items ranging from Marlboros to Colgate toothpaste are smuggled in. Decades-old Caterpillars repaired with "bubble gum and Band-Aids" are on construction sites throughout the land, says James Rockwell, managing director of VATICO, the first U.S. company to open an office in Vietnam. "The Vietnamese respect our products," Rockwell says.

And there are still plenty of deals to come. U.S. construction companies are vying for big projects such as Highway 1, which will run the length of the country. And U.S. telecommunications heavyweights are set to grab business. "Vietnam's stimulus will come from the U.S.," says Tam Chung Ding, director of Motorola Semiconductors Co.'s. Asia Div.

WARY HOSTS. The Vietnamese, haunted by a long history of political and economic domination, repeatedly have said they want a strong American presence to counterbalance other Asian players. "They don't want to give everything to Japan or Taiwan," says Tanya Pullin, a lawyer specializing in Vietnam at the Hong Kong law firm of Deacons. "They want to spread it around."

With the embargo gone, U.S. companies still will bump up against relentless red tape in Hanoi. One American executive based in Vietnam likens the coming months to "a six-foot pothole on the way to Nirvana." American companies also will face tough battles to control ripoffs and smuggled U.S. imports. Mars Inc., for example, recently took out ads in Vietnamese newspapers in a drive to stem counterfeit candy.

It's not the only company with a high profile. As in past years, banners commemorating the New Year are everywhere. But now, Coke, Pepsi, IBM, and Kodak placards are sprouting up all over, too. Twenty-six years after the Tet battles, this year's holiday could once again usher in a new stage in U.S-Vietnam relations.


Nascent efforts by American companies to do business in Vietnam


Caterpillar wants to supply equipment for a $2 billion highway project. Some 50 other U.S. companies, including Morrison Knudsen, plan to submit bids for the first stage.


Mobil has teamed up with three Japanese partners to begin drilling offshore.

Exxon, Amoco, Conoco,

Unocal, and Arco are negotiating production-sharing contracts with PetroVietnam.


GE opened a trade office a year ago. It plans to electrify Vietnam and will establish two high-tech health-care centers. AT&T expects to step up long-distance service in and out of the country.


Boeing hopes to win back Vietnam Airlines orders lost to Airbus during the embargo. United, Northwest, and Continental could begin service to Hanoi and Ho Chi Minh City.


Coca-Cola is ready to begin bottling in Vietnam soon. Pepsi ads have been seen

all over Ho Chi Minh City. Motorola, Kodak, and

Philip Morris are likely to enter the market.


Citibank plans to open branches as soon as it gets permission from Washington and Hanoi. BankAmerica and American Express also have ambitions to expand as soon as possible.


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