In last week's edition, The Economist ran a good piece on the evolution of the Vietnamese economy in recent years. For many Westerners, the thought of Vietnam conjures up images either of colonialism or a battleground between communist and Western ideology, depending on one's perspective and nationality. But neither representation could be further from the truth, despite the strength of the communist leadership which still runs the country today.
In fact, Vietnam's economy -- like China -- is capturing more headlines today than their communist system of government. According to The Economist between 2001 and 2005, Vietnamese yearly economic growth averaged "7.5%, reaching a peak of 8.4% last year." This year, the same number is expected to reach 8%, fueled by a 25% rise in exports. The export figure represents some $22 billion between in global trade between January and June in 2006, according to the story. And it's not just agriculture goods -- for which the country is well known -- that are playing a large part in this export number, although, as The Economist points out, Vietnam is now "the world's largest exporter of pepper and aims soon to overtake Thailand in rice ... it is even selling tea to India."
In my view, selling tea to India is a bit like selling a new breed of desktop application software to the city of Redmond. In other word, it's impressive. But what's even more remarkable from an export perspective is the rise of skilled manufacturing Vietnam. Indeed, the developing country recently attracted a $600+ million investment from Intel to build a new manufacturing facility, and Canon, Honda and Mitsui, according to local news sources, are also investing heavily in manufacturing development aimed at the export market. And with additional free market reforms, it won't be long before larger numbers of small-time entrepreneurs set-up shop and offer their lower cost wares on the world stage. Incidentally, the Wall Street Journal recently had a piece mentioning how Taiwanese manufacturers are moving business from mainland China to Vietnam to take advantage of lower wage and operating rates. When I consider all of these data points, it's clear to me that Vietnam is a country we should all be paying more attention to from a global sourcing perspective. For further reading on Vietnam's potential -- and a bit of comparative low cost country analysis -- check out this great entry on the China Law Blog.