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Letter From Ho Chi Minh City: Development and Growth in Ho Chi Minh City

Ho Chi Minh City in Vietnam has become an Asian powerhouse with booming garment and footwear industries.

The cream and yellow Ho Chi Minh City Hall was finished in 1908 and dates to the French colonial era.

From 1959 to 1975, Vietnam was embroiled in the longest, most controversial and debated war in U.S. history.

Three decades later, Ho Chi Minh City — formerly known as Saigon — has transformed from enemy to business partner and become an Asian powerhouse.

With footwear and apparel production blazing, the city of 9 million people, with economic and entrepreneurial muscle unfurling, is an awakening giant.

While a decade ago its streets were melancholy and gray, today they bustle with color, languages and fashion from across the globe. The number of construction sites is overwhelming, and it seems the city is building everything imaginable, from luxury hotels, office towers and boutiques to a new elevated train system, metro, motorways and a multibillion-dollar international airport. The new terminal of Tan Son Nhat International Airport opened in September 2007.

“This city reminds me of Japan decades ago,” said Shiro Fukukawa, Japanese general director of Zen Plaza, an upscale department store and the first joint venture in Vietnam with 100 percent foreign investment. “We have similar cultures: Both countries have been strongly influenced by China. The Vietnamese work ethic is very high and the people are always eager to learn from foreigners without losing their own culture.”

The center of Vietnamese manufacturing, HCMC is home to 15 industrial parks — with more under construction — and export processing zones. It hosts Quang Trung Software Park and Saigon Hi-Tech Park, and Intel recently announced it would triple its investment to over $1 billion in its factory in the city.

Its garment and footwear industries are booming, with major factories located within or just outside city limits.

More than 4 million foreign tourists visited Vietnam in 2007, and the nation’s economic performance draws increasing outside investment. Over the past decade, annual growth averaged 7.5 percent and foreign direct investment increased from about $1 billion in 2000 to over $6 billion in 2007. It is poised to grow further, despite inflation of around 25 percent and a shortage of skilled labor.

“The production of shoes in our factories has increased 20 percent every year for at least three years,” revealed Nguyen Duc Thuan, chairman of the Vietnam Leather and Footwear Association and chairman of TBS Group, Vietnam’s largest footwear manufacturer. “We recently opened a factory outside HCMC that employs 7,000 workers. Our total workforce is now over 10,000, and almost all we produce is designated for export. The demand from abroad is enormous: Vietnam produces more than 500 million pairs of shoes a year, 65 percent of which are sports shoes. Thirty percent of Nike shoes are made in this country. Shoe production in Vietnam is worth $4.5 billion a year, and we plan to increase that by 10 to 20 percent next year. The quality of shoes produced in this country is now higher than in China.”

The city’s gross domestic product was estimated at $14.3 billion in 2007, or about $2,180 per capita (up 12.6 percent from 2006), accounting for 20 percent GDP of the entire country. The GDP adjusted to Purchasing Power Parity surpassed $71.5 billion, or about $10,870 per capita.

The city’s industrial product value was $6.4 billion, or 30 percent of the IPV of the whole nation.

Ironically, garment and footwear companies’ success in HCMC creates some turmoil in the local labor market.

“The garment industry in HCMC can’t afford to pay minimal wages to its workers,” explains Le Quoc An, chairman of each of the Vietnam National Textile and Garment Group, Vietnam Textile and Apparel Association and the ASEAN Federation of Textile Industries. “Skilled workers have so many job opportunities in different sectors, unless we pay them an average of 2 million dong a month [approximately $130], they will not agree to work in our factories.”

But despite inflation, HCMC’s economic success is clearly visible. Residents follow international fashion trends, the number of luxury car dealers is increasing and thousands of cafes and restaurants host crowds.

The Asian city is adapting European style, with smart-looking department stores selling international brands like Louis Vuitton and Yves Saint Laurent. The impressive Diamond Plaza and Parkson, the Malaysia-based international retail conglomerate, plan to open 18 stores across Vietnam by 2010, and the mini mall Opera View, across the street from the Municipal Theatre, is being renovated.

Development is booming: An exclusive shopping plaza opened in the Art Deco Hotel Rex, in front of the legendary Ho Chi Minh City Hall, and its impressive facade and large statue of Ho Chi Minh now face an advertisement for Chloé and the boutique of Vietnamese designer Minh Hanh.

Large stores are not HCMC’s only shopping attractions, however. Thousands of silk shops, art galleries and traditional markets welcome foreign shoppers in this city blending Communist banners, Honda motorbikes, European cafes and designer names.

Zen Plaza, the only large retailer in HCMC dedicating a large part of its space to local designers, organizes two fashion shows a year and plans to open a school for designers.

“I personally love HCMC,” confessed Benoit Metanomski, manager at five-star hotel Sofitel Plaza Saigon. “It is a simply fantastic place to be. It is safe — much safer than Paris — life is easy going and there are always plenty of things to do.”

Times have changed. “Opening Soon” posters hang next to traditional French-style cafes, and a shop selling old propaganda posters is near the most expensive hotels in town. Galleries with traditional oil paintings face boutiques offering the latest international fashion brands.

Vietnam has grown to be a new Asian dragon, and its largest city — HCMC — is roaring.