Despite the lifting of the US trade embargo, Vietnam, with its ramshackle infrastructure and volatile politics, is still a frustrating place to do business. Yet there are rich pickings for the persistent.

Despite the lifting of the US trade embargo, Vietnam, with its

ramshackle infrastructure and volatile politics, is still a frustrating

place to do business. Yet there are rich pickings for the persistent.


Vietnam’s immense potential to become the next Asian economic tiger has

helped encourage a feeding frenzy by multinational clients and the

western advertising agency networks since the US trade embargo was

lifted early in 1994.

All the ingredients for growth are there. Vietnam has a large population

of around 80 million, eight million of whom are concentrated in the two

largest cities, traditional Hanoi in the north and freewheeling Ho Chi

Minh City, the former Saigon, in the south. About a fifth of the

population is urban, and cities such as DaNang, the port of Haiphong and

the resort city of Nha Trang are all growing fast.

Foreign investors have been attracted by a relatively cheap and

plentiful labour force, the abundant oil and gas reserves in the Tonkin

Gulf, and the apparent readiness of the communist regime to embrace the

free market. About half of the population is under 20, with a seemingly

insatiable appetite for western brand icons such as jeans and soft


US multinationals have been quick to recover lost ground, to the extent

that Pepsi is now the largest advertiser in the region. With the ending

of the trade embargo has come hard currency investment and the

enrichment of a brand-conscious middle class comprised of Vietnamese and

ethnic Chinese who were merely tolerated in the days of hard-line

communist rule. Now they are mostly confined to ghettos such as Cholon,

in Ho Chi Minh City, and are putting their entrepreneurial talents to

full use.

Although the average per capita income is low at about dollars 350 a

year, this figure is growing fast. Long before President Clinton acted

to restore links with Vietnam, Japanese electronics companies had moved

in - Sony and JVC were established brands five years ago. Video

penetration has reached about 50 per cent of the five major urban areas;

TV penetration is up to about 90 per cent.


TV is by far the biggest medium now, having displaced outdoor as the

preferred means of communication for the western multinationals. There

are no national stations, and as a consequence 31 channels in total, but

only three in each of the major markets. They all take advertising with

the exception, at least for the moment, of Channel Nine in Hanoi. TV

viewing figures are slightly higher in the north, where the average

weekly hours of viewing runs at about 18.5. Residents of Ho Chi Minh

watch an average 45 minutes less per week. Saatchi and Saatchi estimates

almost nine out of ten Vietnamese adults over 15 watches television at

least once a week, and more than half watch every day.

Newspapers are also organised on a regional level - the only true

national papers are the English language business titles such as the

well-respected Vietnam Investment Review and the daily Vietnam News. The

most important Vietnamese title for advertisers is the daily Ho Chi Minh

City-based title Saigon Giai Phong, which claims a circulation of

120,000 and readership of 687,000.

Outdoor used to be the largest medium and is still important. Illegal

sites - and at one stage in 1994 it was estimated that there were 10,000

of them - have been culled and new licences are only being awarded to

companies that are prepared to invest in the medium by introducing neon


Radio, which has struggled to attract advertising and listeners because

of its traditional associations as the medium for conveying government

propaganda, is starting to revive slowly. Negotiations likely to lead to

the establishment of the first FM radio sales house are under way with a

series of US investors, and that is thought likely to lead to renewed

interest in the medium.


‘Despite all the investment and all the interest, it’s still chaotic.

The rules change every day, there’s no legal system, no typesetting nor

adequate photography service, so all that has to be sourced in

Thailand,’ Neil French, Ogilvy and Mather’s regional creative chief,

explains. The Bates Vinexad chairman, David Bell, was the first western

ad man to set up shop in Vietnam back in 1993, but he agrees the country

is still an exasperating market in which to operate. ‘Nothing works, and

it’s still incredibly bureaucratic. You can’t move without a licence,

and from time to time the Government stops giving them out, which is a

pretty big drawback.’

The Government has formulated a National Information Technology Plan to

improve the IT support and spent more than dollars 100 million on

computers and computer-related products last year, but has still a long

way to go to provide the sort of environment in which multinational

clients and advertisers can prosper.


One spectre overshadows all other potential problems - next month’s

Communist Party Congress. ‘A lot of decision making is not happening and

it is becoming increasingly hard to get things done,’ says Bates’ Bell.

‘No-one really knows what is going to happen at the Congress.’ The fear

among the western advertising community is that hardliners will reassert

their control over the party and put a severe brake on the rate of


The auspices have not been favourable. In February, the culture

minister, Tran Hoan, sent shock waves throughout the advertising

community by publishing Decree 87, banning such social and cultural

evils as drug abuse, gambling, prostitution and, apparently,

advertising. Police were deployed on the streets to order shops,

restaurants and businesses to remove foreign words from their signs and

paint over advertising hoardings that were not wholly in Vietnamese.

This was a potentially disastrous clampdown because most posters use

dual-language slogans.

The crisis was resolved temporarily a week later when the Culture

Ministry’s international relations department stressed that advertising

was not included under the terms of the directive. Since then an uneasy

truce between party members lobbying for rapid reform and a more

conservative element has paralysed decision making. Next month the

matter should be resolved. ‘I can’t see the hardliners being able to

assume control,’ says Bell, who, alongside most of the country’s

advertising community, is looking forward to renewed growth once the

Congress closes.