VZCZCXRO4475
PP RUEHCHI RUEHDT RUEHNH
DE RUEHHM #0583/01 1790204
ZNR UUUUU ZZH
P 270204Z JUN 08
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC PRIORITY 4584
INFO RUEHHM/AMCONSUL HO CHI MINH CITY 4809
RUEHHI/AMEMBASSY HANOI PRIORITY 3105
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0048
RUCPDOC/USDOC WASHINGTON DC

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000583 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS 
STATE PASS TO USTR DBISBEE 
 
E.O. 12958: N/A 
TAGS: ECON EIND ETRD BEXP KTEX OTRA OVIP VM
SUBJECT: SMALL IS BEAUTIFUL:  A/S HERNANDEZ DELEGATION OPENS DOORS 
FOR SMALL-MEDIUM U.S. FIRMS IN HCMC 
 
HO CHI MIN 00000583  001.2 OF 002 
 
 
¶1.  (SBU) Assistant Secretary of Commerce Hernandez led a trade 
delegation of 14 small- and medium-sized U.S. enterprises (SMEs) 
to HCMC on June 18-20.  The delegation's meetings with potential 
local partners, HCMC officials, and Amcham members generated 
commercial opportunities and increased understanding of local 
market realities.   Education was a central theme of the 
mission, with A/S Hernandez speaking at an Intel scholarship 
ceremony and kicking off Commercial Service (CS) Vietnam's 
virtual education web fair.  HCMC officials acknowledged 
inflation as a pressing issue, but stressed that the region was 
still poised for growth, and welcomed further U.S. investment. 
The delegation noted that the local implementation of policy in 
HCMC, especially commercial access to telecommunications 
bandwidth and funding for higher education, lagged behind 
forward-leaning policy statements they had heard from the 
Ministries in Hanoi.  Overall, the small companies that 
comprised the mission reported that the focused USG support they 
received generated the public and private sector access they 
needed to successfully enter the HCMC market. End Summary. 
 
USG Cachet Opens Doors, Teamwork Creates Opportunities 
--------------------------------------------- --------- 
¶2.  (SBU) The June 18-20 trade mission of 14 small- and 
medium-sized enterprises (SMEs) met with potential buyers, 
distributors, and partners; HCMC officials and AmCham 
colleagues.  Several companies noted that USG backing pried open 
doors that they, as small companies, could not open themselves. 
Representatives of a small plastics-processing technology 
manufacturer, for example, were thrilled about their first 
meeting with a global footwear company that had ignored previous 
requests for meetings.  Member companies also effectively 
networked with each other.  One participating company, a major 
recycler of empty print cartridges in Vietnam, has regularly 
discarded 10 percent of the cartridges that arrived damaged.   A 
trade mission company introduced the recycler to a local 
plastics' manufacturer, who has agreed to purchase the 
cartridges for use as feedstock, generating a 
mutually-beneficial relationship.  Companies that were already 
exporting to Vietnam but had yet to visit here also registered 
gains.  After meeting his Vietnamese customers for the first 
time, a U.S. hardwood exporter felt comfortable enough to set up 
a more liberal payment arrangement that will facilitate export 
growth and help address the "credit crunch" brought on by 
current macroeconomic circumstances. 
 
 
Taking the Long View 
-------------------- 
¶3.  (SBU) Companies that did not advance specific projects 
nevertheless thought that contacts made during the mission would 
pay future dividends.  Two energy-generation equipment companies 
noted that while the Vietnamese market held enormous potential, 
they plan to enter the market only upon deregulation of the 
energy sector and subsequent increases in retail energy prices 
to market levels.  They also noted the uncooperative stance of 
Vietnam's state-owned energy firm Electricity of Vietnam (EVN). 
 A diversified US conglomerate seeking to enter the Asian market 
said the "big picture" knowledge gained and relationships 
initiated during meetings with GVN officials provided an 
extremely valuable launching pad which will form the basis of 
their future Vietnam strategy. 
 
 
"Education Brings Us Together..." 
--------------------------------- 
¶4.  (SBU)...said A/S Hernandez, observing that if current 
projections hold, more than 9000 Vietnamese students will travel 
to the United States to study this year.  Fittingly, he made 
these opening remarks at the Commercial Service's Vietnam's 
Virtual Agent Fair, an innovative, low-cost program during which 
a dozen leading U.S. universities pitched their schools to 
pre-screened Vietnamese education agents over a web-based 
technology.  At an earlier event where 55 Vietnamese students 
received engineering scholarships from Intel, the Assistant 
Secretary lauded the U.S. high-tech giant both for its technical 
innovation and its corporate social responsibility, as 
exemplified by the scholarships and the technical support Intel 
provides to its five Vietnamese partner universities.  As 
another demonstration of the high priority the Vietnamese place 
on education, a trade-delegation member representing an east 
coast university said that the ten HCMC-area universities he met 
with were so receptive to his 'two plus two' undergraduate study 
and research-scholar exchange programs that he plans to double 
his university's outreach efforts to Vietnam. 
 
 
HO CHI MIN 00000583  002.2 OF 002 
 
 
Officials Acknowledge Inflation,But Want US Investment To 
Continue 
--------------------------------------------- -------------- 
------- 
¶5.  (SBU) Officials from the HCMC Departments of Planning and 
Investment, Trade, Industry, Finance, Public Transportation, and 
the Investment and Trade Promotion Center, as well as Vice 
Chairman of the People's Committee Mr. Nguyen Huu Tin 
acknowledged that high inflation is a problem (attributing it 
primarily to high oil prices and the multiplier effects 
thereof), but stressed that the underlying economy was still 
sound and that they welcomed and appreciated investment by U.S. 
firms.  In response to comments from some GVN skeptics that the 
trade delegation contained no 'giant' companies, AS Hernandez 
stressed that SMEs employ close to 70 percent of the workers in 
the United States, and are known for their innovation and 
productivity. The A/S also highlighted the importance to the 
bilateral relationship of IPR protection, the rule of law, and 
Vietnam's adherence to the BTA and WTO trade agreements and 
asked for transparent consideration of U.S. company proposals. 
He likewise noted that, although the GVN was asking its citizens 
to refrain from excessive consumption to combat inflation, he 
hoped they would make an exception to purchase American 
products, to help balance the trade deficit. 
 
North-South Dissonances 
----------------------- 
¶6.  (SBU) A U.S manufacturer of satellite-relay technology said 
that while the Minister of Planning and Investment in Hanoi told 
the delegation that Vietnam's recently launched communications 
satellite, Vinasat, was "open for commercial use", subsequent 
conversations with mobile telephone and Internet service 
providers in HCMC revealed that none of the providers were even 
remotely aware of how to apply for access to the satellite's 
bandwidth.  (Note:  Only Vietnam Telecom International (VTI), a 
subsidiary of state-owned Vietnam Posts and Communication 
currently has access to Vinasat bandwidth; the satellite began 
operation on June 1, and is still in testing mode.  End note.) 
Along similar lines, a representative from a U.S. university 
noted that universities in HCMC with which he had discussions 
were not aware of scholarship funds and other financial aid that 
the Minister of Education and Training had described to him in 
Hanoi. The Assistant Secretary broached this dissonance in 
meetings with HCMC officials, noting that while ministerial 
meetings in Hanoi gave the trade delegation a clearer picture of 
Vietnam's regulatory structure, private and public sector 
discussions in HCMC occasionally revealed conflicting 
interpretations. The A/S offered FCS as an information conduit 
to facilitate coordination between Hanoi and HCMC agencies. 
 
Comment: 
-------- 
¶7.  (SBU) HCMC's business and government leaders warmly welcomed 
A/S Hernandez, and trade-delegation members described the 
mission as highly productive and informative.   Public- and 
private-sector meetings revealed HCMC's enormous potential as a 
trade partner, in fields as diverse as plastics, lumber, and 
heavy machinery and also provided a sobering glimpse of some of 
the impediments (e.g. monopolistic tendencies of SOEs, such as 
EVN and VTI, and the not infrequent information disconnects 
between Hanoi and HCMC) to doing business in this dynamic 
environment.  However, according to the mission's members 
themselves, their most dramatic take-home lessons were that 
there is strength in numbers, and that with focused USG support, 
even small U.S. firms can successfully do business in HCMC. End 
comment. 
 
¶8. (U) This cable was cleared by the delegation and Embassy 
Hanoi. 
FAIRFAX