The Ethnic Chinese & Economic Development in Vietnam 9789814379243

Table of contents :
Contents
List of tables
Acknowledgements
Introduction
1. Formation and evolution of the ethnic Chinese community in Vietnam
2. The position of the Chinese in key economic sectors of South Vietnam before 1975
3. National reunification and the position of the Chinese in the southern economy
4. Summary and conclusions
Select bibliography
Index
THE AUTHOR

Citation preview

THE ETHNIC CHINESE AND ECONOMIC DEVELOPMENT IN VIETNAM

The Institute of Southeast Asian Studies (I SEAS) was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted problems of stability and security, economic development, and political and social change. The Institute is governed by a twenty-two-member Board ofT rustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A tenman Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer. The Indochina Unit (IU) of the Institute was formed in late 1991 to meet the increasing need for information and scholastic assessment on the fast -changing situation in Indochina in general and in Vietnam in particular. Research in the Unit is development-based, with a focus on contemporary issues of political economy. This is done by resident and visiting fellows of various nationalities. To understand the Vietnamese perspective better, the Unit also has a regular programme whereby scholars from Vietnam are invited to do research on issues of topical interest.

THE ETHNIC CHINESE AND ECONOMIC DEVELOPMENT IN VIETNAM TRANKHANH Institute of Southeast Asian Studies, Hanoi

l~n~

Indochina Unit

liil ...... INSTITUTE OF SOUTHEAST ASIAN STUDIES

Cover Photograph: Street scene ofHang Buom, Hanoi, 1993, by courtesy ofRussell Heng

Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Singapore 0511 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies.

© 1993 Institute of Southeast Asian Studies, Singapore Cataloguing in Publication Data Tran Khanh. The ethnic Chinese and economic development in Vietnam. I. Chinese--Vietnam--Economic conditions. 2. Vietnam--Economic conditions. I. Title. 1993 sls93-51703 DS556.45 C5T77 ISBN 981-3016-66-3 (hard cover) ISBN 981-3016-67-1 (soft cover)

The respomibility for facts and opinions in this publication rests exclusively with the author and his interpretations do not necessarily reflect the views or the policy ofthe Institute or its supporters. Typeset by International Typesetters Printed in Singapore by Scapa Pte. Ltd.

Dedicated to the memory of Professor KS. Sandhu Director of/SEAS, 1972-1992

Contents

List oftables Acknowledgements

xt

zx

Introduction

1

1. Formation and evolution of the ethnic Chinese community in Vietnam

11

2. The position of the Chinese in key economic sectors of South Vietnam before 1975

39

3. National reunification and the position of the Chinese in the southern economy

77

4. Summary and conclusions

103

Select bibliography

Ill 125 127

Index The author

List of tables

1. Number of Chinese and their geographical distribution in Vietnam before 1955 2. Number of Chinese in key cities of Vietnam and their percentage in the total Chinese population 3. Geographical distribution of the ethnic Chinese in Vietnam in the 1980s 4. Distribution of the Chinese in South Vietnam, by speech group 5. Socio-economic classification of the Chinese in SaigonCholon before 1975 6. Chinese capital investment in South Vietnam, 1974 7. Total direct capital investment in South Vietnam, by nationality 8. French and Chinese capital in Vietnam, 1906 9. Number of commercial enterprises in Vietnam, by territory, nationality, and size, 1952 10. Distribution of trade enterprises of different sizes among ethnic groups in Cochinchina, 1952

24 25 26 31 33 43 45 46 50 52

X

Li st of ta bl es

11. Distribution of Chinese trade enterprises in various territories and according to business size, 1951 12. Proportion of Chinese enterprises of total South Vietnamese enterprises, 1956-57 13. Number of business enterprises owned by the ethnic Chinese in Saigon-Cholon's nine districts, 1971 14. Ethnic Chinese involvement in South Vietnam's services industry, 1958 15. Number ofbanks operating in South Vietnam, 31 December 1972 16. Number and types of Chinese food-processing businesses in Saigon-Cholon, 1953 and 1955 17. Ethnic origins of entrepreneurs and the success of their firms 18. Participation in domestic trade and services of the private and state sectors during the 1980s 19. Small-scale industrial production and handicraft of the Chinese in Ho Chi Minh City, 1984-85 20. Chinese small-scale industries and handicraft enterprises in the non-state sector in Ho Chi Minh City, 1985 21. Dynamic changes of Chinese small-scale industrial enterprises in the non-state sector in district 11 of Ho Chi Minh City, 1985-90 22. Number of Chinese households having relatives abroad 23. Number of Chinese households in ward 17 of district 6 of Ho Chi Minh City having relatives abroad

54 55 56 60 62 66 74 89 92 93

94 98 99

Acknowledgements

This monograph is the outcome of my study in the past twenty years, encompassing my student days in Vietnam, China, and the erstwhile Soviet Union. To some extent, especially with regard to the economic position of the ethnic Chinese in Vietnam before and after 1975, this study draws on an unpublished dissertation, "Principal tendencies of the socio-economic and ethno-political development of the Chinese community in Vietnam (from the second half of the nineteenth century to 1954 in the North and to 1975 in the South)", which was defended by me in 1987, and my book, The Role ofthe Ethnic Chinese in the Economies ofthe Southeast Asian Countries, published in Vietnam in 1992, as well as other published and unpublished scholarly works. I would like to thank the Institute of Southeast Asian Studies (ISEAS), Singapore, for Research Fellowships to complete this monograph. I am grateful to the late Professor K.S. Sandhu, Director of ISEAS; Dr Ananda Rajah, then Co-ordinator of the Social Issues in Southeast Asia (SISEA) programme; and Mr Russell Heng Hiang Khng, Joint Co-ordinator of the Indochina Unit (IU), for valuable comments on my manuscript and the

xii

.Ack now led9ements

interest they have taken in this study. My thanks also go to members of ISEAS staff who have given me encouragement and support. Their willingness to help has been indispensable even though their names cannot all be mentioned here. I wish to thank them all. All that I can offer in return is this volume.

TranKhanh Singapore, May 1993

J~t~oductio~

Close to twenty years have passed since South Vietnam was liberated in 1975. The economy of a re-unified Vietnam, however, is still poverty-ridden. One of the reasons for this is the lack of effectiveness in the use of private domestic resources, particularly that of the ethnic Chinese in Vietnam. Before 1975, Chinese capital, entrepreneurship, and skilled manpower in South Vietnam played an important role in the development of domestic markets and international trade. After 1975, however, Chinese participation in the Vietnamese economy underwent a decline brought about by the socialist transformation of the South and an exodus of capital. However, the residual economic potential of the Chinese who have remained in Vietnam is still considerable. Under doi mo~ which is the programme of economic and political reforms in Vietnam, there is evidence that the Chinese are once again contributing significantly to the expansion of internal markets and capital accumulation for small-scale industrial development. Accordingly, the role which the Chinese have played in the past and are beginning to play again seems eminently worthy of study. From a more pragmatic point of view, it is also pas-

2

Jntroduction

sible that a better appreciation of the role of the Chinese in the Vietnamese economy both historically and in the immediate future may well be of some value, if not indeed essential, to economic development. In addition to this, there are other related issues which continue to be of academic interest, for example, the study of ethnic relations and the interaction of the Chinese and Vietnamese in more recent times. The role of the Chinese in Vietnam's economy has been the subject of study by many Vietnamese and non-Vietnamese scholars, and it would be impossible to review all the relevant literature here. However, a brief summary will provide an understanding of the subject and issues that require further investigation. Vietnamese authors began writing on the Overseas Chinese in the 1920s. Prominent among them at the rime was Oao Trinh Nhat. His book, The Luc khach tru va van dedi dan vao Nam Ky [The position of the Overseas Chinese and problems of emigration into Nam Ky] (Nam Ky being the southern part ofVietnam), was published in Hanoi in 1924. In it, he presents much valuable data on the economic activities of the ethnic Chinese and compares the economic role of Chinese entrepreneurs and businesses with that of the French and Vietnamese in the early decades of the twentieth century. In this study, he also examines aspects of traditional social and economic organizations of the Chinese in the context of the development of capitalism in Vietnam. Oao Trinh Nhat, however, remained a narrowminded nationalist and his work was controversial because, amongst other things, it featured in debates on ethnic issues and contributed to tension between the Vietnamese and the Chinese. During the 1960s and early 1970s, Vietnamese scholars paid more attention to the study of the role of the Chinese in the Vietnamese economy, especially in the South under the regime in Saigon. They included Tran Van Dinh (1961), Tan Viet Oieu (1961), Khuong Huu Dieu and Quoc An (1970), Hoang Truong Tan (1972), and Nguyen Van Sang (1974), among others. Tran Van Oinh was a prolific writer who wrote many articles on Overseas Chinese in Southeast Asia in general, and in Vietnam in particular, most of which appeared in the periodical The Native Land in the early 1960s. One of his more noteworthy articles (Tran Van Dinh 1961) analyses the policies of the government of the Republic of Vietnam under Ngo Dinh Diem towards the Chinese. In the early 1970s, Khuong Huu Dieu and Quae An (1970) wrote several articles (among others) that focused on the commercial activities of the Chinese, and analysed the factors that contrib-

J

nt rod t-~ ct ion

3

uted to their greater success in business undertakings compared with the efforts of the local Vietnamese. The articles are important for the detailed data and documentation on the activities of the Chinese in various economic sectors, especially in trade and transport. Also noteworthy is the MA dissertation of Nguyen Van Sang, "Nguoi Viet goc Hoa va kinh te Viet nam" [Vietnamese of Chinese origin and Vietnam's economy] (1974). The thesis is valuable for detailed accounts of the economic activities of the Chinese in key sectors of South Vietnam's economy during the 1960s. However, it fails to recognize that the local Chinese bourgeoisie was part of the Vietnamese bourgeoisie and, accordingly, that ethnic Chinese resources could be viewed as an important component of domestic economic resources. Another shortcoming of the study was the relative lack of attention paid to the qualitative and quantitative changes in the nature of Chinese capital, entrepreneurship, and skilled labour in the context of the development oflocal technology and competition in domestic markets. Apart from studies which focused specifically on the Chinese, there exist many general studies of the Vietnamese economy and related socioeconomic issues which touch on the role of the Chinese. They include the works ofNguyen Huy (1972), Le Khoa (1960), Son Nam (1984), Nguyen Van Ngon (1972), and Phan Huy Le (1963). Nguyen Huy'swork, Hien tinh kinh te VietNam [The economic situation in Vietnam], in two volumes, is particularly interesting because it deals with the position of the Chinese within the total economic situation of the Republic ofVietnam over two decades, namely the 1950s and 1960s. After 1975, when the Chinese community became a "problem" in the socio-economic and political life ofVietnam, a number of studies focusing on this issue were conducted by Hoang Kim (1978), LeVan Khue (1979), Nguyen Xuan Luong (1978), and most recently Chau Hai (1990a, 1990b), among others. Most of these authors, however, tended to concentrate primarily on the history of Chinese migration and on how the Chinese had come to terms- or had failed to do so- with the policies of the government of a unified Vietnam. However, these studies pay little attention to the ethnic relations between the ethnic Chinese and Vietnamese and the more recent works also fail to acknowledge the considerable changes in the socioeconomic conditions of the Chinese community in the past few years. More recently, reference materials and a variety of articles on the Chinese in Ho Chi Minh City, the former Saigon, have appeared. Prominent among them are "Nguoi Hoa thanh pho Ho Chi Minh trong chang

4

J nt,.od uc ti o n

duong dau tien xay dung xa hoi chu nghia va nhung van de dat ra'' [The Chinese in Ho Chi Minh City during the first period of transition to socialism] by Nghi Doan, Huynh Nghi, and Phan An (1989); Nguoi Hoa Quan 6 thanh pho Ho Chi Minh [The Chinese in district 6 ofHo Chi Minh City] by Phan An et al. (1990); and "Phat huy tiem nang cua nguoi Hoa trong chien luoc phat trien kinh te-xa hoi cua thanh pho Ho Chi Minh 19912000" [To utilize ethnic Chinese resources in the strategy for the socioeconomic development of Ho Chi Minh City in 1991-2000] by the Mobilization Unit on the Hoa in Ho Chi Minh City (1992). The value of these works lies in the fact that they provide some statistics and details on the economic activities of the Chinese in Ho Chi Minh City after 1975. In general, however, recent Viemamese scholarship has not paid adequate attention to the role of the ethnic Chinese in the national economy after 1975. It needs to be recognized that approaches in the social sciences in Viemam after 1975 diverge from those in non-socialist countries as a result of which research in Viemam has more often than not overlooked socioeconomic realities pertaining to the subject of the Chinese in Viemam. Further, where policy-relevant implications are concerned, it appears that they have not been concerned with arriving at practical solutions nor have they sufficiently addressed issues in ethnic adaptation or integration. The Overseas Chinese in Southeast Asia have captured the interest of Western scholars and other Asian scholars trained in the West for the last forty years. There is a considerable number of studies on the Overseas Chinese in Southeast Asia and it would be impossible to undertake a critical evaluation of them here. However, mention must be made of a number of seminal works, for example, that of Purcell (1980), which was first published in 1951, Skinner (1950), Williams (1966), Amyot (1972), and Wang ( 1981, 1991). Although many of these works are not specifically concerned with the Chinese in Viemam, nevertheless from the point of view of Vietnamese scholarship, they are of interest because they stand as examples of how the Chinese in the region may be studied from a variety of perspectives in the social sciences in non-socialist countries. The monumental work by Purcell is worth noting because, apart from being the first Western scholar to make a major contribution to the study of the Overseas Chinese in Southeast Asia, he also dealt with the Chinese in Viemam. Parts 1 and 4 of his work, for example, contain important data on the Chinese in Vietnam, their economic activities before the 1960s, as well as a respectable treatment of the history of the formation of the community. Among more recent works on

5

the Overseas Chinese in the region, the work ofWu and Wu (1980) also deserves a mention, from the perspective ofVietnamese scholarship, because of its methodology, holistic analysis which treats the ethnic Chinese within a framework of total relations, and valuable statistical data on the economic situation of the Chinese in South Vietnam before 1975. In addition to these studies and other surveys which look at the Chinese in Southeast Asia, there are several studies that focus on the Chinese in Vietnam by Western scholars as well as Vietnamese scholars trained in the West. They include, to name a few, the dissertation "The Chinese in Vietnam: A Study ofVietnamese-Chinese Relations, with Special Attention to the Period 1862-1961" by Luong Nhi Ky (1963), the dissertation by Barton (1977) , the dissertation on "Vietnamese Communist Policy toward the Overseas Chinese, 1920- 1982" by Stern (1984), The Ethnic Chinese in Vietnam and Sino- Vietnamese Relatiom, by Amer ( 1991), as well as articles by scholars such as Ungar (1985, 1987-88) and Barton (1983). Of the studies on the Chinese in Vietnam before 1975 conducted outside Vietnam, perhaps the most useful is Le Chino is au Sud- Vietnam by Tsai Maw Kuey (1968). The second part of this work, for instance, describes in considerable detail the economic activities of the Chinese in South Vietnam up to the mid- 1960s. The value of the work lies in the descriptive and statistical data that it provides on the occupational structure and the overall economic position of the Chinese community in the country. Nevertheless, the study is not without some shortcomings. Its analytical framework seems inadequate and the author fails to consider the directions of development of the Chinese business community in the context of increasing competition and accommodations within the larger Vietnamese society. Still, the work is the first monograph to focus specifically on the Chinese in Vietnam and is a worthy contribution by a scholar trained in the West. Former Soviet social scientists have also paid a great deal of attention to the study of the Chinese in Vietnam. The first of such Soviet studies was a general study of the Chinese in Southeast Asia covering Vietnam as well: Naselenie kitaiskoi nasionalnosti v stranac lUge- Vostochnoi Asia [Population of Chinese nationals in Southeast Asian countries] by Simoniya (1959). The main part of this work reports on the economic activities of Overseas Chinese in the 1940s and 1950s. Essentially descriptive, this study nevertheless left a number of areas unexplored. It does not, for example, deal with the economic posicion of the Chinese in relation to the pressures which they came under during the latter half of the 1950s from the Ngo Dinh Diem

6

J nt .-od u c tio n

government, and the implications for South Vietnam's economy. Nevertheless, the study raises a number of questions regarding the Overseas Chinese, from the perspective of Soviet scholarship in the social sciences dominant at the time, which were subsequently taken up by other Soviet scholars from the 1960s to the 1980s. Another work which focuses on the process of the formation of Chinese capital in Southeast Asia, which also touches on Vietnam, is Zarubejnaia kitaiskaia Bourgeoisia-orujie Peking v Iugo- Vostochnoi Asia [Overseas Chinese bourgeoisie- instrument of Beijing in Southeast Asia] by Andreev (1973). The importance of this monograph lies in its attempt to develop a theory of the process of the formation and evolution of Chinese capital, entrepreneurship, and skilled labour, resting on the assumption that there was an instrumental relationship between China and the Overseas Chinese bourgeoisie, and between the Overseas Chinese and former and Western capitalists. The work ignores, however, the role of Overseas Chinese capitalists in the development of domestic markets and of regional economic ties in Southeast Asia. A more recent compilation worth mentioning is Kitaiskie Ethnicheskie grupi v stranac Iugo- Vostochnoi Asia [Ethnic Chinese gropps in Southeast Asian countries] (1986). This compilation gives outlines of the culture, and socio-economic and political life of the Overseas Chinese in the region. The fourth chapter of the book is of particular interest because it focuses on the economic activities of Chinese entrepreneurs and their relations with the larger societies in which they are found in the region during the post-independence period in Southeast Asia. However, this work deals only with the Chinese in the countries of the Association of Southeast Asian Nations (ASEAN) . Apart from books and monographs, there are numerous articles by Soviet scholars focusing on different aspects of the Chinese community in Vietnam. They include, to name a few, the works ofKotova (1978, 1979), Borisova and Kotova (1981), Vanin (1981), among others. Many of these works, however, have a propagandistic character and their empirical content leaves much to be desired. A survey of the literature on the role of the Chinese in Vietnam's economy indicates that between 1964 and 1975, the Chinese community in South Vietnam flourished and prospered. Furthermore, during this period the Chinese community underwent important changes, both qualitatively and quantitatively: Chinese businesses, for instance, grew and became more diversified, as reflected in the growth of Chinese-owned capital and in terms of the occupational structure of the community. After 1975, however,

J"'t.-od

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IJi

TABLE 7 Total direct capital investment in South Vietnam, by nationality (million Vietnam piasters)

(1l

~

" (1l

t< (1l

1963

1964

1965

1966

1967

1968

1969

Republic of Vietnam Government N arionalized private individuals Foreign private individuals

276 126 42

160 250 335

61 177 15

733 26

1,857 5,176 112

2,842 95

502 5,508 720

Toral

446

1,745

253

759

7, 145

2,939

6,7 12

("\

0 ::> 0 ~

f)"

IJi

(1l ("\

+

Source: Nguyen Van Ngon (1972) , p. 307.

0

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v.

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46 TABLE 8 French and Chinese capital in Vietnam, 1906 (million French francs)

Economic sector

Volume of French capital

Volume of Chinese capital

Total volume of capital

Agriculture Industry Trade

13 72 41

6 24 66

96 107

126

96

222

Total

Percentage French

Chinese

70 76 38

30 24 62

19

Source: Dao Trinh Nhat (1924) , p. 19.

their disproportionately large share of the domestic trade: 1. French capital gave higher priority to developing infrastructure such as railways, roads, and public building, and also to setting up mining establishments as well as to industry. 9 It was not till 1918 that French capital started to be diverted to the area of trade. 2. The ethnic Chinese received favourable treatment in business from the French colonial authority. The Tianjin Commercial Convention signed on 24 April 1886 between France and China allowed Chinese people the freedom to do business in Vietnam. The Nanjing Agreement signed on 16 March 1930 extended the Chinese immigrants freedom in domestic economic activities to include the right to engage in foreign trade. In 1947, after the signing of the Chongqing Convention, the French colonial administration granted Chinese nationals "the Foreign Resident Favour Treatment"; Chinese residents in Vietnam were to enjoy the same status as the French at the expense of the natives, with all the privileges and exemptions, including the right to be exempt from military service and immigration controls. Meanwhile indigenous Vietnamese were not given a free hand to deal in such commodities as wine, alcohol, and opium, and were taxed more heavily than Chinese nationals. 10 3. Chinese businessmen have traditionally been familiar with the Vietnamese market because of trade links between the two countries dating back for centuries. China has long been the major market for Vietnam's agricultural products, particularly rice, and also the principal supplier of consumer goods. 11

P o siti o .-, o f the Chi.-, e s e

j.-,

k ey eco .-,o mi c sec+o ~ s b efo~e 1 9 7 5

47

An outstanding commercial activity of the Chinese in Vietnam under French rule was their trading in rice, in both the domestic and foreign markets. At home, the Grain Merchants Association based in Cholon liaised with big rice traders in provinces all over Vietnam, as well as all French territory in Indochina. The merchants with their large rice mills and great financial resources could control the procurement of paddy from farmers, through small paddy merchants and a widespread local procurement network. They then had the rice milled and transported to Saigon-Cholon for export or to sell on the domestic market. These big traders normally gave cash in advance to the small rice merchants who, in turn, provided farmers with cash and goods as advance payment for their produce. Within this system, local sundries shops or Chinese medicine stores owned by ethnic Chinese merchants also provided credit in the form offertilizers, farm tools, medicines, and daily consumer goods. Chart 1 illustrates this procurement network &om farmer to exporter or the local market. It was a network monopolized by the Chinese merchants, who had an efficient communication system and the ability to provide the peasants with credit. On the plus side, this was a form of investment in rural production in a situation where farmers lacked capital. However, payment usually made in farm produce at a price agreed long before harvest plus high interest on the loans (averaging 30 to 40 per cent) 12 hindered the development of agriculture because after paying off their debts, the peasants again did not have enough rice or capital for the next crop and thus found themselves perennially dependent on the credit of the Chinese merchants. This system enriched the middlemen and hindered the development of the rural area because farmers could never accumulate any capital to raise productive efficiency. 13 After French rule, the ROV Government under N go Dinh Diem ( 195463) set up the Agricultural Credit Board and Credit Corporation in the countryside to provide peasants with credit and break the monopoly in highinterest lending by Chinese merchants. After 1962, however, due to the war and their ineffective operations, credit co-operatives gradually collapsed. Even then, Vietnamese peasants preferred Chinese merchants to government officials as the former were more considerate, straightforward, and easier to negotiate with. 14 Other than the domestic rice trade, ethnic Chinese merchants also controlled the allocation and trading of imported commodities as well as locally produced industrial goods and handicraft. The reasons for their ability to

C hapter 2

48

CHART I Business network of Chinese rice merchants

Rice merchants; owners of boats, sampans, and carts

Branch paddy agent and sundries shops

Local rice sale

I

Provincial wholesale and retail agents and paddy stockholders

Big rice merchants in Cholon

...._ _ _ __,I Import/ export

I

Local rice sale

KEY

one-way relation, selling paddy without getting credit in cash or kind reciprocal relation, selling paddy in exchange for credit in cash or in kind

P o siti o "' o f the Chi.,ese i"' k ey eco y, o mi c secto ~s befo ~e 1 9 75

49

control are as before: the abundance of Chinese capital, their control of the means of transport, and the availability of storage facilities. The relative standing of the French, ethnic Chinese, and Vietnamese merchants involved in domestic trade can be seen in Table 9. Statistics in Table 9 show that among the total number of enterprises registered in Vietnam in 1952, 75 per cent belonged to Vietnamese, 21 per cent to Chinese, and 4 per cent to Europeans and other nationalities. Vietnamese were owners of 31 per cent of class A enterprises; Chinese, 30 per cent; and Europeans, 29 per cent. According to Decrees 8 and 9, dated 10 April1953, class A enterprises were wholesale enterprises, while class Band class C enterprises were considered retailers. 15 The Chinese owned only 29 and 20 per cent of class B and class C enterprises, respectively, whereas the Vietnamese owned 59 and 75 per cent, respectively. Retail enterprises belonging to Europeans and other nationalities were small in number. In Cochinchina (Nam Ky) , where the Chinese exerted a great influence on Vietnam's commerce, they owned 40 per cent of the total wholesale enterprises and 50 per cent of middle commercial shops. Chinese ownership for both class A and class B enterprises were 32 and 20 per cent in Tonkin (Bac Ky) . In contrast, the Chinese did not figure much in trade in the central region of Annam (Trung Ky), where native traders ran their own businesses. The statistics in Table 9 only reflect the number of enterprises, and the three levels of size classification, A, B, and C, used for these enterprises were too broad. A fUrther breakdown of the figures, given in Table 10, provides a better understanding of the strength of Chinese merchants in this sector of the economy. Table 10 analyses the situation in Nam Ky, which has long been the hub of Chinese business. A glance at overall figures shows that the French owned the largest number of class A enterprises; the Chinese, the class B ones; while the Vietnamese dominate in class C enterprises. A closer look at the distribution within each category shows that among class A enterprises, for example, the largest of these businesses are owned by the French, with forty of them holding a licence of 12,000 piasters and more. Both the Chinese and the Vietnamese held only one each. In the middle rank of the A category, where the licence was between 4,000 and 6,000 piasters, the gap between Chinese and French ownership pulled closer, between thirty-four enterprises owned by the French and twenty-two by the Chinese, while the Vietnamese owned only five. A similar analysis of the B and C classes will show that if size of enterprises is taken into consideration, the position of the Chinese

V1

0

TABLE9 Number of commercial enterprises in Vietnam, by territory, nationaliry, and size, 1952* Territory A

Narionaliry

-Tonkin (Bac Ky) Viernamese European C hinese Orher narionaliries Toral Annam (T rung Ky) Viernamese European C hi nese Orher narionaliries Toral

No.

c

B %

No.

%

326 3 14 330 64

32 30 32 6

4,7 15 307 1,26 1 50

74 5 20 1

21,913 160 1,342 13

1,030

100

6,333

100

23,438

146

60

944

71

14,386

-

No.

-

1

96

40

5 388

243

100

1,337

29

2 1,107

100

15,495

Toral %

No.

%

87 2 10

-

26,945 78 1 2,936 127

100

30,798

100

93

15,476

91

93 I

6

-

-

()

:s-

7

8 1,59 1

9

100

17,074

100

D

-u+ (1l

"'

to

Cochinchina (Nam Ky) Viernamese European Chinese Other nationalities Total Whole country Viernamese European Chinese Other nationalities Total

\j

64 195 180 9 448

14 44 40 2

1,403 592 2,125 68

34 14 50 2

44,684 774 19,5 15 177

69 I 30

46,151 1,561 21,820 254

66 2 31 I

0 {/) ::;.:

a·::;

0 .....,...,

....

::>

100

4,188

100

65,150

100

69,786

100

{1)

() ~ ::; {1)

536 509 5 11 169

31 29 30 10

7,Q62 899 3,391 506

59 8 29 4

80,983 934 20,859 1,297

78

1,725

100

11 ,858

100

104,073

100

20

88,581 2,342 24,761 1,972

75 2 21 2

117,656

100

{/)

{1)

::; ~ {1)

t< {1)

* Data from Vietnam nien giam thong ke[Statistical yearbook ofViernam], volume 3 (1951-52), pp. 243-45. A = trade enterprises with licence fees ranging from 2,00 I piasters upwards. B = those with licence fees from 2,000 piasters downwards to 50 I piasters. C = those with licence fees from 500 piasters downwards to 50 piasters.

()

0

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0 ~

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{1) ()

.... 0

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VI

Chapter 2

52 TABLE 10 Distribution of trade enterprises of different sizes among ethnic groups in Cochinchina, 1952 Size of enrreprise based on tax paid to government (dong)

Other Vietnamese

European

Chinese

nationalities

10,001-12,000 8,001-10,000 6,001-8,000 4,001-6,000 3,501-4,000 3,001-3,500 2,501-3,000 2,001-2,500

1 2 4 5 3 3 17 28

40 12 14 8 34 12 19 32 24

1 4 8 22 6 17 41 80

2 2 2 3

Total

64

195

180

9

48 242 230 254 210 419

80 140 126 90 22 134

135 426 417 424 210 513

5 14 25 10 12 2

1,403

592

2,125

68

401-500 301-400 201-300 101-200 50-100

824 1,130 2,332 6,128 34,274

129 112 150 241 142

1,032 1,346 2,204 5,190 9,741

25 30 27 65 30

Total

44,684

774

19,515

177

~12,000

1,601-2,000 1,001-1,600 801-1 ,000 70 1-800 601-700 501-600 Total

Source: Vietnam nien giam thong ke [Statistical yearbook of Vietnam], volume 3 (1951-52), p. 243.

merchants will be stronger than the actual number of businesses owned. This is illustrated of by the data ofTran Van Dinh, which show that although Chinese trading in the eleven prohibited trades in 1957 constituted only 34 per cent of the total, they accounted for 85 per cent of the total capital of

P os iti o n of the C hinese i n k ey econ o mi c se c t o .-s b efo r e 1 9 7 5

53

those prohibited trades. 16 Table 11 shows the distribution of Chinese trading enterprises of various sizes throughout the country. Their big enterprises were concentrated in the three big cities of Saigon-Cholon, Hanoi, and Haiphong and their small businesses scattered in the delta area, especially in the western province of Cochinchina. All three ethnic groups could trade in more or less the same commodities except that the Chinese and French controlled some of the commodities, such as rice and construction materials. Products that were not monopolized by any particular ethnic group included timber, although the Vietnamese share of any trade sector was usually relatively small. The Ngo Dinh Diem regime did not just try to break the Chinese monopoly of the rice trade mentioned earlier. It attempted to "Vietnamize" completely the domestic trade by introducing policies to limit commercial activities of foreigners in Vietnam. Decree 53 issued in 1956 specifically forbade foreigners' involvement in eleven types of businesses: ( 1) trading of fish and meat; (2) operation of provision and sundries shops; (3) trading of charcoal and firewood; (4) trading of kerosene and lubricating oil; (5) operation of pawnshops; (6) trading of silk textiles of!ess than 10,000 metres and thread; (7) trading of iron, brass, and tin ores; (8) operation of rice mills; (9) trading of grains; ( 1O) transportation of goods and passengers by vehicles, ships, boats; ( 11) acting as commercial middlemen for a commission. Foreigners must transfer these businesses to Vietnamese citizens in a given time or be deported or fined up to 5 million piasters. They were given six months for the first seven trades and one year for the last four. The foreigners affected were mainly the ethnic Chinese. In order to continue their old businesses legally the majority of these Chinese traders became naturalized Vietnamese or allowed their families to be so, so they could register themselves as owners of their businesses or partners in Vietnam's indigenous enterprises. This policy dampened somewhat the Chinese propensity to invest in the years that followed and inevitably helped to increase the volume of businesses run by local Vietnamese. Table 12 clearly illustrates the decline in Chinese economic position in ROY's internal trade in the second half of the 1950s. The decline was also witnessed in other non-Vietnamese nationalities. Vietnamese citizens' ownership, on the other hand, increased from 74 per cent in 1956 to 86 per cent in 1957. Foreign involvement in domestic trade gradually decreased in contrast to the steady yearly growth in the number ofVietnam's enterprises after the issuance of Decree 53. In 1963 there were 173,171 retail businesses

v.

.::.

TABLE ll Distribution of Chinese trade enterprises in various territories and according to business size, 1951 *

c

B

A

Total

Territory

No.

o/o

No.

o/o

No.

Saigon-Cholon Southern provinces

116 55

68 32

1,975 316

86 14

7,477 11 ,803

38 62

9,569 12,174

44 56

Total

17 1

100

2,291

100

19,280

100

21,743

100

Hanoi, Haiphong Northern provinces

366 15

96 4

1,087 193

85 15

1,36 1 813

63 37

2,760 1,021

73 27

Total

38 1

100

1,27 1

100

2,174

100

3,781

100

Saigon-Cholon Hanoi , Haiphong and remaining provinces in the whole country

482

87

3,053

86

8,838

41

12,373

48

70

13

509

14

12,6 16

59

13,195

52

Total

552

100

3,562

100

21,454

100

25,568

100

o/o

* Data based on Vietnam nien giam thong ke[S tatistical yearbook ofViemam], volume 2 (1950-51), pp. 248-49.

No.

o/o

()

:sS) \J

-+

~

"

Kl

Positio"' of the Chi.,ese i"' k ey ecoV\ om ic s ecto.,.s be fo.,.e 1 975

55

TABLE 12 Proponion of Chinese enterprises of total South Vietnamese enterprises, 1956-57 1957

1956 Nationaliry Vietnamese Chinese Other nationalities Total

No.

o/o

No.

o/o

94,226 31,270 2, 157

073.8 24.5 1.7

102,333 15,476 1,625

86 13

100

119,433

100

127,653

Source: Vietnam nien giam thong ke [Statistical yearbook of Vietnam], volume 6 (1956), p. 274; volume 7 (1957), p. 277.

with licence fees under 2,000 piasters, compared with 11 7,000 in 1956, while the number oflicences handed out to foreigners for this type of business was only 324, compared with 28,816 in 1956. In the wholesale area, the number offoreign agents decreased from 4,226 in 1958 to 427 in 1969P This was also a period of gradual withdrawal by French businessmen to their own country. Vietnamese businessmen moved in to fill this vacuum and many naruralized Chinese businessmen put their capital into their Vietnamese partner's investments. Given the times as they were, many found it prudent to go into partnership with an indigenous citizen. Others turned to the domain of import-export trade and industry. However, Chinese domination of ROV's domestic trade did not really change. It is estimated that by the year 1961 , the ethnic Chinese business community still controlled 80 per cent of all capital in the retail trade and 75 per cent of ROV's commercial activities. 18 From 1964 domestic trading activities in the ROV gradually decreased as the escalating war disrupted transport between cities and rural areas. The output of agriculrural products, especially rice, diminished rapidly, leading to a need to rely on imports. There appeared successively a series of import companies and supermarkets which tested the survival of small retail businesses and eventually reduced their number. In 1963 the total number of licences for wholesale and retail businesses in South Vietnam was 183,000. This dropped to 150,000 in 1968. 19 To what extent were the Chinese involved in this supermarket business? No statistics are available on this, but the number of Chinese enterprises in Saigon-Cholon in 197 1 (Table 13) is an indication of Chinese position within ROV's domestic trade in the war

C ha pte r 2

56

years up till1975. The table shows that ethnic Chinese owned 2,492 shops, a percentage close to 41 per cent. These were shops with licence fees of less than 7,000 piasters, considered to be small and medium businesses. It is estimated that ethnic Chinese capital controlled the entire wholesale trade and 50 per cent of the retail trade of the South before 1975. 2°Compared with the situation during the colonial period, ethnic Chinese involvement in Vietnam's domestic trade had changed both in quality and quantity. Before 1955, Chinese capital controlled only 50 per cent of the wholesale trade and 80 per cent of the retail trade. It would seem that the ethnic Chinese businessmen were moving from smaller-scale retail businesses into larger wholesale enterprises.

b. External trade With regard to Vietnam's exports, ethnic Chinese businessmen were able to establish a trading network with their compatriots in China and other migrant Chinese communities in Southeast Asia much earlier on, even before the onset of French colonialism. This was possible owing to the policy of the nineteenth century Nguyen dynasty which, as shown earlier, was rather generous to the Chinese migrant community. Rice export was one area the Chinese were well established in because, as explained earlier, they monopoTABLE13 Number of business enterprises* owned by the ethnic Chinese in Saigon-Cholon's nine districts, 197 1 District

All enterprises

Chinese enterprise

4 5 6 7 8 9

1,050 500 1,000 500 2,000 767 26 1 28 4

13 1 75 66 148 1,67 1 230 100 10

Total

6, 100

2,492

I

2

3

• Those with licence fees below 7,000 piasters. Source: H oang Truong Tan (1 972), p. 100.

Pos iti o V\ of the Ch i.,ese ;., k ey eco V\omi c secto~s befo~e 1975

57

lized the internal procurement and distribution system. From the beginning of AD 1865 Chinese merchants in Cholon had set up direct contacts with the Hong Kong and Shanghai Bank to export rice and other agricultural products to China. This was two years before the French colonized Nam Ky, the region known as Cochinchina in AD 1867. By AD 1874 there were fourteen rice-exporting companies owned by the Chinese in Vietnam competing with ten European import-export businesses. 2 1 The aforementioned Grain Merchants Association, with its headquarters in Cholon, had contacts with rice markets in Taiwan, Japan, Hong Kong, Thailand, and the then British Malaya, and was familiar with the output, consumption, and prices of agricultural products in these places. The French colonial regime saw the advantage of using such market expertise and so allowed Chinese merchants to freely participate in external trade; in fact there was a certain amount of co-operation between the French and the Chinese in both import and export. A good example was their joint rice-exporting efforts to Hong Kong, Shanghai, and Singapore. According to French statistics, the value of rice exports reached 65.3 per cent of the total export value during 1913-17,62.6 per cent during 1928-33, and 35 per cent in 1938. 22 There was no detailed breakdown, however, of the Chinese share but it is generally believed to have been significant. The exportation of mineral products and rubber was one area in which the Chinese were denied a role by the French. After the French departed in 1954, the ROV Government tried to promote export. Unfortunately, this suffered when war escalated in 1964, and the two main export items lost ground. For example, instead of being able to export almost 323,000 tons of rice, which it did in 1953, the Republic had to import 130,000 tons in 1965, and 341,000 tons in 1969. In 1961 it exported 83,000 tons of rubber but the figure fell to 21 ,000 tons by 1969. 23 This forced businessmen, both ethnic Chinese and Vietnamese, to deal instead in the export of scrap metals, either in their original form or melted into blocks. This kind of exports grew stronger from 1969 onwards as more scrap was generated by the war. During the colonial period, imports were controlled by the French. Almost all major import items such as machinery and equipment for transport, building materials, and luxury goods were undertaken by French companies, with the Chinese acting only as middlemen for a commission. After the French withdrew from Vietnam, the Ngo Dinh Diem government tried to Vietnamize the economy and reduce foreign participation. The ethnic

58

Cha ptel" 2

Chinese response to this new policy was to apply to be naturalized as citizens so that they could move into foreign trade, which was previously controlled by the French. Vietnamese entrepreneurs did try to compete but lost out to the Chinese due to their lack of capital and business ties outside Vietnam. When U.S. aid was stepped up in the 1960s, the import sector experienced an unprecedented boom and became the key economic sector of the Saigon regime. Many Chinese made it big just by being transporting agents or middlemen in the import of goods, servicing the war and consumption in the cities. They handled more than 60 per cent of the total volume of goods imported into South Vietnam through U.S. aid. 24 According to data from the Industrial Logistics Department of the Saigon regime, Chinese enterprises made up 45.6 per cent of all enterprises handling the import trade of the ROV in the early 1970s. Their involvement was most evident in trades such as foodstuff (61 per cent), hides and leather (79 per cent), dyes and flower pattern priming (86 per cent), glass (56 per cent), chemicals (83 per cent), plastics (75 per cent), steel and cast iron tubes and iron containers (85 per cent), nails (61 per cent), bolts and screws (1 00 per cent), material for battery manufacturing (57 per cent), electrical wires (43 per cent), detergents and soap (60 per cent), foundry, zinc plating, priming (50 per cent), and rubber (42 per cent). On their part, the Vietnamese were active in trades such as animal feeds (93 per cent) , insecticides (62 per cent), toothpaste and cosmetics (79 per cent), electrical instruments (80 per cent), and television spare parts (72 per cent) .Z 5 From these two lists, it is apparent that the Chinese dominated the import of foodstuff, chemicals, and metallic items. These imports were vital for various industries and were daily necessities of the populace. Another reason the Chinese could do so well was the rather liberal economic policy of the then Nguyen Van Thieu regime, which placed no restrictions on them. According to the data of the Saigon regime, 815 out of 966 or 84 per cent of direct and indirect importers in 1971 were ethnic Chinese. 26 According to figures of the Ho Chi Minh City People's Committee, there were more than 300 Chinese export-import companies in this city alone at the time of the liberation of South Vietnam in 1975. In addition, there were fifty big Chinese agents for agricultural, sea, and forestry products. 27

c. Services The Chinese also played an important role in this sector. Services included

P o sitioV\ o f the C hiV\e s e iV\ k e y ecoV\o mi c secto ~ s b efo~e

19 75

59

the following: restaurants, drink and hotel, amusement and recreation, medical, educational, and other miscellaneous services. Operating restaurants or hotels was the stepping-stone for Chinese businessmen to launch into bigger endeavours such as trading, banking, and manufacruring. They started with eating houses and boarding places when they first did business because these enterprises returned a quick profit while requiring only a small capital and little preparation time. Furthermore, the restaurant and hotel business was seldom affected by government policies or local discriminatory policies. Even if it was, damages were normally negligible. According to statistics prepared by the Saigon administration, in the year 1953 there were ninety-two big Chinese restaurants in Saigon-Cholon, 826 eating houses, 243 tea and beer shops, and forty-eight hotels belonging to ethnic Chinese. 28 According to other statistics, when the French left, the Chinese owned more than 50 per cent of all big hotels, 90 per cent of small hotels and boarding houses in the Saigon-Cholon and Gia Dinh areas. 29 The concentration of the Chinese in the services sector of the ROV in 1958, as can be seen in Table 14, was high. Given that the Chinese population in the ROV at that time was 800,000, that would make it about one service enterprise for every 300 Chinese. There was an explanation for this attraction on the part of the Chinese to the service industry. As the latter did not belong to any of the eleven trades prohibited by the Ngo Dinh Diem regime, the Chinese were given a free hand and ample opportunity to expand in this field. During the 1960s, with the influx of American aid and military personnel, the service industry boomed, thus making it more attractive to both Chinese and Vietnamese entrepreneurs. According to data published by the Chinese Chamber of Commerce in Saigon-Cholon on 8 September 1974, Chinese investment in the field of amusement and recreation was 20 per cent; in medical and other health services, 80 per cent of total investment in these fields. d. Finance and banking

During the colonial years, banking was handled mostly by the French. The Indochina Bank was founded in 1875, serving French residents as well as Chinese and Vietnamese businessmen. Early in the twentieth cenrury, the Franco-Chinese bank was jointly founded by French and Chinese businessmen in Saigon-Cholon. Irs capital grew very rapidly from 10 million francs in 1922 to 50 million francs within a short span of five years. 30 At around the same time, the Chinese business community started to found their own

Chap+e~ 2

60

TABLE14 Ethnic Chinese involvement in South Vietnam's services industry, 1958 Total Field

SaigonCholon

Hotel and other lodging services Miscellaneous repair service

108 39

Motion picture Amusemenr and recreation except motion picture Medical and other health services Education service Restaurant, cold drink and food supply service Miscellaneous

20

Total

9 135 32

Narn Ky provinces

Cenrral provmces 29

No.

%

137 39

5 15

20

7

9 376 32

3 14 12

196

45

920 636

408

99

1,427 636

53 24

1,899

604

173

2,676

100

Source: Far Eastern Economic Review, 2 January 1958, p. 22.

commercial banks. Before the establishment of the ROY in 1955, there were six Chinese banks and insurance companies in the South. 3 1 These institutions provided mostly credit facilities to rice merchants. There were also many Chinese lenders operating under the guise of pawnshops. In the early years of the ROV, the government set up credit establishments to help Vietnam's indigenous businessmen. The Agricultural Credit Office serviced farmers; the National Economic Operation Office, later renamed the Industrial Development Center, provided credit for the industrial sector. However, a Vietnam Commercial Credit Bank was also established which functioned entirely as a private bank offering credit to any suitable customer. Ten private banks coexisted with these government financial establishments. Of these ten private banks, eight were registered as foreign banks. The eight were three French, two British, and three Chinese. Part of the capital for foreign Chinese banks was actually owned by local Chinese in Vietnam. These foreign Chinese banks were the Bank of China, Bank of Communication, and Bank of East Asia; and the Vietnamese Banks were the Industrial and Commercial Bank of Vietnam and Bank of Vietnam. 32 If the savings of various ethnic communities were compared, the Chinese share, according to 1958 figures, was not impressive at 18 per cent. The

P o siti o VI o f the ChiVI ese iVI k ey eco VI o mi c secto >'S b e fo>"e 1 9 7 5

61

Vietnamese accounted for 40.5 per cent and the French 41.5 per cent.33 This low level of deposit in the banks was caused by the Ngo Dinh Diem regime's 1956 decree prohibiting the Chinese to handle eleven businesses. This made the Chinese nervous and so they withdrew their money from banks. If they did not use legal banking facilities, they could put their money in unregistered money-lending business where things are taken on trust without paperwork. According to data by Nguyen Van Sang, there were eighty-nine such low-profile establishments in Saigon-Cholon in 1956. 34 From 1964 the financial sector in the ROY grew rapidly to service the large inflow of capital coming in the form of American aid. As of 31 December 1972, thirty-six banks with 225 branches were in operation located mostly in big provincial cities (Table 15). During this period of growth, the number of Chinese-owned banks registered as foreign banks remained at three: the Bank of East Asia, the International Commercial Bank of C hina, and the Bank of Communications. T his was in contrast with the rapid expansion ofVietnamese banks. As stated earlier after the establishment of the ROV, there was no Vietnamese private bank and there was only one government-owned bank. By 1970, there were eighteen Vietnamese private and government banks, and by 1973 this number increased to twenty-two. 35 However, this was only what appeared on the surface. In fact, a number of the banks registered as Vietnamese-owned had capital invested by ethnic Chinese businessmen or industrialists. The latter were doing this to play safe. Although many of them have become naruralized as Vietnamese citizens after the 1956 Decree by Ngo Dinh Diem, having a Vietnamese partner as a front provided a greater sense of security. The Dai Dan Toe newspaper published on 13 April 1974 claimed that the principal capital of the following banks - Dong Nai Bank, Dong Phuong Bank, Nam Do Bank - belonged to the ethnic Chinese. According to E.S. Ungar's data, by 1972 in South Vietnam there were thirty-two banks of which twenty-eight were owned by local Chinese. 36 According to Wu and Wu, ethnic Chinese capital accounted for 49 per cent of the total capital invested in eleven local private banks in 197 4. 37 According to another researcher, in 1975 there were seven banks in Saigon-Cholon with ethnic Chinese as the dominant partners. They ran the bank's Chinese Affairs Office and because it was not politic to assume the top position in these banks, they became the Vice-Chairmen. 38 Indeed many other banks also had a Chinese Affairs Office in order to service the ethnic Chinese business community better because they were major customers. Given their heavy involvement in the ownership and operation of banks,

62

Chaptel" 2

TABLE 15 Number of banks operating in Soutb Vietnam, 31 December 1972 Branch offices in Saigon and Gia-Dinh

Branch offices in other provinces

Vietnamese National Bank of VietNam* 2 SOFIDIV* 3 Bank of Vier Nam 4 Industrial and Commercial Bank of Vier Nam 5 Vier Nam Commercial Credit 6 Commercial, Industrial and Agricultural Bank 7 Tin-Nghia Bank 8 Saigon Bank 9 Nam Do Bank 10 Dai Nam Bank II Agricultural Developmenr Bank* 12 Dong Phuong Bank 13 DaiA Bank 14 Dong NamA Bank 15 Dong Nai Bank 16 Ky Thuong Bank 17 Nam Hai Bank 18 Truong Vier Bank 19 Mekong Bank 20 Saigon Credit 21 Nam-Vier Bank 22 Vien-Dong Bank

79

124

2 7 10 2 19 6 I 5 2 4 4 2 2 3

I 5 10 I 13 3

French 23 Banque Francaise de l'Asie 24 Banque Francaise pour le Commerce 25 Banque Narionale de Paris

12 5

Nationality and name of bank

English 26 Hongkong and Shanghai Banking Corporation 27 The Chartered Bank Chinese 28 The Bank of East Asia Ltd 29 The International Commercial Bank of C hina 30 Bank of Communications

5 1 3

6 7 45 10 7

2 I 3 3 I 4

6 3 3

2

2

63

P o sit io l'\ o f the Chi.,e s e i"' k e y ec ol'\omi c s e c+o.-s be fo.-e 1 9 7 5

TABLE 15 (Continued)

National ity and name of bank Thai 31 Bangkok Bank Ltd

Branch offices in Saigon and Gia-Dinh

Branch offices in other provinces

2 2

Japanese 32 The Bank ofTokyo Ltd Korean 33 Korea Exchange Bank American 34 The Chase Manhattan Bank 35 Bank of America 36 First National City Bank

93

Total

127

* Non-commercial banks. Source: Vietnam nien giam thong ke [S tatistical yearbook of Vietnam], volume 18 (1972) , p. 245.

the Chinese business community found it relatively easy to get credit for their businesses. Even in government-owned banks such as the Vietnam Commercial Credit Bank, Agricultural Development Bank, and the Industrial and Commercial Bank of Vietnam, 80 per cent of their credit was taken by Chinese. 39 Two of these banks, as stated earlier, were set up to provide credit for local businessmen but ethnic Chinese who have taken up citizenship also qualified.

2. The role of the Chinese in industry and transport The ethnic Chinese community first made money from commerce and then expanded their business activities into banking and services. The capital they made &om these helped them venture into the manufacturing industry when the opportunity arose. This venture into industries also brought both a quantitative and qualitative change to the nature of Chinese capital in Vietnam. During the colonial period, most of the major industries were in North Vietnam and owned by the French. The Chinese could only manage to find

64

C ha pter 2

a niche in the operation of small-scale industries in the South such as rice milling, and food and beverage processing. The French prohibited manufacturing enterprises that compete with and were detrimental to the colonial economy they dominated. Basically, this referred to any industry which would affect their control ofVietnam's natural resources for export. Such a policy hampered Vietnam's industrial development and also curbed Chinese participation in the sector. Besides this unfriendly industrial policy, the Chinese were also reluctant to venture into areas requiring big capital but which might not yield correspondingly large profits. So they stayed with their traditional trading and credit-lending business. After 1954 came the nationalization of all private industries in the North, and in the South, French capitalists gradually withdrew their investments. Most of their enterprises were forcibly sold to the Saigon government or allowed to operate only as joint public or private companies. Only a small number of French factories producing beer, alcoholic and soft drinks, and cigarettes remained in operation. The subsequent period saw the emergence of ethnic Chinese and Vietnamese entrepreneurs to replace the French. The Chinese were also pushed into industry by another factor: the Saigon government's (1955-63) decision to restrict foreign (meaning ethnic Chinese without citizenship) participation in commerce and small businesses. The government itself also launched a deliberate policy to promote industry and so in the late 1950s, industries such as food processing and weaving developed rapidly. In the period that followed (1964--75), the government took a less interventionist role and left private capital to lead investment. This was a time when the chemical, pharmaceutical, glass, and metallic industries, and mechanical assembly were booming. The Chinese played an important role at this stage. Statistics of the People's Committee (in Ho Chi Minh City) show 80 per cent Chinese ownership of all industries in operation in the city in 1975, just before the liberation of the South. Specializing in light industry and in food processing, the Chinese owned 322 big well-equipped factories and 8,000 medium-sized and small ones. These started out mainly to capture the local market but eventually went into export as well. What follows is a more detailed description of the various industries which the Chinese were involved in. a. Rice-milling and food-processing industries

Rice milling, the production of beer, liquor, soft drinks, cigarettes, and the

P os iti o" of the Ch i.,e s e ;.., k ey eco V\ om ic s ecto>'s befo,.e 1 975

65

general processing of food were already quite well developed under French rule. The industries were undertaken both on large and small scales. For the Chinese businessmen, their early monopoly of the rice distribution system allowed them to expand their milling capacity and they controlled this industry until1975. The first steam-operated rice-milling enterprise owned by the Chinese came into being in AD 1876 in Cholon. 40 By the end of the nineteenth century, of the total of eight rice-milling factories in SaigonCholon, five belonged to the Chinese. 41 Chinese ownership grew steadily in the Saigon-Cholon area. In 1920 thirteen out of twenty rice mills were Chinese-owned. By the 1930s the Chinese owned seventy-five; the Vietnamese, sixteen; and the French, three. 42 The Great Depression of the 1930s and the resulting drop in the price of rice led to a decline in the number of rice mills in the Saigon-Cholon industry. Before World War II, only twenty-seven of them remained in operation, of which the four largest belonged to the French. The position of Chinese capital in this field was somewhat weakened in the post-war period. Only 60 per cent of the seventy rice-milling enterprises of Saigon-Cholon area belonged to the Chinese. 43 From 1955 onwards, the decrease in rice production in the South and the exclusion of non-naturalized Chinese from this business saw a further decline in Chinese involvement in the rice-milling industry. According to statistics, of the 873 rice mills in the late 1950s in the ROY, only 108 rice mills, or 12 per cent, belonged to the ethnic Chinese. 44 Another set of figures which came from the Saigon Board of Statistics shows that in 1970, out of 1,414 rice mills in the South, 352 mills, or 24.9 per cent, were owned by the Chinese. 45 During the French colonial period, almost all the big alcoholic and soft drink factories were located in the South and owned by the French. For instance, there were the Barasseries et Glacieres de Indochina (BGI) founded in 1927, and the Societe Francaise des Distilleries del l'Indochina (SFDI) distillery at Binh Tay in 1921. The Chinese and Vietnamese only ran their family enterprises, producing bread or foodstuff made from rice, bean, or fruits. This kind of business was very popular with the Chinese, who operated a good number of them mainly in the cities. Table 16 illustrates Chinese participation in the food-processing industry in Saigon-Cholon in the years 1953 and 1955. A Far E11Stern Economic Review figure in 1957 showed 1,045 out of the 2,415 Chinese enterprises in the South to be producing foodstuff, accounting for 43 per cent of Chinese processing industries. 46

Chapte >' 2

66

From 1955 and particularly in the 1960s the Chinese intensified their efforts in this industry to cope with the rapidly increasing demand by the army and the growing urban population. This was particularly evident in the case of soft drinks and monosodium glutamate. Chinese businessmen owned two large-scale drinks factories: one, the Phuong Toan, which began in 1947 in Saigon-Cholon producing soft drinks, and the other, the Merry Realm, TABLE16 Number and types of Chinese food-processing businesses in Saigon-Cholon, 1953 and 1955 Number of businesses

1953

1955

66 17 43 66 62 10 27 13 30 25

40 18 43 68 60 10 27 13 30 27

359

336

7 5 3 21 6 2 6 8 44

10 8 5 15 4 2 7 10 40

Sub-total

102

99

Total

46 1

435

Type of food-processing industry Incorporated or partnership busi ness Rice-milling Flour-milling Bakery Pastry-making Producing soyabean foodstuff Producing oil Processing dried fish Producing fish sauce Processing farm products Producing fruit jam Sub-total Non-incorporated or self-ownership business Producing pastry foodstuff Producing fresh noodles Producing canned food Producing sugared almonds and sweets Distillery Producing aerated drinks Producing syrups and fruit juice Producing ice-cream Producing sauce and other liquid seasonings

Source: Tsai Maw Kuey (1968), pp. 172-73.

P os itio VI o f the ChiVIe s e iVI k ey eco V\o mic sect o ,.s b e fol"e 1 9 7 5

67

which started in 1966 producing flavoured milk, vinegar, and soft drinks. However, the French continued to dominate the drinks manufacturing industry until 1975 and were far more superior than the ethnic Chinese where capital, organization, and product quality were concerned. The Phuong Toan and Merry Realm had a paid-up capital of only 60 million piasters compared with the French investment of 3.5 billion piasters in the BGI and SFDI distilleries at Binh Tay in the late 1960sY The Chinese also specialized in the production of soya bean sauce, canned foods, and seasoning spices. According to data collected by Nguyen Huy, there were about 130 soya bean sauce producers in the ROV in the first half of the 1970s, the majority of them belonging to ethnic Chinese. They were mainly small and family enterprises. 48 The Chinese also moved into fishsauce making, which was traditionally done by the Vietnamese. By 1975, one-third of all fish-sauce factories in the ROV were owned by ethnic Chinese. In the food-canning industry, three out of six big factories in the ROV before 1975 belonged to ethnic Chinese.49 One was the American-owned Foremost Dairy Vietnam SARL company specializing in the production of powdered and condensed milk and the other two were owned by Vietnamese. Vietnamese and Chinese factories were canning meat, fish, and fruits contracted by the ROV Government for its army. The Chinese contributed a great deal to the rapid development of the monosodium glutamate (MSG) manufacturing industry, especially in the 1960s. Before 1963, there had been no MSG factories in the South. Supplies came mainly from Japan. Immediately after the Thai Son company started MSG production in May 1963, the Saigon government banned the import of this product. Two more such companies came into existence in 196 5 and 1966: Thien Huang and Vifoinco, respectively. Investment capital in all these three companies belonged to Taiwanese and local Chinese in Vietnam. 50

b. Textile industry The only modern weaving factory founded by the French in Nam Dinh in the North was nationalized in 1954 by the DRV Government. The local weaving industry, comprising mainly small-scale family-run units were operated by both ethnic Chinese and Vietnamese. Traditional manual looms were used and the finished product was therefore less refined and cost more, about three times higher than the French imported material. 5 1 Thus the local weavers could never compete and many enterprises went bankrupt. After the

68

Ch a p+e ~

2

departure of the French in 1957, a group of ethnic Chinese and Vietnamese from North Vietnam set up Vietnam's biggest cotton-spinning factory in Khanh Hoi in the ROY, using equipment from their old factory in Haiphong. 52 According to official statistics, the Chinese owned some 580 spinning and weaving firms in the South in late 1957. Most of these were small, family-run enterprises. 53 In the Saigon-Cholon area, there were some 100 Chinese-owned weaving looms before 1960. 54 It was not until the early 1960s that this industry started getting modernized. The ROY Government and private businessmen began to import weaving machines from Taiwan, Japan, Germany, the United States, and France. In the years 1969-70, 11 billion piasters out of the total investment of 36 billion piasters for all industries went into weaving. 55 Local Chinese and Taiwanese played a major role. The products made ranged from silk to synthetic: woollen clothing, towels, fishing nets, mosquito nets, blankets, and carpets. Production output could reach 65 to 70 million metres of materials yearly, mainly for the domestic market. Compared with other industries in the ROV, the textile industry was well-equipped with imported, up-todate, and well-maintained machinery. In 1966 this industry employed 11,572 workers, the majority of whom were ethnic Chinese. 56 According to the Ho Chi Minh City Statistics Office, the Chinese owned ninety-five weaving enterprises in the City before 1975, of which three, Vinytex, Vinatexco, and Vinatexfico, were the biggest textile ventures in Vietnam then. 57 Statistics from the Chinese Chamber of Commerce in Saigon showed that 80 per cent of the whole weaving industry was in Chinese hands, which in 1974 amounted to about US$3 million.58

c. The metallic, chemical, and timber-processing industries During the colonial period, metal refining was not earmarked for development by the French administration. C hinese and Vietnamese were only capable of setting up small workshops to produce metal handicraft and household products to meet local demand. Under the ROY Government (1955-75) this industry was still rather rudimentary, although a number of Vietnamese and Chinese entrepreneurs began to establish factories and blast furnaces to cast iron and roll steel in a semi-mechanized process. Their main raw materials were scrap iron and other discarded metals from the war. According to the Saigon Commercial Office, the Chinese owned eight enterprises producing metallic instruments in Saigon-Cholon in 1957, which were small-scale industries.59 The picture changed in the mid-1960s wi th the

P os iti o " o f the C hi" e s e i" k ey eco " o mi c sect o>"s b efo>"e 1 9 7 5

69

appearance of a number of well-organized, modern metal refineries and ironcasting factories. These were owned by ethnic Chinese and used imported machinery. An example of these was the Vicasa Company of Mr Ly Long Than, which started in September 1969 with an investment capital of 40 million piasters and employed GOO workers. His factory was equipped with two photo-electric iron furnaces of 6-ton capacity each and a rolling mill. The whole system was imported from Taiwan at a cost ofUS$700,000. The factory produced iron rods from discarded metals. Its output capacity was 25,000 tons per year. The Tan Viet Company operated a relatively modern high-frequency induction furnace with an annual output capacity of 600 tons. The Trido Company had two iron-casting furnace producing 6,000 tons per year. The Thanh My Industrial Corporation also imported machinery from Taiwan, a blast furnace with an annual output capacity of 6,000 tons. The Dong A Company used an electric furnace with a load capacity of5 tons, producing an annual outputof12,000 tons. 60 There are also many Chinese-owned factories working with materials such as brass and aluminium and making bolts and nuts, barbed wires, sheet metal, all types of containers and cans, and simple accessories for the mechanical and construction industries. According to the Saigon Commercial Office, Chinese investment in the iron and steel industry was about US$3 million, which was about 80 per cent of the total investment in this industry in the ROV before 1975.6 1 The chemical industry, as for other industries, also moved ahead during the 1960s. Here again, the Chinese played an important role. They specialized in the production of plastics whereas the Vietnamese concentrated on the production ofWestern medicine, soap, and detergent. Statistics show that in 1957 there were forty-three Chinese-owned chemical industry enterprises in the Saigon-Cholon area. 62 In 1969 there were about 250 small, labourintensive factories and thirty modern factories producing plastics licensed to operate in the ROY, most of which were owned by local Chinese. The biggest company was the UFI Plastics with a total investment of 280 million piasters, of which 88 million was spent on machinery; it employed 260 workers. 63 Its finished products were of good quality and could compete with foreign imports. This was made possible by utilizing machinery and even raw materials from Japan, Taiwan, and Korea. According to official statistics, the Chinese owned 187 chemical enterprises before 1975.64 The Saigon Commercial Office estimated that Chinese investment in this branch of industry amounted to some US$1 .5 million, this being 80 per cent of the total

70

Chapte r 2

investment in this industry in the ROV. 65 The local Chinese also had a keen interest in the timber-processing industry. Their small lumber enterprises could be seen everywhere in South Vietnam. According to the Saigon-Cholon Chamber of Commerce, a total of276 timber enterprises were in operation in the country in 1957 producing mainly construction lumber; 160 of them were in the Saigon-Cholon area and belonged to local Chinese. 66 It is not clear how many of those outside the Saigon-Cholon area were owned by the Chinese. According to figures of the Ho Chi Minh City People's Committee, Chinese ownership of the timber industry was around 90 per cent of the timber industry in the city. They could build wooden ships with a capacity of 400 to 500 tons.67 d. Other industries and handicraft

The local Chinese were also involved in printing, publishing, production of paper, and various electrical appliances for general use. In Saigon-Cholon in the late 1950s they owned fifty-nine enterprises producing paper, cardboard files, packaging paper, and ninety-eight printing premises, publishing school books, magazines, and daily newspapers. 68 The paper industry also included the making of incense paper for religious purpose. The local Chinese also went into joint ventures with the ROV Government and Vietnamese businessmen to set up modern paper factories, complete with imported machinery and equipment. Examples were NAGICO and GOGIMECO, which produced white paper and wrapping paper. The annual output of these two companies could reach 12,000 tons. Taiwanese technicians were brought in to man the imported machines. 69 However, the output of these two companies could not equal that of other paper factories owned and managed by the government or Vietnamese businessmen. The GOGOVINA and the COGIDO, both government-owned companies, each produced 37,500 tons of paper yearly. So the local Chinese role in the paper industry was a modest one. However, they were big producers of general electrical goods such as fans, wires, batteries, and storage batteries. A few names of Chinese companies producing or assembling electric fans then were Natico, Tan Loi, Khuong Huu, Dong A, Minh Tan, and Ngoc Giao. The following were some of the companies which manufactured batteries and lighting equipment: Vien Dong, Kwang Ming, Kwong Wa, and Bac Lan. However, the production of electric fans dropped sharply from the late 1960s because of consumers' preference for imported fans from Japan and the United States.

P o siti o "' o f the C hi"'ese i>1 k ey eco >1 o mi c secto r s b efore

1975

71

Prior to 1955 the French controlled the rubber-processing industry, which was then nationalized by the ROV Government. So the Chinese channelled their resources and efforts into the production of plastic utensils and evenrually into the footwear industry. The Vietnamese specialized in the production of car tyres and mattresses. 70 During the colonial period, the Chinese had some sugar refineries in the delta region of Cochinchina and in Tay Ninh.71 After 1955, however, they withdrew from this business as a result of the buying over of the French refineries followed by the setting-up of the Vietnam Sugar Refinery by the ROV Government. Apart from the aforementioned industries, the Chinese in Vietnam also engaged in other small-scale industries such as hide-tanning, shoe-making, carpentry, mother-of-pearl handicraft, tailoring and dressmaking, as well as pottery-making.

e. Transport Transport plays a very important role in the distribution and circulation of goods. The Chinese figure prominently in this vital economic segment. Under the French, most of the junks and tugboats in operation in the rivers and streams of Cochinchina belonged to the Chinese. They transported rice bought by Chinese merchants. According to the 1921 census, the number of junks in Cochinchina, mostly possessed by the Chinese, totalled 3,000. 72 There were also many small steamers of about 500 tons owned and operated by the Chinese, plying between Saigon and Haiphong, and occasionally between Saigon and Tourance (Danang), before the partition of North and South Vietnam. 73 By 1963 the war had so damaged the land transport system as to render it virtually inoperable. Water transport, therefore, became the alternative for the distribution of goods within the ROV. A great number of agricultural products, particularly rice, were supplied to Saigon and other big cities by river transport. Coastal shipping also connected Saigon with the provinces of central Vietnam. Official data show that in 1967 a total of twenty-nine ships ply the Saigon-Danang route, among which were fourteen USAlD ships, two French ships, and thirteen Vietnamese ships. Of the thirteen Vietnamese ships, four belonged to local Chinese.74 According to other data, by the end of the 1960s there were 170 Chinese transport firms engaged in inland transport using junks and tugboats. They took charge mainly of the transport of agricultural and industrial products from Saigon-Cholon to provinces in the delta and central Vietnam. According to the Ho Chi Minh

Cha pte r 2

72

City People's Committee, there were more than 3,000 mechanized vessels for seafaring and coastal transport in Saigon before 1975 belonging to the local Chinese. 75 No specific figures are available on the traffic volume to enable us to draw conclusions about the proportion of goods carried by Chinese-owned vessels. Suffice to say that the local Chinese owned a sufficiently large number of vessels to be an important force in the transport sector. Their winning points were good service of their customers, reliability, and the lack of red tape when handling goods. In case of damages or losses, compensations were settled without delay. 3. Chinese human resources

To evaluate the position of the ethnic Chinese in Vietnam's economy, the capacity of their human resources such as managerial skills and other business expertise should also be examined. The Chinese form a large segment of middle-class business entrepreneurs, technical and managerial personnel, and skilled workers. Chinese immigrants provided a labour force vital to the colonial exploitation of Vietnam. They represented a large percentage of workers in the mining, manufacturing, and processing industries. According to French statistics, 19,000, or 9 per cent, of the 221,000 workers employed by French colonial administration in 1929 were Chinese. They also made up 7 per cent of the miners, 14 per cent of workers in light and processing industries but only 0.35 per cent of plantation workers. 76 The real figures for Chinese workers in various industries would be much bigger as those working in factories owned by their fellow Chinese were left out in the counting. They could have accounted for another 10,000 people. Under the Saigon regime (1955-75), the number of industrial workers and those engaged in service-oriented fields increased rapidly. Among the 30,500 salaried workers in the ROV in the mid-1950s, 12,000 were Chinese (40 per cent) .77 While the Chinese were only 5 per cent of the ROV population, they accounted for 25,000 to 30,000 industrial workers in the mid-1960s, accounting for one-third of the total southern industrial workers?8 They formed the main labour force for such industries as textiles, metal refinery, printing and publication, the making of plastic utensils, timbersawing, rice-milling, and food-processing. They were better than the indigenous work-force in terms of technical ability and occupational experience.

Positio"' o f the Chil'\ ese i"' k e y ecol'\omic sectovs b efo ve

1975

73

Emerging from the successfUl market economy was a new class of professionals, the managerial class. Again, the ethnic Chinese were the most successfUl of this new strata of people. According to data compiled by Tran Kiem Luu, ethnic Chinese owned 53 per cent of the most successfUl enterprises, while the North Vietnamese who migrated to the ROV owned 35 per cent, and Southerners and other nationals owned only 12 per cent.79 Table 17 provides survey findings to illustrate the higher skills of Chinese entrepreneurs vis-a-vis their Vietnamese counterparts. In the DRV, after the year 1954, ethnic Chinese labour force was also important for specific industries or professions. Official statistics show that 15 to 17 per cent of the miners in the North in the mid-1970s were ethnic Chinese. Almost the entire manpower in the pottery and porcelain factories were Chinese. 80 The Chinese were also well-represented as handicraft artists and those living along the coast were prominent in fishing. Among the 15,000 Chinese living in Hanoi before 1978, 3,000, or one in five, were cadres or government servants.

NOTES 1. Purcell (1980), p. 200. 2. Luong Nhi Ky (1963), pp. 62-63. 3. Wu and Wu (1980) , p. 86. 4. Nguyen Van Ngon (1972) , pp. 306-9. 5. Ho (1969), pp. 49-50. 6. Nguyen Huy (1972) , pp. 30-34. 7. Converted into U.S. dollars at the rate of exchange in 1967: US$1 = 169 Vietnamese piasters. See Dacy (1986) , p. 181. 8. Dao Trinh Nhat (1924) , p. 20. 9. The total of French capital investment in Indochina during 1888- 1918 was 492 million French francs, of which 249 million was in the industrial and mining sectors, 128 million in transport, 75 million in trade, and 40 million in agriculture. See Nguyen Van Ngon (1972), p. 65. 10. Chang (1982) , p. 5. 11. C hina accounted for 41 per cent of Vietnam's total trade in the years 191418. See Cheskov (1968), p. 84, and Historia Vietnama v noveisei vremea (19171965) [History ofVietnam in the modern times (191 7-1965)) (1970), p. 28. 12. Nguyen The Anh (1970), p. 246.

'I

.::.

TABLE1 7 Ethnic origins of entrepreneurs and the success of their firms

(percentages)

Ethnic origin

Unsuccessful

Eth nic C hinese North Vietnamese emigrant South Vietnamese and other eth nic groups

-

Total

-

Marginal

Average

Successful

Very successful

33.9 11.0 55.5

37.5 25.0 37.5

53.0 23.5 23.5

53.0 35.0 12.0

100

100

100

100

Total no. of firms 45.0 25.0 30 100

Source: Tran Kiem Luu (1975), p. 75.

() :::> D

1'0

P o siti o "' o f the Chi.,ese ;., k ey eco i'\ o mi c secto ~s b efo ~e 1 9 7 5

75

13. The profit on 100 kg. of exported white rice was so divided: farmers, 12.75 per cent; middlemen, 22.9 per cent; transport, 45.0 per cent; export tax, 11.37 per cent; other expenditures, 7.39 per cent. See Pham Cao Duong (1967), p. 81. 14. Nguyen Huy (1972), vol. 2, p. 136. 15. Ibid. p. 127. 16. Tran Van Dinh (1961), p. 147. 17. Statistical Yearbook ofVietnam. Vol. 6 (1956) (1958), p. 127; Nguyen Huy (1972), vol. 2, p. 128. 18. Brewer (1986), p. 71. 19. Nguyen Huy (1972), vol. 2, p. 128. 20. The Hoa in Vietnam, Dossiers (1978), vol. 1, p. 81. 21. Son Nam (1984) , p. 121; Cheskov (1968), p. 83. 22. Nguyen The Anh (1970) , p. 217. 23. Nguyen Huy (1972), vol. 2, p. 149. 24. Noveisaia istoria Vietnama (1965- 1980) [Contemporary history of Vietnam (1965-1980)] (1984), p. 150. 25. HoangTruongTan (1972), p. 113. 26. Nguyen Van Sang (1974) , p. 51. 27. Huynh Nghi (1989), p. 8 (consultative materials). 28. Tsai (1968) , pp. 169-73. 29. Nguyen Van Sang (1974), p. 55. 30. Simoniya (1959), p. 68. 31. Tsai (1968) , p. 170. 32. Le Khoa (1960), p. 178. 33. Ibid., pp. 178-79. 34. Nguyen Van Sang (1974) , pp. 57-58. 35. Statistical Yearbook ofVietnam. Vol. 16 (1970) (1971), p. 239. 36. Ungar (Winter 1987-88), p. 606. 37. Wu and Wu (1980) , p. 85. 38. Huynh Nghi (1989), p. 8. 39. Tien tuyen [a newspaper], So 2578, 18 September 1973. 40. Son Nam (1984), p. 120. 41. Ibid. , p. 151. 42. Simoniya (1959), p. 106; Cheskov (1968) , p. 104. 43. Simoniya (1959) , pp. 106-7. 44. Tran Van Dinh (1961), p. 146. 45. Nguyen Van Sang (1974), p. 14. 46. Tsung-To Way (2 January 1958), p. 22.

76

Cha pte r 2

47. Nguyen Huy (1972), vol. 2, pp. 98-99. 48. Ibid., p. 109. 49. Huynh Nghi (1989), p. 8; Nguyen Huy (1972), vol. 1, p. 111. 50. Nguyen Van Sang (1974) , p. 27. 51. Cheskov (1968), p. 88. 52. Nguyen Huy (1972), vol. 1, p. 115. 53. Far Eastern Economic Review, 2 January 1958, p. 20. 54. Tsai (1968), p. 172. 55. Nguyen Huy (1972), vol. 1, p. 115. 56. Ibid. p. 117. 57. Huynh Nghi (1989) , p. 8. 58. Wu and Wu (1980) , p. 85. 59. Far Eastern Economic Review, 2 January 1958, p. 22. 60. Nguyen Huy (1972), vol. 1, pp. 129-30. 61. Wu and Wu (1980), p. 85. 62. Far Eastern Economic Review, 2 January 1958, p. 22. 63. Nguyen Huy (1972), vol. 1, pp. 188-89. 64. Huynh Nghi (1989), p. 8. 65. Wu and Wu (1980), p. 85. 66. Simoniya (December 1961), p. 72. 67. Huynh Nghi (1989), p. 8. 68. Far Eastern Economic Review, 2 January 1958, p. 22. 69. Nguyen Huy (1972) , vol. 1, pp. 176--77. 70. Ibid., pp. 153-54. 71. Purcell (1980) , p. 194. 72. Ibid. 73. Far Eastern Economic Review, 2 January 1958, p. 22. 74. Nguyen Huy (1972), vol. 2, pp. 109-12. 75. Huynh Nghi (1989) , p. 8. 76. Ngo Van Hoa and Duong Kinh Quoc (1978), pp. 201-3. 77. Raboti kfas Asia I Africa [Working class in Asia and Africa] (1964), p. 252. 78. Lechiagin (1977), p. 65. 79. Tran Kiem Luu (1975), p. 75. 80. The Hoa in Vietnam, Dossiers (1978) , vol. 1, pp. 19-20.

_ _ _33 National ~et-\nification and the position of the Chinese in the sot-\the~n economy

1 . Socialist transformation of the southern economy and the decline of Chinese business After the collapse of the Republic ofVietnam (ROY) regime in Saigon (30 April1975), the socialist government of a united Vietnam embarked on a programme to transform the capitalist economy of the South from one based on the market principle to a centrally planned one. An ideological requirement of this exercise would be the removal of a wealthy class of people at the top and the redistribution of their wealth. That being the case, the prosperous business community of the entire South, whether Vietnamese or ethnic Chinese, were affected. However, the Chinese suffered more because of their disproportionately high involvement in business. The effort to convert the southern economy proceeded in stages in this order: the anticompradore bourgeoisie movement and first currency reform in late 1975, and then the socialist transformation of private capitalist industry and trade, accompanied by another currency reform in 1978. a. The anti-compradore bourgeoisie movement and first currency reform in September 79 75

One of the first things the Hanoi government did afrer liberating the South was to start eliminating the compradore bourgeoisie. "Compradore" bourgeoisie (from the Portuguese word for "buyer") was the formal communist term for those local agents acting on behalf of foreign capitalists and who had made money through playing such an economic role. In the context of Vietnam, the southern compradore bourgeoisie were said to be big businessmen who were "reactionary in politics", who colluded with imperialism and the Saigon regime. This was a political criterion to define that class. There was also an economic criterion which typified compradore bourgeoisie as people who made their fortunes in contract work or commerce in support of the U .S. and Saigon administrations. They were also guilty of using their economic clout to establish monopoly control over markets. 1 They were regarded as an "instrument of the U.S. imperialists for carrying out their neocolonialist policy" and as the "principal social basis" of the Saigon regime "which in turn relied on it to grow rich'? The Vietnamese bourgeoisie in general and the compradore bourgeoisie in particular developed in conjunction with the penetration and expansion ofWestern capitalism. Under French rule, Overseas Chinese and native merchants collaborated with French companies in the export of rice and

80

C ha p+e>' 3

other national resources, and the import of industrial goods and thus became wealthy. During the time of the Saigon regime (1955-75), especially after 1964, the compradore bourgeoisie became rich very rapidly. This was a time when opportunities for business came with the U.S. need for a trade and service network to supply its troops fighting in Vietnam. The post-1964 years also saw an ROY Government inclined to deregulate the economy and promote liberal market practices. Local Chinese businessmen were quick to seize these opportunities and expanded operations not just in their traditional strongholds of trade and services, but also in finance and light industries. Chinese control of various sectors of the economy during this period and relevant statistics have been discussed in Chapter 2. The political underside of such economic practice was the inevitable corruption of the power elite. In order to operate, the compradore bourgeoisie, particularly the disadvantaged local Chinese businessmen, had to cultivate the politicians and military leaders of the ROV. At the simplest level it was wining and dining them. But a more serious form involved the use of huge monetary bribes or offers of shares in businesses. In the process, politicians, bureaucrats, and military leaders also grew rich and became "the bureaucratic and militaristic wing" of the southern compradore bourgeoisie. 3 According to post-1975 Vietnamese classification, the South had about 4,200 big capitalists before liberation, among whom 60 per cent belonged to the compradore bourgeoisie class, with each owning tens of billions of piasters (old South Vietnam currency). 4 There were both ethnic Vietnamese and Chinese compradore bourgeoisie. The most typical representative of a Chinese member of this class would be Ly Long Than, who controlled eleven different trades and owned twenty-three enterprises. This business empire would include a very large cross-section of enterprises such as Vietnatexco and Vinafilco textile factories, Vinatefinco cloth dyeing and printing mill, Viunica and Vicasa steel factories, Nakydaco edible oil factory, Rang Dong sea transport, and Saigon-Singapore shipping companies, Lubico biscuits and sweets factory, a real estate company, the Thien Hong hotel and restaurant, Nam Do bank, and Trung Nam bank. 5 Hoang Kim Quy would be an example of an indigenous Vietnamese member of the compradore bourgeoisie class. He was a native of Hanoi, where he had an important import-export firm before he went South in 1954, at the partition of the country, and made his fortune from businesses ranging from barbed wire manufacturing, textiles, importing of appliances, and banking. He was also a member of the Saigon "Lower House" and had

Natiol'1a l ~ e ul'1ifi catiol'1 a"d the p os itio" of the C hi l'1ese

81

a close relationship with the then President Nguyen Van Thieu and other leaders of the Saigon administration and the military establishment. 6 In order to hasten the end of the compradore bourgeoisie's hold on the economy and to move towards the removal of capitalist ownership, the mass campaign under the code name of "X1" was launched on 11 September 1975, four months after liberation. The Provisional Revolutionary Government (PRG), which was then running the South, issued at a press conference a fourteen-point economic policy which, among other things, stipulated that speculators and economic monopolist, who are causing disturbance to the market will be arrested and punished appropriately for their crimes. Their property may be confiscated in whole or in part. All properties of compradore capitalists ... whether they have fled abroad or remained at home is placed under the control of the state and confiscated in whole or in part depending on the nature and extent of their offences. 7

The arrest of big tycoons and assorted speculators and hoarders took place a few days before the announcement of the X1 campaign. According to Vo Nhan Tri, the actual number of people targeted for arrest in Saigon-Cholon and seventeen other provincial cities in the South were 670 heads of families. The campaign lasted a month until early October 1975. When it concluded, only 159 of them were officially considered as compradore bourgeoisie, and of these, 117, or about 70 per cent, were ethnic Chinese. 8 According to official estimates of the Socialist Republic ofVietnam (SRV), among the total number of compradore bourgeoisie in Saigon-Cholon in 1975, ninetyeight were ethnic Chinese. The Chinese compradore bourgeoisie made up only 1.2 per cent of the total Chinese bourgeoisie of this city. The ethnic Chinese suffered most during this time. Vietnamese authority did not announce at that time the number of Chinese companies or shops searched and/or closed, and the people arrested for their class status. It was learnt later that at least 100 Chinese firms were thoroughly searched on only one evening, 9 September 1975, and 250 wealthy Chinese were arrested during the campaign. Several committed suicide. Absentee properties, including houses, were confiscated on the spot. Those arrested included presidents and/or owners of companies producing monosodium glutamate, wheat flour, textiles and paper, metalworks, movie theatres, import-export firms , and ironworks. 10 A separate estimate by the Taipei Hua-Ch'iao Ching-chi nien-chien (1976) put the losses of Chinese investors in Vietnam at US$1

82

Cha ptel" 3

billion to US$2 billion. 11 Many ethnic Chinese tycoons and leaders of the community fled overseas in those months. The PRG occupied the office building of the General Association, then the separate bang associations, and closed down eleven Chinese newspapers. They also took over the Chinese Chung-Cheng General Hospital in early 1976 and the other five bang hospitals in January 1978. 12 Nl industrial and commercial firms, banks, transport companies, and capitalist plantations belonging to foreign capitalists and the native elite were immediately confiscated. According to the party paper in the South, the Saigon Giai Phong(the Liberation daily) on 8 November 1977, by that time, nearly 1,000 enterprises of compradore bourgeoisie and foreign capitalists were confiscated and converted to the control of the state. The businesses that were nationalized in this campaign went into decline and production dropped or stagnated for want of raw materials and equipment and also because of mismanagement. The annual average growth rate for the gross production of industry in the period 1976-80 increased by only 0.6 per cent, so there is no basis to say that state control of these private businesses helped to rebuild the country after the war. 13 In conjunction with the Xl campaign, a new currency was introduced on 21 September 1975, which was also aimed at reducing the economic influence of private business in the South. The old southern piaster was abolished as a medium of exchange, and replaced by a new southern dong. In theory, all piasters held by private citizens could be exchanged for the new currency (at the rate of 1 dong for 500 piasters), but, in reality, each family possessing less than one million piasters was allowed to exchange up to 100,000 piasters for 400 dong and deposit the remainder in the state bank. Small business with certified licence could exchange an additional 300,000 piasters for another 600 dong. 14 This placed those with more than the approved amount in a quandary. In particular, it was the ethnic Chinese who had just sold their goods or business equipment at unbelievably low prices to Vietnamese cadres under pressure of the anti-compradore bourgeoisie movement. They were afraid that if they exchanged the additional! 00,000-500,000 piasters and deposited them in the bank, they would be identified as compradore bourgeoisie; but if they kept their extra old currency, not only would the currency be worthless but it would also get them into trouble. Amidst great confusion, some of them deposited only a portion of their extra piasters, some asked their relatives or friends to do the exchange on their behalf, some sold the piasters to government cadres at a rate of 5,000:1, some gave away

N a tion a l >"e cmifi cati o n a nd the p o siti o n o f the Chin e s e

83

money, and others simply burnt their excess currency. 15 Those who had not hoarded gold or foreign currencies suffered great losses overnight. As for the excess money that was deposited in the bank, it took the authorities almost six months to announce the decision to depositors that they could withdraw 30 dong per month. But by December 1976 the government ordered a stop to such withdrawals. 16 Measures were also introduced to curb capitalist trading. The merchants were not confronted with outright confiscation as in the case of the industrialists but they were to be taxed more. On 17 June 1976, the promulgation of surtax was regarded as the first important sanction. It was decided that the rate of profits allowed would be 10 per cent for the trade sector and 15 to 25 per cent for the industrial sector, all excessive profits being subjected to a heavy surtax. 17 The application of this measure made it possible for the state to take a substantial part of the excessive profits made by traders. Thus the profits of businessmen were virtually wiped out. Besides this, on 4 July 1976, government ordered traders to declare their stocks. Major traders had to sell goods that were basic necessities to the state and were prohibited from distributing these goods to the population. 18 But difficult as it was for the businessmen, they soon found ways of getting around these obstacles. Through means described above or by offering bribes, they managed to obtain large sums of the new currency.19 b. The socialist transformation of private capital and the second currency reform in 1978

After the confiscation and nationalization of the businesses and properties of the compradore bourgeoisie and foreign capitalists, the leadership was determined to move on to a further stage of socialist transformation in the South. The initial exercise in 1976 covered only 159 big capitalists. By early 1978, 1,500 large- and small-scale capitalist enterprises were nationalized and converted into 650 state corporations. In terms of jobs, these employed 130,000 workers or 70 per cent of those who were working in private capitalist manufacturing sector.20 There was unfinished business from the X1 campaign to eliminate the compradore bourgeoisie. There still remained in the South numerous capitalists in small and medium-sized businesses, especially those engaged in trade. According to official classification, there were a total of28,817 industrial, commercial, and financial capitalists in the South before 1975, of whom 24,158, or 84 per cent, were engaged in trading. 21 Together they possessed

84

Chapte r 3

a considerable amount of production means: raw materials, fuel, capital goods, and other economic resources. Meanwhile, the state sector was represented in only a few branches and at low levels: 25 per cent of the trade in fish, 30 per cent in vegetables, 15 to 20 per cent in meat- this capitalist sector continued to account for 70 per cent of the primary needs of the populationY Actually by the end of 1976, about 93 per cent of the total number of registered capitalists of the South were allowed to continue their business activity. 23 With regard to trade, only some 30 per cent of it was conducted by state agencies. 24 From the government's perspective, this was one reason the market could not be controlled and order restored in the chaotic economy. With the value of hindsight, market control and price fixing was never going to solve economic problems. But way back then, Vietnam's leadership did honestly think it was an economic policy which would produce the desired results. During those years, they believed that it was impossible to bring down food prices without breaking the hold of Cholon's Chinese businessmen on the rice trade. There was also a political reason for breaking the rice monopoly of the traders. It would facilitate another policy at that time, which was to persuade the unproductive population ofHo Chi Minh City to leave for new economic zones (NEZs). As long as there was a way of making a living out of the Cholon business network, the Chinese were unlikely to want to go to the NEZs. In addition to that, for the second year in succession, harvests were poor and state procurement of grain had fallen in the South. The output of paddy plus subsidiary crops fell by 9.1 per cent from 1976 to 1978, primarily because of collectivization of farms from early 1977. Of course, bad weather also contributed to lower production, and unfavourable climatic conditions. 25 The escalation of war with the Khmer Rouge then in control of Cambodia and the worsening relations in 1977-78 between Vietnam and China also created an atmosphere of tension all over Vietnam in general. It also added to the psychological pressure bearing down on the local Chinese community. All these steeled the SRV government's resolve to move on with its socialist transformation programme. So the X2 campaign was launched. On 23 March 1978, a communique entitled "Government decision on transfer of the capitalist trade sector to production" was issued. The communique states that "all trade and business operation of the bourgeoisie tradesmen are to be abolished". They

N a ti o l'\al ,.e ul'\ifi ca ti o l'\ a l'\d the p os iti o l'\ o f the ChiVl e se

85

will be guided and assisted by the State in using their capital to produce material assets for society. If they have technical and professional skills, they may be employed in the state-run trade sector to serve the revolution.

Small merchants were allowed "to retail those goods not controlled by the State". 26 Evidently, the traders were not going to be let off too easily this time. Like the anti-compradore bourgeoisie movement in 1975, this campaign had been prepared at least one month before action was taken. Tens of thousands of youth volunteers, communist cadres, and security force members had to be mobilized to close all businesses and make a thorough search to prepare inventories of goods held in shops or businessmen's residences. On that day in Ho Chi Minh City and other urban centres in the South, the state proceeded to draw up inventory lists of the outlets and stocks of capitalist traders in order to eventually fix the prices at which they would be requisitioned or purchased. The searches turned out large stocks of consumer goods acquired illegally. If the traders had respected official regulations, the goods would mostly have been sold by state shops and co-operatives. These businessmen were not only prohibited from carrying out commercial activities, but they had also been asked to prepare to leave the cities to go either to their native villages or to the NEZs- resettlement areas on virgin land. An estimated 30,000 southern merchants and 150,000 dependent family members were affected. Owners were paid compensation for their stock (cost value, minus 10 per cent tax, deposited in state bank) and were given the choice of working as employees of the state or moving to new economic zones. 27 For a few days after that, almost all private business activities, apart from restaurants, came to a halt in all the southern cities. According to the Communist Review, the journal of the Vietnam Communist Party, about 40 per cent of resources and the retail trade in the South by the middle of 1978 were controlled by state and collectives, which was up from 30 per cent before the X2 campaign.28 In effect, the latest action by the government removed big and medium traders, who made up about 10 per cent of all traders in the South. 29 Thus there remained a large number of small traders who were outside the scope of the action. They returned to open their roadside stalls. Prices remain high. However, on 17 April 1978, the government launched another programme, named "Decision to abolish small street traders". The open-air markets including illegal hawking places were closed down. These small traders were ordered to transfer to production activities (such as in

86

Cha pte r 3

farming or being employed in a factory) or collective trade (to trade as part of state collectivized system). 30 Meanwhile, the earlier programme to shift private capital in industry into state hands continued. About 243,000 private small-scale industry and handicrms or 45 per cent of the total in this category were ordered to shift to collective or production group by the end of 1978_31 A second currency reform also took place to control the vast amount of wealth still in private hands and to reunifY the currencies of the North and South. This took place on 3 May 1978, and according to state Decree 88 CP, each urban household was allowed to exchange old banknotes for 100 to 500 dong in the new banknotes, and each rural family, for 50 to 300 dong, depending on the size of the household. Public offices, military units, and other economic and social organizations were each allowed to exchange an amount not exceeding 1,000 dong. All excess money, supported by evidence as legitimate income, can be exchanged and deposited in the bank. The regulation concerning withdrawal from banks over the maximum of 500 dong also made sure that businessmen could not obtain any amount over the minimum for living expenses. An exception can be made for those who are investing their money in a joint venture with the government, or who have agreed to lend to the government at a frxed interest or needed money for urgent private reasons such as sickness, birth, accidents, or funerals. 32 As in the case of the frrst currency reform in 1975, this currency reform was a logical follow-up to actions taken against private businesses, a further blow to the rich and upper-middle class in the South. However, many businessmen still kept gold or foreign currencies in secret places, but from then on, their economic activities in the main were dependent on government policies. According to official statistics, by the end of 1978, out of3,500 key industrial enterprises of compradore bourgeoisie and national capitalists, 34 per cent were nationalized and 14.5 per cent were ordered to shift to joint state-private manufacturers, or co-operative enterprises. National capitalists refer to capitalists who do not serve foreign interests. About 76 per cent of private industrial enterprises in Ho Chi Minh City were transferred to state or state-private manufactures. In the commercial sector, more than 60,000 large- and medium-sized private trade enterprises in the South were banned from trading and ordered to move into the industrial or agricultural production sector. 33 But if the state was making headway in its ideological goal to collectivize the private sector, it was also a time of economic hardship for the pub-

)\J a ti o Y> a l r ecmifi ca ti o "' a Y>d the p os it io Y> of the C hiY> e se

87

lie. The whole country was seriously short of consumer goods and food. This was the immediate consequence of disrupting the flexible and active trading network. It was also a result of official mismanagement.34 At the same time the international situation aggravated local conditions. These were the years when border tensions with Democratic Kampuchea under Pol Pot intensified. China became involved in the dispute and this affected the situation of the ethnic Chinese community in Vietnam, not just in the South but also in the North. This conjunction of economic and political factors led to a large exodus of refugees from Vietnam by land and by sea. During 1978-79 an estimated 150,398 to 270,882 persons left the country, a disproportionately high number being ftom the Chinese community.35 Most of the refugees arriving in China were from the North. Those who left by sea and who came to be known by the international community as the "boat people" were mostly from the South. The total number of persons who left the country from 1975 to 1989 was estimated to be more than 1 million. 36 What proportion of these capitalists being dealt with by the state were ethnic Chinese? Although it is difficult to put an exact figure to them, it was generally believed that more of them were ethnic Chinese than indigenous Vietnamese. According to Chen C. King, about 50,000 Chinese firms were confiscated of their goods and 320,000 ethnic Chinese were sent to the NEZs during 1975-78. 37This campaign to transform the economy into a socialist model saw the loss of hundreds of thousands of Chinese labour: those who fled the country and those who had to leave their trade and do something else for a living. They included technicians, managers, and entrepreneurs. This created a big gap in Vietnam's economy in terms of skilled labour and capital.

2. Chinese adjustment to a socialist economy a. Trade and services sector

The proportion of Chinese participation in trade and services in relation to their total population in Ho Chi Minh City fell from 70 per cent before 1975 to about 24 per cent in 1988 (from 422,000 to 100,000). Take district 5 of the old C holon as an example. The percentage of Chinese engaged in commerce and services was reduced from the earlier figure of 80 per cent to 30 per cent in 1984. 38 From 1978 to 1984, in district 6 (new Cholon), where the Chinese population is third highest after districts 5 and 11 of Ho Chi

88

Chapte~

3

Minh City, the number of Chinese big traders and medium traders dwindled to 20 per cent of the total number of district traders (1,419 out of 6,853). 39 The same situation was seen in the delta provinces of the Cuu Long nver. This decline in Chinese participation in the trade sector resulted in a diversion of Chinese economic endeavour to the manufacturing of consumer goods for the domestic as well as export markets; these were characteristically cottage industries. Chinese capital could take the form of private ownership, co-operatives, or collective pattnerships. They could and did go into joint ventures with local governments or state enterprises. It is believed that more than 50 per cent of the local Chinese business community engaged in business and service before 1975 had switched their capital to production. 40 Other factors contributed simultaneously to the reduction oflocal C hinese participation in commerce. First, there was the growth of a network of nationalized trade. Second, the government took over foreign trade as well as the wholesale and retail of vital supplies such as grains, iron and steel, cement, and a number of other necessities. Third, there was an international effort to isolate Vietnam, which greatly reduced foreign trading opportunities and affected the domestic production and transport system, all of which curbed commerce within Vietnam as well. The impact of these factors could be measured by statistics of the post-1980 period (see Table 18). Clearly, from 1980 to 1986, state control of trade rose from 39.2 to 58.6 per cent, with a corresponding decline in private sector control from 60.8 to 41.4 per cent. But the trading sector in the hands of the local Chinese still had considerable liveliness despite the contraction. One reason for this was the corruption and the bad management in the state sector. During the 1980-85 period, despite the vigorous nationalization policy, the quantity of goods collected and purchased by the state service still accounted for about only 20 per cent of the total output value of small-scale industries in Ho Chi Minh City. The retail sale conducted by the state and collective enterprises accounted for 40 per cent of the City's market. State and collective retail sale controlled only 50 per cent of the pork, 24 per cent of the fish, 22 per cent of fresh vegetables, 34 per cent of sugar, and 50 per cent of fuel. 4 1 Districts 5 and 6, the hub of local Chinese business, still remained as one of the biggest commercial centres of this city, linking it with the western provinces in the delta of the Cuu Long river. This was an important stretch in the internal distribution network for goods. For local Chinese businessmen, the period 1980-85 had its ups and

'L c

+ a· :s

c

.

11>

s: :s

~ ()

c+

a·

TABLE 18 Participation in domestic trade and services of the private and state sectors during the 1980s (in percentages)

:s c :s n_ +

;;-

General domestic trade

[!)

Food and services

\J 0

Sectors

1980

1985

1986

1987

1988

1989

1980

198 5

1986

1987

1988

1989

State/collective Private

39.2 60.8

58.8 4 1.2

58.6 4 1.4

56.8 43 .2

49.6 50.4

4 1.6 58.4

23.3 76.7

34.4 65.6

34.9 65. 1

26.9 73.1

29.2 70.8

16.9 83. 1

T oral

100

100

100

100

100

100

100

100

100

100

100

100

fJI

:;:

a· :s 0

---+,

+

;;11>

()

;;-

Source: Statistical data of the Socialist Republic of Vietnam, 1976-89 (1 990), pp. 111 - 12.

:; (1l fJI 11>

00 \D

90

Chap+e~ 3

downs. Chinese economic activities in general and their commercial operations in particular regained impetus following the promulgation of Directive 10 on 17 November 1982 by the Secretariat of the Party Central Committee, which set forth the "policy towards the ethnic Chinese in the new stage". Directive 10 stipulated that Chinese living in Vietnam would be considered as Vietnamese citizens. They had the same rights and obligations as other Vietnamese citizens. It also emphasized that, however, cadres and students of Chinese origin were allowed to participate in or study certain professions only. They had the duty to serve the army but could not be officers.42 This directive has the effect of encouraging the Chinese business community to be more active. However, a year later, on 13 September 1983, the party Politburo issued Act 14 concerning the government's continued efforts to improve the socialist transformation of private industry and trade. The Act read in parts: "to forbid Chinese participation in commerce, transport, printing, processing, cultural business, information, opening of schools, etc." 43 This Act stopped local authorities and other governmental agencies concerned from carrying out Directive 10, thus hindering Chinese investment endeavours. In 1986 came a major event in Vietnam's recent political history. The 6th Communist Party Congress formally introduced a programme of reforms known as doi moi, which was to create favourable conditions for private business to revive itself Prior to the Congress in December, specifically on the question of the local Chinese community, Directive 256 was issued in October by the Chairman of the Ministerial Council to implement the suspended Directive 10. Doi moi and its endorsement of a multi-sector economy reversed the ideological compulsion for collectivization and gave the private sector including local Chinese businessmen more space than they ever had since 1975. Since then and especially in recent years, there have been signs of expansion in number and scale of trade and services undertaken by both private indigenous Vietnamese and local Chinese businessmen. Thousands of new small and medium-sized private shops selling a greater variety of imported and locally produced goods have sprung up in Ho Chi Minh City and other cities ofVietnam. In Ho Chi Minh City alone, more than 700 goldsmith shops have opened since private trading in gold was legalized in early 1989.44 The local Chinese are very active in this trade, their traditional area of expertise. A symbol of the re-emergence of ethnic C hinese in domestic trade is the construction of the new five-storey An Dong shopping complex in

N a ti o VI a l l"e v.VIifi cati o n a VI d the p o siti o n of the Chinese

91

Cholon. The total investment for this project was US$ 5 million, put together by a group of local Chinese businessmen. With regard to foreign trade, the state has taken over and this had disrupted the intricate network of Chinese wholesalers, retailers, importers, and exporters and led to their becoming ineffective and immobile in the domestic market after 1975. However, the Chinese move into industry has enabled them to produce light industrial goods for the government to export. There have also been occasions when the government had to call on their experience to help source for cereals and scrap iron and steel to export. After the campaign to abolish the compradore bourgeoisie and the first currency conversion in September 1975, a total of thirty government and private banks of the former Republic ofVietnam were nationalized while all foreign banks were instructed to suspend their operations. The revolutionary government took a monopolistic control over financial investment and forbade all forms of private participation. It was not until July 1992 that the Vietnamese Government officially again allowed foreign banks to open representative offices and branches in Vietnam. By the end of 1992, fifteen foreign private banks and four jointventure banks with foreigners were operating in this country. 45 Since 1992 the government has also allowed Viemam's private entrepreneurs to set up their own banks. Up to February 1993, there were ten such private banks operating. 46 In December 1992 ethnic Chinese businessmen in Cholon started the first Chinese commercial bank since 1975. Given that the local Chinese had capital shares in eleven banks before 197 5,47 there is potential for the expansion of their role in banking beyond the one bank they now own. Much also depends on the economic reform policy of the SRV government. b. Manufacturing industry

The policy of socialist transformation, as explained above, had made Chinese businessmen divert some of their capital into manufacturing. However, the socialist transformation programme had also led to the nationalization of all big and medium-sized private industrial enterprises which would make it impossible for anybody to think of setting up large-scale production. Neither did anybody have sufficient capital for that scale of project in those years. At the same time, government efforts to promote the consumption oflocally produced goods after 1978 were congenial to the development of small-scale light industries. Furthermore, locally produced goods no longer

Chapter 3

92

had to face tough competition from foreign imports, a problem they used to face in the pre-1975 market. The Chinese continued to concentrate their small-scale industries in areas that they had traditionally worked, such as metallurgy, plastics and mercury-glass, food-processing, hide-tanning, production of construction materials and cultural goods, especially in garment and footwear industries. Thus Ho Chi Minh City was again to develop into the industrial hub that it was before liberation, and once again the local Chinese were to play a significant role. The size of the Chinese role can be seen in Table 19. They made up 13 per cent of the city's population but the value of their output was 38.3 per cent of the total. The city itself produced from 40 to 50 per cent of the gross value of total output from handicraft and other small-scale industries. 48 Chinese small-scale industrial activities were concentrated in the three districts of 5, 6, and 11. District 11 had the highest ethnic Chinese population, about 50 per cent of the whole district population, and also the highest gross value of small-scale industrial output of the city. The Chinese here accounted for more than 70 per cent of the labour force. Their traditional industries such as those dealing with mercury-glass, plastics, and hides are special economic features of this district. District 5 Chinese made up 40 per cent of this district's population. Chinese labour force here amounted to 74 per cent; the number of their production enterprises, 87 per cent; and their gross output value 40 per cent of that of the whole district in the period 1984-86. 49 Chinese effort to move into industrialization was not easy during that TABLE19 Small-scale industrial production and handicraft of the Chinese in Ho Chi Minh City, 1984---85 Entire city

o/o

No.

o/o

16,705 166,352

100 100 100

5,320 49,679

3 1.50 29.00 38.30

3, 160,000

100

404,09 1

12.79

No. Enterprises Labour force Gross val ue of ourpur T oral population

C hinese share

Source: Nghi Doan, Huynh Nghi , and Phan An (1989), pp. 14- 15; Huynh Nghi (1989), p. 2.

93

N a ti o "'a l "e "'"'ifi cati o "' a "'d the pos iti o "' of the C hi"'ese

time. They had to strive against an economic environment which lacked everything - raw materials, energy, and capital - as well as negotiate an outdated taxation and pricing system of a bureaucratic administration plagued with corruption and mismanagement. The Chinese concentrated their small-scale industrial activities in nonstate organizations, similar to their activities in goods distribution and circulation. See Table 20. About one-third of those types of enterprises were owned by the Chinese. Before 1975, Chinese labour force converged mainly in big Chinese-owned enterprises such as those of weaving, food-processing, grain-milling, metal-refining, plastic asnd chemical manufacturing. These enterprises became state-owned or joint state-private enterprises after liberation, and business failure after 1975 gradually led to Chinese labourers leaving to join non-state enterprises. Those who could, applied for permission to leave Vietnam. With the promulgation of a private business law in 1989 and a company law in 1990, there has been an expansion in the number and scale of private enterprises. Many Chinese entrepreneurs diverted their resources to establish private companies. According to official data, up to the end of 1992, in Ho Chi Minh City alone, more than 420 private enterprises registered for operation. This figure does not include private enterprises in banking, tourism, and other services, the most popular form of organization of these being limited liability companies. Among private enterprises registered as industrial production units in the city during the period 1989- 92, the number of Chinese-owned enterprises constituted about 45 per cent, this TABLE20 Chinese small-scale industries and handicraft enterprises in the non-state sector in Ho Chi Minh City, 1985 C hinese share

Entire ciry Form of organ ization of enterprises Co-operative Partnership Proprierorship

No.

o/o

N o.

o/o

604 3,324 11 ,694

100 100 100

180 1,303

29.80 39.20 35.00*

* Statistics claim a proportion of one-third of C hinese small-scale industries proprietorship for the whole ciry. The figure of 35 per cent is suggested by the writer. So urce: Nghi Doan, Huynh N ghi, and Phan An ( 1989), p. 15.

Chapte~

94

3

being nearly 200 enterprises. The majority of them are medium and small companies, but there are also a number of big enterprises such as Viet-Hoa Construction Company, Minh Phung Garment Factory, Binh Tien Footwear Enterprise, Chien Thang Agricultural Processing Company, Viet Huang Noodle Instant Processing Company; Thanh Loi Machine Rice-Mills Factory and Son Hoa Plastics Enterprise. On the average, these big Chinese enterprises employed from 500 to 1,000 employees. 50 Since 1990, co-operative and partnership enterprises decreased rapidly, in contrast to the fast growth in the number of private enterprises. This is in keeping with the larger political climate of doi moi, which has been very encouraging towards entrepreneurs. The situation in district 11 ofHo Chi Minh City shows a similar for trend for local Chinese business enterprises (Table 21). Generally, Chinese-owned industries have been able to do more as they are given more scope for independent operation under doi moi. They have sought to tie up with foreign capital and look for foreign markets as well as supplies. Generally, they have done well, with the possible exception of metallurgy, which was one of the traditional Chinese strongholds before 1975. After the war, discarded iron and steel and other metals were bought TABLE21 Dynamic changes of Chinese small-scale industrial enterprises in the non-state sector in district 11 of Ho Chi Minh City, 1985-90 1985 Form of orgamzanon of emerprise

1990

No. of emerprises

No. of workers

No. of emerprises

No. of workers

Co-operative Partnership Proprietorship Join-vemure with local government organizations*

52 420 1,986

2,090 10,182 6,977

27 247 3,039 48

1,028 6,711 11,409 2,045

Total

2,458

19,249

3,361

21,193

• Those enterprises are directly controlled and managed by city, districts, or division authorities. Source: "Phat huy tiem nang cua nguoi Hoa trong chien luoc phat trien kinh te-xa hoi cua thanh pho Ho Chi Minh 1991-2000" [To utilize ethnic Chinese resources in the strategy for the socio-economic development of Ho Chi Minh City in 1991-2000] (1992), pp. 18-19.

N a ti o "'a l .-e cmifi cati o "' a V\d the positio "' of the Chi"'ese

95

to reproduce hardwares such as nails or moulds for mechanical spare parts. The Chinese also produced rice-grinding and husking machines, insecticide sprayers, noodle-making machines, different types of combustible machines, electrical goods (torch lights, irons, transformers), bicycle and motorcycle spare parts, and so on. In the late 1980s, Thanh Loi enterprise, owned by Chinese in district 6, produced the Satarna rice-grinding and husking machines with capacities of 300, 600, 700, and 1,000 kg./hour. This equipment is very popular in the domestic market as well as in Laos and Cambodia. Huu Lien, a Chinese enterprise in district 11 , manufactures bicycle and motorcycle chains not only for the domestic market but also for export to Hong Kong and Taiwan. 51 Since 1985 the general situation for this industry has worsened, due partly to the increasing scarcity of scrap metal and partly to stiffer competition from better-quality imported metal goods in a market saturated with imported items. Many enterprises have had to cease operation because they could not survive the competition. However, the Chinese have done better in the plastics and footwear industries, sectors which the local Chinese are strong in, and which traditionally has been run on a family basis with rudimentary equipment. UFI Plastics, a modern factory owned by local Chinese before 1975, later became stateowned. Presently, the Chinese plastics factories Kieu Tinh, My Le, and the Binh Tien slippers co-operative in district 6 as well as a series of small enterprises in Tan Binh and district 11 produce good plastic consumer goods for the domestic and export markets. Since 1990 private plastic enterprises in general and those of the Chinese in particular have upgraded their equipment. One major capital source for renovating the private sector in the plastics industry is the investment of overseas Vietnamese, most of whom are ethnic Chinese. It was estimated that in the plastics industry, private manufacturers have imported nearly US$10 million worth of machinery during 1990-92. Due to improvements in technology, the plastic products manufactured by the Chinese are still of better quality and preferred by consumers to similar goods produced by Vietnamese private companies or state enterprises.52 Before 1975 the Chinese controlled most of the textile and hide-tanning industries. They owned nine big cotton companies equipped with twelve giant plants employing almost 12,000 workers. All these factories were nationalized and they were left with only small factories. Since 1990 they invested heavily in modern equipment from Taiwan and Japan and have moved on to lead the booming private garment industry ofVietnam. The

96

Chapte,. 3

garment industry has employed and trained thousands ofViemamese workers. The growth of some of these garment enterprises illustrates the progress that has been made since the early 1980s as official economic policy becomes more liberal and growth has accelerated in the last couple of years. A prominent example is the Minh Phung Garment Factory in Ho Chi Minh City formed in 1981 by the local Chinese Tang Minh Phung. It started with only eight workers producing rubber products such as sandals and slippers of all kinds. At the height of its business activity and prior to its alleged involvement in illegal land acquisition, the company was considered a model of successful private entrepreneurship. Another prominent indicator of the re-emergence of Chinese entrepreneurship is the Binh Tien (BITIS) Footwear Enterprise, which has become one of the biggest private manufacturers in Ho Chi Minh City. It was set up in 1982 by a local Chinese, Vu Khai Thanh, as a small co-operative workshop with ten workers, producing sandals and slippers from discarded rubber tyres. In 1989 BITIS was the first private company to be allowed to handle its own import and export directly. As for the case of Minh Phung, BITIS has also invested in modern equipment and exports to many countries around the world. It has also gone into joint ventures with Taiwanese companies to invest in the economy as well as distribute consumer goods. By the end of 1992 BITIS had a work-force of 2,000 with capital worth US$6 million. 53 In the food-processing industry, there has also been a revival of the big Chinese corporations of the pre-1975 days. Examples are renowned companies such as Phuong Toan and Merry Realm Beverage Company mentioned in Chapter 2. But there have also been new enterprises such as VietHuang Noodle Instant Processing Company, established by a local Chinese in 1991 with a Singaporean partner. It imported new equipment valued at about US$1.5 million. Recently, Viet-Huang has gained a leading position in the domestic market and is now venturing into southern China. 54 But the rejuvenation of Chinese industrial capital, as for other sectors of the economy, still faces many problems. Viemam's economy is still backward, hampered by a lack of capital, poor infrastructure, and bureaucratic hurdles. The manufacturing sector has recently seen the problem oflarge-scale smuggling of goods into Vietnam and sold cheaply in the country. Competition from smuggled goods has been so bad that it threatens the survival of some local industries. The total worth of smuggled goods is somewhere around 20 per cent ofVietnam's official imports. 55 Many of these goods are made

Natio.,a l >'ecm ificatio"' a "'d the p os it io "' of the C hi .,ese

97

in China and are very cheaply priced, thus making it difficult for the local industry to stay viable. Besides acting more forcefully against the smugglers, the government should also be revising its tax policy to protect the market for locally produced goods or to give incentives to local producers. The Trading Law and Domestic Investment Law should be promulgated earlier in order to offer to local entrepreneurs the same incentives which foreign investors are enjoying. At the same time, private entrepreneurs should be given equal treatment as officials who run state enterprises with regard to access to economic information and the opportunity for travel abroad to seek out markets.

3. Overseas connections of the ethnic Chinese In conducting business, the Chinese community in Vietnam has benefited from traditional ties within respective Chinese dialect groups. That is to say, speaking a common language helps communication and therefore facilitates business ties and contacts with Chinese of the same or a similar dialect group in another country. This was especially useful with the older generations when kinship ties and having a common ancestral village counted for much more. However, some residual effects of such old dialect ties remain. Before 1975, Vietnam's Chinese community in the South had trade and business ties with the Chinese in Taiwan, Hong Kong, Singapore, Thailand, and Cambodia. Events since then have expanded these regions to include the ethnic Chinese diaspora in North America and Australia. The exodus of ethnic Chinese from Vietnam during 1978-81 was responsible for this. Statistics show that at the end of 1987, 55 per cent ofHo Chi Minh City's total Chinese population of7 4,957 families (415,864 persons) had relatives living in twenty other countries in the world. 56 In districts with a high proportion of Chinese population (districts 11, 5, 6, and 10) the percentages of Chinese having relatives abroad are even higher. As an example, Table 22 sets out the figures for district 5, the second highest in Chinese population after district 11 ofHo Chi Minh City. Table 23, using statistics from a ward in the same ciry, shows the spread of relationship between South Vietnam's Chinese to their kinsmen in overseas capitalist countries. Among the 1,014 Chinese households in this ward, 470 had relatives living in sixteen foreign countries, excluding China. Contrary to the traditional pattern of having relatives in East and Southeast Asia, the largest groups of relatives are to be found in North America, Australia, and Western

Chapte~

98

3

TABL£22 Number of Chinese households having relatives abroad (up ro May 1987) Category T oral district Chinese population Number of Chinese having relatives abroad T oral number of Chinese households Number of households with relatives abroad Number of households with regular contact with overseas relatives* Number of households with non-regular contact with overseas relatives*

No.

o/o

83,197 49,399 16,194 10,569

100.00 59.30 100.00 65.26

10,049

62.05

1,022

6.31

• In contrast to total Chinese family registers of the whole district. Source: Huynh Nghi (1989) p. 20.

Europe. At the beginning of 1975, there were 940 Vietnamese in Australia, including students and diplomatic representatives; these were mainly ethnic Vietnamese. In 1986 the figure rose to 83,049, this time comprising a majority of ethnic Chinese who, as refugees, entered the country during 197881.57 Within the last fifteen years, a large number of refugees, including ethnic Chinese from Vietnam, have made it good in their new countries. Many of them have become good business managers. Increasing numbers are coming back to Vietnam to explore business opportunities made possible by a more relaxed and liberal economic policy under d.Ji moi. Apart from the returned ethnic Chinese ex-citizen, foreign investments coming into Vietnam are also led by people of the Chinese race. Currently the four capital-rich newly industrialized economies (NIEs) are major investors in the region and three of them- Taiwan, Hong Kong, and Singapore - are predominantly Chinese. As a whole, investments from Southeast Asian countries, even those in which the Chinese form a minority, are derived mainly from their wealthy ethnic Chinese tycoons. According to official data in 1989, out of the total140 foreign representative offices in Ho Chi Minh City more than 100 were Chinese-owned or Chinese-related organizations. 58 Five years ago, in 1988, the first foreign private company to come in on a joint venture with a local company was owned by an Indonesian Chinese businessman, Mr Edward Soeryadjaya. His local partners were Chinese from Cholon. This company is called Indovina International and

99

}\latioYial >'e tAYiificatioYI a Yi d the positioYI of the ChiYie se

TABLE23 Number of Chinese households in ward 17 of district 6 of Ho Chi Minh City having relatives abroad No. of households having relatives abroad Order

2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 Total

No.

o/o

261 66 63 21 16 16 5 4 4 4 3 3 3

55.53 14.04 13.40 4.46 3.40 3.40 1.06 0.08 0.08 0.08

470

100.00

Countries where relatives are United States Canada Australia Hong Kong France West Germany Sweden England Switzerland Taiwan Holland Iralia Malaysia Indonesia New Zealand Norway 16 countries

Source: Huynh Nghi (1989), p. 20.

based in Hong Kong. Fortnightly, cement from Indonesia was transported by sea to Ho Chi Minh City port in exchange for scrap iron, which in turn would be sold in Taiwan and South Korea. Other industrial commodities from Hong Kong and Thailand were traded by Chinese there for Vietnam's coffee, tea, fish, shrimps, and leather products. 59 From the passage of the Foreign Investment Law in December 1987 to 25 December 1992, 556 foreign investment projects in Vietnam with a total capital ofUS$4.6 billion had been approved. 75 per cent of the projects or about 80 per cent of the capital went into the southern provinces, particularly Ho Chi Minh City and Vung Tau. Among the total capital invested, Taiwan, Hong Kong, Singapore, and Indonesia (mainly Indonesian of Chinese origin) accounted for 60 per cent. Hong Kong, with ninety-eight

100

Chapte,. 3

licences approved, became the country with the greatest number of projects, valued at US$475.5 million. Taiwan with seventy projects had the highest invested capital ofUS$1.09 billion, about 25 per cent of foreign capital invested. Singapore is Vietnam's largest trading partner and its capital investment, currently ranking eleventh, is fast catching up with those ahead. Since the Sino-Vietnamese border was informally reopened in the late 1980s, especially after Sino-Vietnamese diplomatic relations were normalized in October 1991, the ethnic Chinese in Vietnam have found it easier to travel to China in search ofbusiness opportunities. China itself has undergone economic reforms in recent years, and southern China has been widely recognized as one of the most promising growth area with vast economic potential. This has given rise to a form of people-to-people relationship between China and Vietnam which has hitherto been impossible, a relationship which is based on capitalist practices and governed by profits rather than ideological solidarity though that is still a feature of SinoVietnamese official ties.

NOTES 1. Vo Nhan Tri (1990), pp. 64---65. 2. Nguyen Hoang (1975) , pp. 6-10. 3. Nguyen Hoang (1975), pp. 7-9; Vo Nhan Tri (1990), p. 69. 4. Nghien cuu Lich su, So 6 (1977), p. 20. 5. The Hoa in Vietnam, Dossiers (1978), vol. 1, p. 81. 6. Nguyen Hoang (1975), p. 7. 7. For points 10 and 11 of this Statement, see Nguyen Hoang (1975), p. 10. 8. Vo Nhan Tri (1990), p. 66. 9. "Nguoi Hoa o Vietnam va chinh sach cua Dang ta'' [The ethnic Chinese in Vietnam and our Party's policies] (1989), p. 10. 10. C hen (1987), p. 57. 11. Wu and Wu (1980), p. 86. 12. C hen (1987), p. 57. 13. So Lieu thong ke CHXHCN Vietnam [Statistical data of the Socialist Republic ofVietnam) (1990), p. 16. 14. Vo Nhan Tri (1990), p. 7 1 15. Chen (1987), p. 58. 16. Chen (1987), p. 58.

101

17. The Nguyen (1978), p. 12. 18. Ibid., p. 12. 19. "Hanoi Takes a Grip on the South", Far Eastern Economic Review, no. 21 (26 May 1978), p. 81; Yo Nhan Tri (1990), p. 94. 20. Thayer and Marr (1980), p. 29. 21. Nghien cuu Lich su, So 6 (1977), p. 21. 22. The Nguyen (1978), p. 12. 23. Saigon Giai Phong, 29 December 1976. 24. "Comrades Curb the Capitalist" (14 April 1978), p. 12. 25. Tran Bach Dang (1988), p. 42. 26. Nhan Dan [People's newspaper], 25 March 1978; Vietnam Courier, no. 72 (May 1978), p. 14. 27. Nhan Dan, 27 March 1978; Thayer and Marr (1978) , p. 30. 28. Vu Lo (1978), p. 60. 29. Do Muoi (1979), p. 11; Vu Lo (1978) , p. 61. 30. Glazunov (1981) , p. 178. 31. Nhan Dan, 5 November 1978. 32. Nguyen van Canh (1983), p. 37; Far Eastern Economic Review, no. 21 (26May 1978), p. 81. 33. Nhan Dan, 27 October 1978. 34. Nhan Dan, 9 October 1979, 20 October 1986; 6th National Congress of Communist Party ofVietnam (1987), p. 21. 35. Beresford (1988), p. 153. 36. Bao "Doan Ket"[Doan ket newspaper], no. 424 Qune 1990), p. 6. 37. Chen (1987) , p. 64. 38. Nghi Doan, Huynh Nghi, and PhanAn (1989), pp. 4, 7, and 18. 39. Phan Aneta!. (1990), pp. 33 and 105. 40. "Nguoi Hoa o Vietnam va chinh sach cua Dang ta" [The ethnic Chinese in Vietnam and our Party's policies] (1989), p. 10. 41. "Economic Management in Ho Chi Minh City", Vietnam Courier, no. 8 (l984) , p.19. 42. "Nguoi Hoa o Vietnam va chinh sach cua Dang ta" [The ethnic Chinese in Vietnam and our Parry's policies] (1989) , pp. 23-25. 43. Ibid., p. 25. 44. Far Eastern Economic Review, 27 April1989, p. 68. 45. Vietnam Dau Tu Nuoc Ngoai [Vietnam investment review] , So Tet Quy Dau 1993 [Special issue for the 1993 New Year] (1993) , p. 4. 46. Vietnam Dau Tu Nuoc Ngoai [Vietnam investment review], 22-28 February 1993, p. 7.

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47. The Hoa in Vietnam, Dossiers (1978), vol. 1, p. 81; Ungar (Wimer 1987-88), p. 606. 48. Vietnam Couriers, no. 8 (1984), p. 19; no. 6 (1985), p. 18; no. 10 (1988), p. 18. 49. Nghi Doan, Hyunh Nghi, and PhanAn (1989), pp. 15-16. 50. Vietnam Investment Review, 22- 28 February 1993, p. 7; Phan An and Phan Xuan Bien (1991), p. 21; "Phat huy tiem nang cua nguoi Hoa trong chien luoc phat trien kinh te-xa hoi cua thanh pho Ho Chi Minh 1991-2000" [To utilize ethnic Chinese resources in the strategy for the socio-economic development ofHo Chi Minh City in 1991-2000] (1992), p. 27. 51. Nghi Doan, Huynh Nghi, and Phan An (1989), p. 38. 52. "Phat huy tiem nang cua nguoi Hoa trong chien luoc phat trien kinh te-xa hoi cua thanh pho Ho Chi Minh 1991- 2000" [To utilize ethnic Chinese resources in the strategy for the socio-economic development of Ho Chi Minh City in 1991-2000] (1992), pp. 32-33; Vietnam Investment Review, 22- 28 February 1993, p. 7. 53. Vietnam Dau Tu Nuoc Ngoai [Vietnam investment review] 15-30 December 1992, p. 16; Vietnam Dau Tu Nuoc Ngoai [Vietnam investment review], So Tet Quy Dau 1993 [Special issue for the 1993 New Year], p. 8. 54. "Phat huy tiem nang cua nguoi Hoa trong chien luoc phat trien kinh te-xa hoi cua thanh pho Ho Chi Minh 1991-2000" [To utilize ethnic Chinese resources in the strategy for the socio-economic development of Ho Chi Minh City in 1991-2000] (1992),pp.31-32. 55. Vietnam Investment Review, 18- 24 November 1991 , p. 3 56. "Phat huy tiem nang cua nguoi Hoa trong chien luoc phat trien kinh te-xa hoi cua thanh pho Ho Chi Minh 1991-2000" [To utilize ethnic Chinese resources in the strategy for the socio-economic development of Ho Chi Minh City in 1991-2000] (1992), p. 9. 57. Coughlan (1989), p. 1. 58. "Vai tro cua nguoi Hoa trong quan he kinh te doi ngoai cua thanh pho Ho Chi Minh" [The role of ethnic Chinese in the foreign economic relations of Ho Chi Minh City] (1989), p. 54. 59. "Vai tro cua Hoa kieu trong kinh te Vietnam" [The role of Overseas Chinese in the Vietnamese economy], Song Moi [Vietnam weekly] (20 July 1990), p. 17.

Summa~y at\d cot\clusiot\s

The history of Chinese settlement in Viemam evolved through several stages. The first massive influx came into what is today North Viemam as long ago as 214 BC; subsequent waves were to follow, brought about by political instabilities or dynastic changes in China. Viemam had traditionally been a refuge for defeated soldiers and fugitive scholars from China. These early settlers were assimilated through the centuries and no extant ethnic Chinese community in Vietnam could trace its roots direcdy to those times. Viemam's rulers had also deliberately crafted state policies to assimilate Chinese immigrants, one significant period being from the fourteenth to the sixteenth centuries. So what remains identifiable as centres of Chinese settlement belongs to more recent history; the second half of the seventeenth century. Then there had been gathering points of Chinese immigrants in the northern and central parts ofViemam such as Thang Long, Pho Hien, and Hoi An. Those Chinese communities then were engaged mainly in trading and handicraft. However, their trading activities were not maintained and developed in the centuries that followed. Most of them did their seasonal business and after a period of time returned home to China or emigrated to other countries. But from the late seventeenth century onwards, historical and socioeconomic conditions permitted the beginnings of a Chinese migrant community as a relatively permanent entity within the ethno-demographic and socio-economic structures of Vietnam. There was, first, the large inflow of Chinese immigrants to the southern part ofViemam. They congregated in distinct areas, being permitted to do so by the ruling Nguyen lords at that time. The relatively large numbers and the longevity of these communities saw the birth of community organizations based on dialect affinity and kinship ties. These were known as bang or dans. Business being a major lifeline of the Chinese, a Chamber of Commerce was also set up together with other kinds of business associations based on trades. These varied organizations were to take on socially and politically important roles in setting down ground rules for doing business, mediating in disputes, and providing for the welfare and education of their members. It was a pattern largely similar to ethnic Chinese migrant communities in other Southeast Asian countries. Since the end of the seventeenth century; it may also be said that the Chinese communities which settled in cities or smaller rural towns played an important role in economic development particularly in the South. They facilitated the distribution and circulation of goods for the Vietnamese domestic market and raised the standard of handicraft skills. Their successful endeavour in commerce also enabled the Chinese to accumulate capital and

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Chapter 4

pick up business skills which stood the community in good stead to capitalize on economic opportunities during the ensuing period of French colonization. An analysis of ethnic Chinese economic experience in Vietnam since the days of French colonialism reveals some significant trends. The Chinese served as the middlemen for the French; in the course of acting as middlemen they not only prospered but also developed a closer interaction with the larger Vietnamese community. This gave them a greater familiarity with local conditions, which was to be useful for their business long after the French had lefi:. Throughout this period, the Chinese stuck closely to their traditional and conservative approach to business, which was self-reliance. Thus partnership and corporation did not become the main forms of organization for ethnic Chinese enterprises in Vietnam under French domination. However, the Chinese business culture was to some extent influenced by the French. Chinese capital, in coexistence with French capital, played a very important role in the formation of the colonial economic structure and capitalism in Vietnam, contributing to the expansion of the internal market and the accumulation of capital for industrial development. Growth and change for the Chinese business enterprise was slow and mainly medium in size. Capital reserved for industrial production was not substantial and was mostly invested into industries closely linked to their trading activities. The discriminatory policies of the French in some instances also produced unsettled minds in the Chinese community on whether to sink their roots in Vietnam, which in turn affected their will to invest. In their business ventures, the Chinese did not face great competition from the indigenous Vietnamese. What was more problematic for them was getting around the restrictions imposed by the respective government at any one time. Chinese business not only expanded in quantity and scope but business structure became more sophisticated. This was particularly so during the 1960s when they increased their production capital and transformed gradually from being traditional traders and middlemen to industrialists. Many small and medium-sized enterprises upgraded into large-scale enterprises with modern equipment. In this, they were also well-served by connections with Overseas Chinese. For instance, Taiwan was instrumental in providing technology and skilled manpower in some of the industrial projects. Politics of course had a role in this. In the 1960s, Taiwan and the ROV were dose strategic friends in the U.S.-led alliance against communism in Asia.

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So the ethnic Chinese can be said to have contributed greatly to the development of the domestic market under French colonial rule and the development of modern industries such as textiles and chemicals for the ROV. This was to be a two-edged sword. It brought development bur it also posed difficulties for indigenous entrepreneurs who wanted an equitable share of the national economy. Economic success our of proportion to their actual numbers in the total population set the local Chinese apart from the Viemamese. This situation was similar to those experienced by other countries in the region. The private capitalist sectors, in general, and the Chinese monopolistic position in trading, banking, and manufacturing, in particular, were destroyed by socialist transformation in South Viemam after 1975. These drastic changes with the exodus of hundreds of thousands of Viemamese and ethnic Chinese in the 1978-81 period wrecked the market economy in the South and created a loss of skilled labour, expert managers, and capital. This greatly set back post-war economic reconstruction. Although ethnic Chinese participation in the country's economy was greatly reduced by these political upheavals, what remained of Chinese capital was still considerable. This was manifested by Chinese activities in small-scale industry and handicraft. During the 1980s the ethnic Chinese in Ho Chi Minh City produced at least one-third of the gross output of small-scale industry of this city, even though they comprised only 13 per cent of the city's population. The Chinese effort not only brought in cash, created jobs, it also taught people some valuable lessons such as how to mana:uvre in a centrally planned economy, which was unfriendly to private business, and how to get around problems such as scarcity of raw materials, lack of capital, unrealistic tax and pricing system, and bad distribution network. Ethnic Chinese businesses gradually recovered in the 1980s and following the VCP's 1986 acceptance of the market principle and endorsement of a multi-sector economy, they were able to make significant progress. Many have resumed their trading activities. Others have moved from trade to set up medium- and large-scale manufacturing enterprises, usually with the help of capital from relatives who had fled overseas after 1975. Local Chinese enterprises such as plastics, textiles and garments, shoes, and foodstuffprocessing have regained their previous status as major players in Vietnam's private-sector light industry. There have also been a return to areas such as banking and import-export, though at a much reduced level. A long-term effect of present economic trends made possible by a liberal pro-business

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political climate may be to see the local Chinese community regain its 1975 economic pre-eminence. What would that mean for Vietnam? A question like this touches on so many important national issues, issues such as racial harmony, economic security, and even foreign policy. To be precise, would a resurgence of ethnic Chinese businesses leading to a disproportionate share of economic wealth give rise to resentment by the Vietnamese? If there is such resentment, is it the role of the government to manage the scope and extent of the economic activities of any one community so that social harmony is not severely affected? If a sizeable portion of a country's economy is in the hands of an ethnic minority, does it constitute a lack of economic independence and all that that implies for national security? In the context ofVietnam and its ethnic Chinese citizens, these issues are also linked to the question of the country's relationship with China, that eternal gigantic country just across the northern border. Is the local Chinese community a potential threat should Sino-Vietnamese relationship become tense again? Should increasing business ties between Vietnamese citizens of Chinese origin and ethnic Chinese elsewhere be viewed from a strictly economic perspective or has it larger strategic implications? The answers to these questions are beyond the ken of any one academic researcher to provide. Essentially, the outcomes of the future will always depend on many factors. The economic role of the ethnic Chinese in Vietnam will be determined by official policy, public feelings, the performance of the economy, the situation outside Vietnam and, not least, the conduct of the local Chinese business community itself While each of them plays a role in influencing future eventualities, they are themselves shaped by each other in the process. What may be said with some certainty at this stage is that the ethnic Chinese have contributed in concrete ways to economic development, which the Vietnamese Government is pursuing under doi moi. Whether they are business contacts with fellow Overseas Chinese, enormous capital resources, entrepreneurial talent, and the skills of their workers, these are the resources that Vietnam needs to plug into the international market economy. Any practical and rational government will want to utilize rather than hinder these assets among its population. Another certainty is that the ethnic Chinese will be conducting their business in an environment that is increasingly supportive of private entrepreneurship. This enlarged economic space will allow more room for manccuvre and more linkages to be formed. If one reviews the historical

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narrative so far, major impediments to Chinese business activities tend to arise from political needs. In the days ofNgo Dinh Diem, citizenship was the issue. Today the nationality of the local Chinese is no longer an issue. In the years immediately following the 1975 liberation of the South, it was ideology. However, that sort of ideological zeal no longer energizes the economics or politics of the country. For the future, both the Vietnamese state and its ethnic Chinese citizens should recognize certain obligations on each side. The government should treat the ethnic Chinese minority in the same way it does the Vietnamese majority and other minority groups. Preferential treatment, be it in economic, political, social, or cultural, must be abolished. All citizens must be respected and protected according to the United Nations' Human Rights Declaration. The local Chinese must consider themselves as citizens of the country, enjoying equal rights and shouldering equal responsibilities. They must abide by the nation's laws and support wholeheartedly the government's policies for the common purpose of national reconstruction as long as these policies are not racially discriminating. To achieve these goals, the government has to create a conducive economic environment which allows for free and fair competition between entrepreneurs of all ethnic groups and in all trades. It must resist its age-old penchant to monopolize means of production, distribution, and circulation of goods. In the event of a conflict of interests, all parties must remain calm to resolve their problems through peaceful negotiation, always with regard for national unity, equality, and racial harmony. Another condition of utmost importance to obtain satisfactory solution to these conflicts is the nonintervention of all foreign authorities into Vietnam's internal affairs. The local Chinese should not allow themselves to be used as a tool to serve any foreign government's interest. If the above conditions are met, the Chinese community can be assured of their rights and status in Vietnamese society and, in return, the ethnic Chinese can be expected to contribute willingly and effectively to the rebuilding and modernization ofVietnam.

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Jndex

Assimilation of ethnic C hinese, 14, 17- 19, 28 Association of ethnic Chinese, 30-31, 33-35

Bang, 34-35 Business association, 35-36, 47--48, 57,67 Chemical industry, 68-70, 96--97 Chinese business network, 48, 97- 99 Chinese capital investment, 4 1--44, 9 1-97 Chinese compradores, 79-83 Chinese Chamber of Commerce, 35 Chinese human resource, 72-73, 9293

Chinese grouping administration, 3435 Chinese status, 28-30 Chinese resource as domestic resource, 4 1-44,92-100 Cholon, 15, 18- 19, 25 Clan association, 35- 36 Compradore bourgeoisie, 79-83 Discrimination against Chinese, 1719,28,90 Domestic trade, 17, 44-46, 87- 91 Economic organization, 35, 47--48 , 57, 67 Emigration, 14- 16 External trade, 18, 56-58, 90-9 I

126

Finance and banking, 60-63, 81-82,

91 Foreign investment, 41--44, 91-97 Foreign economic relation, ethnic Chinese, 46--47, 62-65, 97-100 Geographical distribution of Chinese,

Organization of ethnic Chinese, 18,

30-31,33-35 PRG (Provisional Revolutionary Government), 81-82 Processing industry, 64-70, 91-97 Population growth, 21, 25-27

16,22- 28 Haiphong, Chinese in, 25- 26 Hanoi, Chinese in, 25-26 Ha Tien, Chinese in, 15-16 Hoi An, Chinese in, 18 Ho Chi Minh City, Chinese in, 26,

87-89

Quan 5 (old Cholon), 23, 87-88 Quan 6 (new Cholon), 88 Quan 11, 94-95 Quang Ninh, ethnic Chinese in, 22-

25 Rice-milling industry, 64-67 Right status of Chinese, 28-30

Immigration. See Emigration Labour force of the ethnic Chinese. See Chinese human resource

Socialist transformation, decline of ethnic Chinese, 79-87 Saigon, 15-25 Small-scale industry and handicraft,

Metallurgic industry, 68-69 Minh Huong, 28-29 Mining, 20,64

Service, 58-59, 88-89 Speech group of ethnic Chinese, 30-

Nationality law, 17-19,46, 99 Nationalization policies, 14, 17, 19,

Surname association. See Clan association

70-71, 92-95, 99

31

28,80-87 Occupation of ethnic Chinese, 32-33,

47--48

Textile industry, 67-68, 99-100 Transport, 71-72

THE AUTHOR Dr Tran Khanh is a researcher with the Institute of Southeast Asian Studies in Hanoi, where he specializes in modern socio-economic problems, especially the issue of the Overseas Chinese community in his country. This was the subject of his postgraduate work at the Leningrad State University. His two recent books in Vietnamese were The Role ofthe Ethnic Chinese in the Economies ofSoutheast Asian Countries (1992) and Singapore's Success in Economic Development (1993).

Economic reforms in Vietnam have allowed its ethnic Chinese citizens to prosper, but growing Chinese economic strength harbours the seeds of political problems. The topic is also meshed with the larger concern of Sino-Vietnamese relations, which in the best of times can be coloured by a suspicion which goes back centuries. In the worst of times, as in 1978/79, both sides were engaged in open warfare. To understand the current situation, The Ethnic Chinese and Economic Development in Vietnam delves into the origins of Chinese settlement in Vietnam, tracking the flow of history through the major events which have shaped the Chinese mercantile community and made it what it is today. The most significant feature ofDrTran Khanh's work is that it draws on Western, Russian, and Vietnamese sources, as well as the writer's own familiarity with the actual situation on the ground.

ISBN 981-3016-67-1