A Marxist Mini-Dragon? Entrepreneurship in Today's Vietnam

By Dana, Leo Paul | Journal of Small Business Management, April 1994 | Go to article overview
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A Marxist Mini-Dragon? Entrepreneurship in Today's Vietnam

Dana, Leo Paul, Journal of Small Business Management

In contrast to reform in Eastern Europe and the former Soviet Union, where a market economy was decreed to have replaced communism, liberalization in Vietnam has involved ushering in entrepreneurship as a complement to state enterprise, rather than as a replacement of Marxist ideals. Without overthrowing the socialist establishment, doi moi (literally "renovation"), the Vietnamese version of perestroika is allowing small businesses to play an increasingly important role in the economic development of the nation. New billboards promote doi moi, yet old posters continue to urge workers to follow socialism. This article summarizes the evolution of economic developments in Vietnam, followed by a description of the current state of entrepreneurship.

The lack of published research about Vietnam made this study especially interesting and challenging. Methodology involved document analysis, observation of transactions and interactions among entrepreneurs, and in-depth interviews of entrepreneurs and consultants, on location in Indo-China.

Historical Background

Tonkin, the northern part of Vietnam, was a province of the Chinese Empire from the year 42 A.D. until the fall of the T'ang dynasty in 906. It subsequently became independent in 938, reverting to Chinese rule from 1407 until 1427. Further south, the kingdom of Champa (central Vietnam), was founded in the third century. It was eventually absorbed by the expanding Vietnamese kingdom, but a lengthy civil war split the latter in 1660. The extreme southern part of Vietnam remained under Cambodian rule until a century later. Vietnam was unified for the first time in 1802.

In order to protect missionaries in Vietnam, France invaded the south in 1859. Eight years later, the status of the latter was changed to the colony of French Cochin-China. In 1885, France established a protectorate over the rest of Vietnam.

In 1941, Japan occupied Vietnam. After the Japanese surrender in September 1945, Nguyen That Thanh, calling himself Ho Chi Minh--literally "the brilliant one"--declared himself president of the independent Republic of Vietnam. France sent its military to reassert French rule, and by 1946 France had regained control of its former colony of Cochin-China but not of its former protectorate to the north.

A 1954 armistice agreement in Geneva created the 61,293 square mile Democratic Republic of Vietnam (North Vietnam) north of the 17th parallel with Hanoi as its capital. The Republic of Vietnam (South Vietnam) was limited to 67,108 square miles in the south with Saigon as its capital. When the communist Viet Minh took control of North Vietnam, the government instituted a program of land reform. Consequently, several hundred thousand small-scale landowners fled to the south, where the spirit of entrepreneurship survived.

In 1964, U.S. President Lyndon Johnson sent forces into battle to assure the independence of South Vietnam, but it was overrun by the north in 1975. The Socialist Republic of Vietnam was created in 1976. Hanoi, formerly the administrative capital of Indo-China and later the capital of North Vietnam, became the capital of the new Socialist Republic.

With the merger, even the smallest business in the south was nationalized. All of the bookstores were shut down and their inventory confiscated. Government newspapers replaced the existing dailies. Private homes were raided and "decadent" literature was burned. Schools of bourgeois learning were closed as the Hanoi government tried to spread Marxist ideology.

All bank accounts in former South Vietnam were frozen, and the South Vietnamese were told they had 12 hours to take their cash to the banks because the South Vietnamese currency would become worthless. The savings of each family was limited to the equivalent of 1,000 French francs (approximately $200 U.S.). At the Fourth National Congress of the Communist Party of Vietnam, Trong Chinh declared that:

The State of the Socialist Republic of Viet-

nam is a proletarian dictatorship state.

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