Risk Managers pay attention
In recent years, Vietnam has been the focus of many companies looking for alternatives to China. Vietnam was at the top of the list – also due to Vietnam’s clever behavior. As a sales market, but also as a production location with lower costs and less political influence.
👉However, a few things have significantly changed lately. Again without proper attention in the Western hemisphere. A recent publication of the Chatham House helps to understand the new developments.
Highlights of the Chatham House Article, dated May 9th:
⏩“In just a few weeks, the Communist Party of Vietnam (CPV) has shredded its reputation for boring political stability
⏩The new-look Vietnamese leadership appears more focused on regime survival than further liberalization. The country now appears to be a much riskier bet. It seems the CPV leadership is willing to sacrifice some economic growth in the interests of tighter political control.
⏩…..the tendency towards repression and ever-greater control will be baked into the system. This will make it harder for democratic countries to work with Vietnam. The CPV leadership will find greater acceptance in Russia and China.
⏩Although this power struggle is not about foreign policy, it will result in a turn towards China and away from the West.
⏩What we are seeing is a takeover. The winners of this power struggle are the hardliners: the police generals and the dogmatic Leninists. A recent instruction (Directive 24) instructs officials and party members to limit contacts with foreign organizations.
⏩📌The CPV has successfully ‘played’ Western expectations on this score for some time. With the new leadership in place, the CPV’s affinity with its Chinese political counterparts will be harder to disguise.
⏩Fear of being ensnared in the anti-corruption campaign has caused officials to avoid taking decisions, delaying job-creating investments.
📌An economic slowdown may cause popular discontent and it is not clear how the CPV will manage mass disaffection.“
👉 For the entire article see the link in the comment section
In Summary
📌“Internationally, Vietnam will continue to trumpet what it calls ‘bamboo diplomacy’, bending with the wind while remaining firmly rooted. Behind the slogan, however, Vietnam is turning away from the West and towards like-minded authoritarian partners.“
The aim is NOT to denigrate Vietnam or business relations with Vietnam. On the contrary, however, increased attention is essential.
Source Graphic & Text: Chatham House, May 9th, 2024
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