Vietnam, Hon Hai and riding tigers

Whilst Tiger wins relentlessy on the golf course other Tigers in Asia are riding higher and fast and represent a major change in global business. Everyone should take a closer look.

Vietnam 's 84 million people are ruled by Communists and now have second-fastest-growing economy in Asia, behind China. Economic growth, a healthy 8.2% this year will jump to 9% in 2007 aided by huge investments from overseas - after they were admitted as the 150th Member of the World Trade organisation subsequent to Dubya's visit last year. The median age of the population is 25, and is now a model of stability, as opposed to China, which has 800 million poor points out Nguyen Van Lang, Vietnam’s vice minister of science and technology.

Intel has announced it was tripling its investment in Vietnam to $1 billion. Taiwan’s Hon Hai group, one of the world’s largest contract electronics manufacturers, announced plans to invest $5 billion in the developing country.
Last week the Vietnamese Government was busy in Palo Alto wooing the new generation of Vietnamese Americans, children of those who fled to the Bay area (Viet Kieu) after the fall of Saigon in 1975 at a 2 Day networking event organised by the Vietnamese Strategic Ventures Network and Vina Capital associated with the highly experienced Draper, Fisher Jervetson financial group (who were behind Baidu see Lord Patel Aug 2005 and Skype amongst many others) which they intend to be an annual event. VSVN claims to represent investors and other professionals supporting the global Vietnamese technology and business community.

There is still resistance to dealing with the communist government and many who harbour resentment but a guy like Thinh Nguyen, who founded valley-based Pyramid Software Development, set up an office in Ho Chi Minh City in 2001 takes reflective view.

“There still are people who don’t like it,” he says. “But now people understand you have a right to do business wherever you want. The community is getting more mature.”

Dealing with the communists is however not easy Milpitas based Sigma Designs a semicon ductor design company who set up an office in Ho Chi Minh City eight years ago complains of red tape but speaks highly of the smart, hard-working and loyal employees, he said. “We were surprised at how fast our young engineers learn. We don’t have to throw books at them.”

In Today's Wall Street Journal there is a must read article by Jason Dean about Taiwan based Hon Hai who have invested heavily in China and now sinking huge resources into Vietnam.

"The Forbidden City of Terry Gou" is the result of secretive 56 year old founder of Hon Hai (Foxconn) deciding to open up his massive enterprise to scrutiny and Jason visits the square mile Longhua Science & Technology Park in Shenzen - so massive they serve 150,000 meals a day which he carefully calculates requires 10.6 metric tons of dry rice.

Hon Hai's revenue has grown more than 50% a year in the past decade to $40.6 billion last year. It is expected to add $14 billion in revenue this year. That is roughly the equivalent of Motorola adding, within a year, the sales of CBS Corp.

Hon Hai and its affiliates make products not only for Apple, Nintendo, H-P and Motorola, but also cellphones and parts for Nokia Corp., PlayStation 2 sets for Sony Corp. and computer parts for Dell Inc. who have been customers since 1995.

The size ansd scale of this secretive company is immense more than 450,000 workers are now employed across about a dozen provinces of China. Thousands more work in facilities run by Hon Hai and its affiliates across the globe -- including Hungary, Mexico and Brazil -- as the company sets up plants closer to its customers' operations. The company is one of the biggest exporters in the Czech Republic.

Terry is said to be worth US$10Bn, a fanatic at cutting costs (but not cutting corners) whose first business was making channel changing knobs for TV sets, he is described by one commentator as having "US$10Bn in dimes and quarters."

Now Terry is getting more reflective about succession . There is no natural successor -- his son and daughter don't work at the company.

He now wants to step down and takes as his example the fate of the Qianlong Emperor, who ruled from 1736 until 1796, when he was 84 years old. Qianlong greatly expanded the Qing Dynasty, making China perhaps the wealthiest country on earth at the time. But his judgment failed in his later years, and the Qing began a decline that led to its eventual demise. "He controlled the whole of China for 60 years," says Mr. Gou. "He stayed there too long. So I want to sit back and give young people more responsibilities, when I'm still young."