A recent Linkedin post alerted me to a crackdown on foreign land ownership. It linked to an article in the local press about Chinese investors buying land in Da Nang through “various ruses.” As I read the article I came to realize that the Linkedin poster hadn’t really read into the article that much, or he had and was trying to squeak through a potentially racial attack on Chinese in Vietnam.

The article, linked here, outlined the Chinese methods for obtaining land. First, they became minority shareholders in a company with Vietnamese shareholders contributing land as their capital and then increasing their shareholding to 100%, a technically legal acquisition. Second, they outlined the use of Vietnamese-Chinese citizens as nominees who held the land use rights although they did not have the financial means to own 10-12 plots of land themselves.  Unlike Thailand, Vietnam has yet to enact legislation that prohibits a nominee ownership structure and both techniques for land ownership are allowed under the law.

But that isn’t the real point of the article. After outlining the concerns about foreign ownership of land in border and coastal regions, the article discusses Chinese investment in general in these areas, calling out 149 Chinese invested companies in border regions. They continued to, paraphrasing sources in the Ministry of Defense, state that

while these companies have basically followed the regulations in Vietnam, they have been instances of bringing Chinese workers into Vietnam as tourists and using their work without reporting it to the authorities.

Meanwhile, several companies have hidden themselves behind the cover of a Vietnamese firm. This means that the firm is legally Vietnamese, but its owners, operators and managers are all Chinese.

In some cases, some firms have been found disguising themselves as normal companies to commit hi-tech crimes and even producing and/or trading in narcotics. Other firms have evaded taxes and caused severe environmental pollution.

So far, authorities have handled a number of cases involving Chinese companies, including three cases in which 63 Chinese laborers failed to declare temporary residence, three with 87 Chinese laborers having no work permits, and one involving 285 Chinese workers clashing with Vietnamese workers.

Reading these allegations, purportedly from a ministry official, opened my eyes wide. It reads like a list of accusations against Chinese investors and Chinese in general. It brought to mind something that I understood in general, but may not have understood the reasons behind: that Vietnamese strongly dislike Chinese. And I began to wonder why this was.

I have heard that Chinese are smelly, noisy, obnoxious. The adjectives used to describe Chinese tourists in Vietnam are much the same as I have heard used to describe American tourists in other parts of the world. Arrogant, expecting preferential treatment, expecting locals to speak English, etc. I myself am not fond of American tourists, but that comes from exposure to other points of view. It is not enough for me to hate Americans.

So why do Vietnamese hate Chinese?

HISTORICAL REASONS

A basic Google search on the question returns pages and pages of results citing historical reasons.

Before Vietnam became an independent nation it was an administrative region of China. This case existed for a thousand years until Vietnam fought and won its independence. An uneasy peace existed for a while with the two countries in various types of relationships. For a brief period of time China again conquered Vietnam, but Vietnam again won its freedom. During the Mongol expansion Vietnam fought off Chinese invasions multiple times. And though victorious, Vietnam’s rulers decided to maintain a vassal position relative to China to preserve the peace and to avoid unnecessary deaths in war.

Vietnamese court officials trained in China. They brought Confucianism south and inculcated the court and the country with the Chinese philosophy. For many international observers, this–and the subsequent Communism of both countries–is enough to warrant lumping the two countries together. This is a mistake. Despite this cultural and administrative similarity, Vietnam remained independent of China.

After WWII, China was named as administrator of northern Vietnam until such time as the French could resume their control of the colonies. And although not an enthusiastic supporter of Communist Vietnam, China did provide some troops and arms to fight the Americans during the Second Indochina War. This was all obviated, though, when China supported the Khmer Rouge in the late 70s and, in response to Vietnam’s invasion of Cambodia, crossed Vietnam’s borders itself. This, the Third Indochina War, was a major breach of Communist relationships. Vietnam fought the Chinese back and preserved its territorial sovereignty, for the time.

More, since the end of China’s invasion, they have claimed territory in the East Sea (South China Sea) as their own, bogusly trying to possess the Spratly and Paracel Islands and obtain sovereignty over the territory and natural resources stretching down what is essentially all of Vietnam’s coastline. This has led to continuing tensions between Vietnam and China as Vietnam has, historically, laid claim to these islands and patroled them for centuries in an effort to promote international trade.

If Korea hates Japan for less than fifty years of occupation, then Vietnam certainly has reason to hate China for its historical actions in occupying, invading, bullying, and otherwise trying to control Vietnam. But there are other reasons, too, and in examining them, foreign investors may learn a lesson in how to approach doing business in Vietnam.

PRESENT REASONS

A Google search using Vietnamese language terms returned an article from Nghien Cuu Quoc Te, here, that outlines several reasons that Vietnamese–on the ground–hate Chinese. It is an opinion piece by Nguyễn Hải Hoành, professor and author, about the relationship between Vietnam and China.

The first reason that Hoanh gives for the dislike of China by Vietnamese is the Chinese failure to understand Vietnam’s situation. The two countries share a border but the Chinese see Vietnam as poor and backwards, undeveloped and damaged. They do not look at the people or the culture or the family or the worker. They do not try to understand Vietnam on a Vietnamese basis.

The second reason is that Chinese think they are better than Vietnamese. Whenever they come to Vietnam they look down on the quality of Vietnamese goods, food, manufactures, services. They judge Vietnamese for the corruption of their government, which is little worse than China’s own, and for the value of its currency. For many reasons the Chinese judge Vietnam as inferior, and the Vietnamese resent this.

Third, when China began investing in Vietnam in the 90s, they ignored the then existing regulations. They repatriated profits without declaring them, ran up debts and defaulted on loans, didn’t pay taxes, and otherwise ignored the legal authorities of Vietnam. This made it difficult for the second wave of investors–from Japan and Korea–who had to overcome the lack of trust in foreign investors left behind by the Chinese misbehaviors.

Fourth, Chinese exporters failed to understand the consumer culture in Vietnam. Because they saw Vietnam as a poor country that didn’t consume quality goods, they tried to export to the market the poorest quality products. For example, the Trung Khanh motorcycle, a poorly made motorcycle, that sold very few units in the Vietnamese market because of its poor quality. Because of this, and other actions of Chinese businesses, Chinese products have gained the reputation of “poor quality”.

CONCLUSION

I haven’t had a chance to ask around, but according to a 2015 PEW Survey, only 19% of Vietnamese like China. This compared to 82% who liked Japan. It is obvious that the relationship is not a positive one. And for good reason. From a thousand years of occupation to repeated attempts–some as recent as 1989–to occupy portions of Vietnam to contradictory claims in the East Sea of territory that has historically belonged to Vietnam China has epochs of attempts to control a people who obviously do not want to be controlled.

Not only that, but their treatment of Vietnam in the present day, besides the territorial claims in the East sea, ranging from failing to understand the Vietnamese people, their interests, their market, and their consumption patterns have all created a situation in which China sees Vietnam as a dumping ground for its waste. Something the Vietnamese do not appreciate and something that could have been avoided if China had bothered to show a modicum of respect for Vietnam’s culture, history, and people.

As foreign investors and business people coming into Vietnam, don’t make the Chinese mistakes. When I first started working here foreign investors would come into Vietnam expecting to dictate terms to Vietnamese firms simply for the opportunity to grasp at foreign capital. Even then it was presumptuous and distasteful on the part of the foreigners. It still is happening, too, foreigners thinking they can dictate terms to Vietnamese businesses because they have “more experience” are “western” or “developed” and have a “moral superiority” to a non-Christian nation.

Don’t be the ugly investor who comes in with an attitude of arrogance and superiority. You will be disappointed when the Vietnamese see through your narcissism and refuse to do business with you on your terms.