Reaction to death of General Giap – essential investment lessons

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General Giap
General Vo Nguyen Giap

The state funeral procession on 13 October 2013 of General Giap, the legendary general and strategist who masterminded the Vietnamese victory over the French, was watched by millions of people in the streets of Hanoi.

The Vietnamese reaction to the death of General Giap on 4 October 2013 at age 102 provides essential lessons about the country’s investment attractions relative to other frontier markets.

Political and social risk is a key factor which investors often fail to assess properly, since it is rarely objective and not easily quantifiable. But we cannot generate superior IRRs and make proper investment decisions without understanding the social & political environment and ‘glue’ that holds countries together and in which companies operate.

The reaction to General Giap’s death illustrated the strength of that ‘glue’ in Vietnam.

With a median age of 28 years, and only 13% of the population over 55 years of age, few of the 92.5 million Vietnamese have experienced the war-torn past and poverty of the country. While the reaction was more muted in the South, it is clear that the passing of General Giap and three-day national mourning from 11 October to 13 October, provided the country with a rare opportunity to remind its young population of the achievements of their parents, grandparents and great grandparents and to demonstrate the strength that comes with unity.

This display of national unity should be seen in the context of the fact that favoritism, crackdowns on freedom of speech and restrictions on individuals is pervasive in Vietnam, where the government has an almost absolute monopoly on power. In addition, there appears to be a fundamental lack of trust among peoples in Vietnam in their business dealings. People from the North often say they ‘dislike’ people from the South and vice versa, and Vietnam continuously ranks lower quartile in indices about doing business, transparency and corruption.

Finally, communication with and between Vietnamese is not easy, meaning that a number of issues may get hidden or are lost in translation. As a foreign investor, the skewed market mechanisms, fundamental lack of trust and communication problems poses obvious risks and requires a strong system of controls in any investment. However, while these problems are pervasive and requires monitoring, the key lesson from the death of General Giap is that Vietnam has a more deep rooted and homogenous sense of national pride than many other frontier markets in Asia (e.g. Myanmar where ethnic unrest is rife).

The reaction to the passing of General Giap demonstrates that the young generation of Vietnamese is embracing the lessons of unity and pride from their elders. The mourning was neither staged nor superficial, but a demonstration of real social cohesion. Coupled with the Confucian basis of the society, these are essential ingredients that will ensure the long term success and stability of the country as an emerging destination for M&A and capital flows and which fundamentally differentiates investment risk in Vietnam from other directly competing destinations.

 

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Reading Time: 2 minutes

General Vo Nguyen Giap

The state funeral procession on 13 October 2013 of General Giap, the legendary general and strategist who masterminded the Vietnamese victory over the French, was watched by millions of people in the streets of Hanoi.

Reading Time: 2 minutes

General Giap
General Vo Nguyen Giap

The state funeral procession on 13 October 2013 of General Giap, the legendary general and strategist who masterminded the Vietnamese victory over the French, was watched by millions of people in the streets of Hanoi.

The Vietnamese reaction to the death of General Giap on 4 October 2013 at age 102 provides essential lessons about the country’s investment attractions relative to other frontier markets.

Political and social risk is a key factor which investors often fail to assess properly, since it is rarely objective and not easily quantifiable. But we cannot generate superior IRRs and make proper investment decisions without understanding the social & political environment and ‘glue’ that holds countries together and in which companies operate.

The reaction to General Giap’s death illustrated the strength of that ‘glue’ in Vietnam.

With a median age of 28 years, and only 13% of the population over 55 years of age, few of the 92.5 million Vietnamese have experienced the war-torn past and poverty of the country. While the reaction was more muted in the South, it is clear that the passing of General Giap and three-day national mourning from 11 October to 13 October, provided the country with a rare opportunity to remind its young population of the achievements of their parents, grandparents and great grandparents and to demonstrate the strength that comes with unity.

This display of national unity should be seen in the context of the fact that favoritism, crackdowns on freedom of speech and restrictions on individuals is pervasive in Vietnam, where the government has an almost absolute monopoly on power. In addition, there appears to be a fundamental lack of trust among peoples in Vietnam in their business dealings. People from the North often say they ‘dislike’ people from the South and vice versa, and Vietnam continuously ranks lower quartile in indices about doing business, transparency and corruption.

Finally, communication with and between Vietnamese is not easy, meaning that a number of issues may get hidden or are lost in translation. As a foreign investor, the skewed market mechanisms, fundamental lack of trust and communication problems poses obvious risks and requires a strong system of controls in any investment. However, while these problems are pervasive and requires monitoring, the key lesson from the death of General Giap is that Vietnam has a more deep rooted and homogenous sense of national pride than many other frontier markets in Asia (e.g. Myanmar where ethnic unrest is rife).

The reaction to the passing of General Giap demonstrates that the young generation of Vietnamese is embracing the lessons of unity and pride from their elders. The mourning was neither staged nor superficial, but a demonstration of real social cohesion. Coupled with the Confucian basis of the society, these are essential ingredients that will ensure the long term success and stability of the country as an emerging destination for M&A and capital flows and which fundamentally differentiates investment risk in Vietnam from other directly competing destinations.

 

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