Wednesday, March 17, 2010

A guide to doing business in Vietnam

Nexus Technologies Inc is a Philadelphia-based export company that helped connect American suppliers with Vietnam-based firms that needed to procure imported machinery and parts.

It is one of scores of such businesses that help companies negotiate their way through the complex and opaque process of exporting to a market like Vietnam, where government red tape is stifling and corruption is rife.

The company says on its website that "doing business in Asia requires relationships, trust, and the time to build them". That's a point echoed by many businesspeople I've spoken to.

Thankfully for US exporters, the website continues, "Nexus is proud to have established, through its consistent presence and reliable performance, trusted relationships with customers."

There's no doubting the quality of its relationships, at least according to Nexus' Vietnam client list, which includes the likes of British oil giant BP, mobile phone operator VinaPhone and Saigon's Tan Son Nhat Airport.

The emerging question is over how Nexus managed to achieve these "trusted relationships".

The company and its owner have just pleaded guilty in a US court to paying bribes of more than $250,000 to Vietnamese government officials between 1999 and 2008.

According to a statement from the US Department of Justice, Nam Nguyen, the company's president and owner, "negotiated the contracts and bribes with the Vietnamese government agencies and employees". Meanwhile, his two siblings - An Nguyen and Kim Nguyen - handled the US side of the business, identifying American vendors and dealing with finances.

As part of its guilty plea Nexus admitted that it "operated primarily through criminal means" and has agreed to cease operations.

At sentencing in July, the company faces a maximum fine of $27m, while Nam and An Nguyen each face maximum prison sentence of 35 years and Kim Nguyen faces a maximum sentence of 30 years.

The prosecution is part of a wider crackdown by the US authorities on the payment of overseas bribes by US companies, which is rampant in many developing countries such as Vietnam.

While it is good to see the US authorities taking action against such corrupt practices (prosecutors in countries like the UK are much more timid about such issues), the problem remains that if you want to break into Vietnam as a capital goods exporter or contractor, it's nigh on impossible to do so without paying bribes.

The challenge is to find "consultants" who can vicariously oil the wheels of corrupt commerce on a plausibly deniable basis.

That's where companies like Nexus come in.

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