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The Characteristics of American Business It is essential to become familiar with two words in order to understand the meaning of business

to Americans: They are private and profit. Businesses are directly or indirectly owned and operated by private individuals or groups of individuals in order to make a profit. In contrast to these privately owned, for-profit businesses, there are also (1) public, government-owned-and-operated institutions, and (2) nonprofit organizations, such as churches, charities, and educational institutions. These organizations and institutions should not be confused with businesses. In comparison to Vietnam: In Vietnam, business also means profit. There are also private-owned businesses but private is not a characteristic of Vietnamese business because state-owned businesses play the key role. In Vietnam, there are six main economic sectors: o State economic sector o Collective economic sector o Private and small-owner economic sector o Private capitalist economic sector o State capitalist economic sector o Foreign-invested sector Besides, there are nonprofit organization such as charities, educational institutions, hospitals, funds and foundations

Vietnam an economy in transition


The economy of Vietnam has continued to transition over years since the U.S. lifted its trade Embargo in March 1993. As can be seen from the chart below, industrial GDP grew by more than 10% annually during the past decade. Industry and construction by 2002 contributed just less than 40% of GDP in 2002. By this

measure, Vietnam can now be classified as a highly industrialized country although if measured by employment, Vietnam is still an agrarian society as about 65% of the workforce is involved in agriculture, fisheries and forestry. Average Growth Rate for State Industry in Vietnam 1996 1997 1998 1999 2000 2001 2002 2003 (Est.) 15 11.9 10.8 13.2 11.7 12.3

Below is a chart which lays out the GDP structure from 1994 to 2003, by economic sectors. Total 1994 100 1995 100 2000 100 2001 100 2002 100 2003 100

State

40.12

40.18 10.06 3.12 36.02 4.32 6.30

38.53 8.58 3.38 32.31 3.92 13.30

38.4 8.06 3.73 31.84 4.22 13.75

38.31 7.98 3.93 31.42 4.45 13.90

38.0 7.76 4.00 33.0 3.14 14.1

Economy Collective 10.17 Economy Private 3.06 Economy Individual 35.86 Economy Mixed 4.38 Economy Foreign 8.41 Invested

Economy Source: Statistical Yearbook First, despite the increasing visibility of small shops, private restaurants, new factories, etc., the State Sector and State Owned Enterprises (SOE) have continued to be the biggest sector of the economy. Although the total number of state owned business has declined markedly, their role in the economy has held steady. Total 1991 1995 1997 2002 SOE Workforce 704,000 750,000 777,000 877,000

A second major point to note is that the collective economy is still a major factor in overall economic activity in the economy. However, it also must be noted that this collective economy is not synonymous with collectivization but more a form of voluntary linkage among working people to better husband their resources and skills. Agricultural, forest and aquatic cooperatives is a very major portion of these collectives as local families voluntarily cooperate to jointly produce and harvest agricultural and aquatic products. Fabrication and marketing of handicrafts, a growing Vietnamese export, are also a major sector in which collectives have played a major role. Thirdly, the individual, small-owner, and private economy has continued to grow and mature, particularly in Ho Chi Minh City and Hanoi. This growth really accelerated from passage of the Company Law in 2001 which many observers have praised as having resulted in a major breakthrough in helping to create a more level playing field for private business. Vietnam retail business is becoming predominantly run by small private entities and is a stable growing force in the

economy. The private manufacturing sector, despite its smaller contribution to industrial GDP than State Industries employs four times as many workers as the state sector. Fourth, Foreign Direct Investment FDI showed much promise in the early years.

As can therefore be seen above, Vietnam has undergone a steady change in the mix of its economy. Private, Individual and FDI investment portions of national GDP are increasing and the State economy portion is decreasing although not as quickly as might at first appear on city streets or through reading local news media. Although the change amounts are significant, the overall direction is probably more important. Vietnam in 2004 is an economy with a strong state sector and with a growing private and individual sector that has become increasingly significant in the retail sector and is growing in the services sector. Collective associations, particularly in forestry, agriculture and aquaculture remain a relatively large portion of National GDP. All of these changes will continue in the years ahead as Vietnams economy continues to redefine and adjust to more and more market based structures.