海角大神

As maritime disputes simmer, Vietnam counts cost of anti-China riots

Hundreds of Asian factories were attacked in May after popular anger erupted over Chinese oil exploration in disputed waters. Vietnam depends on foreign investment to generate growth and has promised to avoid a repeat.

After anti-Chinese rioters attacked his auto-parts factory in May, Lee Wang-chung and his family had to leave town in a hurry. His factory was one of hundreds in Vietnam engulfed in protests triggered by popular fury at China's positioning of a $1 billion oil rig in a disputed part of the South China Sea.听

A week later, Mr. Lee was back at the factory,听repairing its broken windows. He says the local government is supportive, as are his Vietnamese staff. For one thing, he's not even a Chinese citizen: He's Taiwanese.

But to the 20,000-odd rioters who rampaged through an industrial park looking for Chinese script or other symbols, that didn't matter. Most of the 460 affected factories belonged to Taiwanese, Singaporeans, and South Koreans, whose companies have collectively poured billions of dollars into Vietnam's rapid industrialization.听

The question hanging over Vietnam is what happens next time there's a provocation with China, its giant rival. While thousands of Chinese and other Asians fled Vietnam during the protests, investors and analysts say most have since returned after the government promised to ensure their safety.听Police have arrested 85 people linked to the protests.

Having pledged to tamp down anti-Chinese violence, Vietnam may now opt for international diplomacy. Earlier this month, 61 members of the ruling Communist Party issued a public call for the government to take legal action against China over its oil rig deployment. 听

In the event of another high-seas face-off, Vietnam听may听appeal to a United Nations tribunal as the Philippines did听March 30听over a separate bilateral maritime spat.听

鈥淎nother similar China rig incident could well convince Hanoi that it needs to launch its own international tribunal case seeking arbitration over China鈥檚 claims,鈥� says Murray Hiebert, senior fellow at the Center for Strategic and International Studies in Washington.

As a deterrent to China,听Vietnam is asking the US to lift a longstanding ban on sales of lethal weapons. Japan and Russia have听already听pledged naval support to Vietnam.

Reliant on foreign capital

At the same time, Vietnam is stepping up policing of industrial parks with foreign-invested factories such as Lee鈥檚, mindful that it depends on foreign capital to grow its $155 billion, export-dependent economy.听

鈥淭he government when it feels threatened is able to step in, and one thing they don鈥檛 want is insecurity for foreign investment, because they rely heavily on [foreign investment] in this country,鈥� says Ralf Matthaes, owner of In-Focus, a business consultancy in Ho Chi Minh City.听

China has become Vietnam鈥檚 seventh largest investor听with听$2.3 billion in commitments听in 2013, up from $345 million in 2012.听

A mainland Chinese manager in a听Taiwanese-owned shoe factory near Ho Chi Minh City听says听most Vietnamese people are friendly. But the mood snapped in May when rioters torched two buildings and looted another at his factory; managers hid in another building until police rescued them. The manager, who declined to be named, returned in August.

鈥淢ost people are kind. When you need something you can get it,鈥� the manager says of his two years in Vietnam. 鈥淲e are interdependent. If one side gets hit, both get hit.鈥�听

The factory has been partly rebuilt, the manager says, and resumed producing shoes for international brands.听

Testy relations

Vietnamese show signs of accepting ethnic Chinese investors听from outside the country. (Vietnam has its own ethnic Chinese minority.) Still, Lee says he avoids speaking Chinese when Vietnamese are listening.

鈥淢ost of the Vietnamese who I know don鈥檛 like China but everyone likes the money China throws at you,鈥� says Michel Tosto, managing director with Viet Capital Securities in Ho Chi Minh City. 鈥淰ietnam is trying to play the middle ground.鈥�

How well Vietnamese get along with managers from China may come down to case-by-case factors such as whether the Chinese speak Vietnamese, says Hoang Thu Huyen, country manager with Dezan Shira & Associates in Hanoi. 鈥淚t depends on both sides, the kind of relationship and background of people."听

Some Vietnamese workers still resent听centuries of periodic invasion attempts from China. The two sides fought a bloody border war in 1979.

鈥淸There are] lots of stories about bad tricks and behavior of Chinese people in Vietnam,鈥� says one local worker, who declined to give his name. 鈥淚 prefer management by other nationalities.鈥�

Since May, factory managers and their contacts in the government have reminded Vietnamese employees that their Taiwanese or other Asian supervisors aren鈥檛 from China.听

To stop any further unrest, police have been sent to patrol听foreign-owned听factories in two industrial zones hit hardest by protesters. In export processing zones, Communist cadre are also scouting for any early signs of new unrest,听Mr. Mattheas says.