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Vietnam has recently appeared on the radar of many multinational companies eager to avoid the increasing costs and labor regulations of China and other expensive Asian countries. Indeed, minimum wages in Vietnam remain significantly lower than China. The loosening of Vietnamese labor and investment regulations in 2008 has also made it easier for foreign companies to do business there. Companies that are fortunate enough to find and retain the right talent have the potential to do very well in the country. For many others, however, the struggle to recruit and retain human capital has sometimes outweighed the cost-savings of doing business in Vietnam.

Vietnam experienced GDP growth of just over 3% during the first quarter of 2009. This is a more than 50% drop over the same period last year. Foreign Direct Investment (FDI) pledges also fell by around 70% during the first quarter. Multinational companies like Intel and Galanz Group (a large Chinese electronics manufacturer) have invested heavily in Vietnam over the past several years. Now these and others have already begun to scale back operations in the country, citing human capital as a major barrier to growth.

The Vietnamese workforce of around 47 million has become increasingly educated over the past decade. However, many Western companies have found insufficient technical and business training among local graduates and have been forced to look overseas to fill important positions in their Vietnam operations. It is often much more difficult to attract expats to Vietnam, which is less developed and offers a lower standard of living than China. Those that do come often require full expat packages. Many firms that have opted to stick it out in Vietnam have now turned to overseas Vietnamese to help fill the talent gap. Of the more than 50,000 foreigners currently estimated to be working in Vietnam by the Ministry of Labor, War Invalids, and Social Affairs (MoLISA), more than half are of Vietnamese descent.