Vietnam living its own Asian success story

VINH CUU, Vietnam -- This South Korean-owned factory, which produces millions of Nike athletic shoes every year, employs ceiling fans and an open-air design to keep its assembly lines comfortable in the tropical heat. Workers strolling between buildings on the manicured industrial campus wear pastel-hued polo shirts. Nearby, cheerful managers lead upbeat training sessions in air-conditioned classrooms.

Yet, one of the biggest problems for Nike and its Korean partner is hanging onto employees. Every year, more than one out of five workers leave for another job in Vietnam's rapidly developing economy, where wages for some skilled positions are rising by double-digit annual percentages. "Because people have so many more options, it's harder to retain people," says Shirley Justice, Nike's chief representative in Vietnam.

Vietnam is a key link in Nike's global supply chain: Last year, the Beaverton, Ore.-based company shipped 75 million pairs of shoes from its Vietnamese suppliers and expects to ship 81 million pairs in 2008. Nike says its footwear and clothing orders keep 200,000 Vietnamese workers employed, so its views carry weight here.

Long overdue economic growth

Vietnamese officials recognize the need for action but regard the problems as the inevitable consequence of rapid — and long overdue — economic growth. After Vietnam was forcibly unified by the communist North Vietnamese in 1975, it spent a decade mired in disastrous economic experiments that brought it to the brink of famine. In 1986, communist authorities launched doi moi, a policy of market-based reforms, which seemed to mimic China's earlier market-friendly moves. Like its northern neighbor, Vietnam is a one-party state whose leaders are more interested in economic change than in political liberalization.