Ladies in Red Make a Bull Case for Vietnam

(Bloomberg Opinion) -- Women hold up half of the sky, or so Communist China’s founding father Mao Zedong liked to say. These days, that’s certainly the case in Vietnam. 

Throughout the country, many well-known businesses are run by women. There’s Mai Kieu Lien, who captured the rising middle class’s thirst for protein-rich milk drinks and built Vietnam Dairy Products JSC into a $10 billion empire. Then there’s Nguyen Thi Phuong Thao, founder of budget airline VietJet Aviation JSC, who became Vietnam’s first female billionaire – and not just because of its bikini-clad flight attendants. Vietnam’s hourglass Hanoi-to-Ho Chi Minh City geography makes flying an efficient option in a nation that’s yet to build a high-speed rail line between the two megacities.  

Riding the consumer-spending wave lifted Cao Thi Ngoc Dung’s Phu Nhuan Jewelry JSC. And if you’re seeking an industrialist, look no further than Nguyen Thi Mai Thanh of Refrigeration Electrical Engineering Corp.

At 73 percent, Vietnam’s female labor-participation rate is among the highest in the world. The country’s women are also avid business pioneers: For every male early-stage entrepreneur, there are 1.4 female ones, estimates Global Entrepreneurship Monitor. Women contribute 40 percent of the nation’s wealth, nearly on par with China.  

There’s a historical reason for this. With so many men killed during the Vietnam War, women had to fill the void. In 1976, there were only 95 men for every 100 women between the ages of 25 and 64. By 1986, when Doi Moi reform launched, women still comprised the majority of society and got a nice ride out of the move toward capitalism. You might say the spirit behind Rosie the Riveter, the symbol of American women who worked in U.S. factories during World War II, is very much alive in Vietnam. 

Even as Vietnam recovers from a bruising war and its gender ratio converges back to parity, women aren’t dropping out of the labor force. The government has working moms’ backs: Maternity leave mandated by law is a generous six months.  

This is all music to foreign investors’ ears. 

Consider why global investors prefer one developing country over another. With fresh memories of the billions of dollars in wealth created in China, many are looking for China 2.0. They’re seeking countries with the right demographics – young, eager workers building manufacturing hubs, and in turn, using fatter pay checks to buy their first cars or designer handbags. 

Looking at the overall population, Vietnam is only the world’s 15th largest country, smaller than Indonesia, Pakistan, Bangladesh and the Philippines. But most of its rivals come with demographic dividend discounts. The women labor-force participation rate in Pakistan and Bangladesh, for instance, is a paltry 25 percent and 33 percent, respectively. Taking that into account, the real working age population (between 15 and 64) would be only 37 percent and 45 percent, instead of the official 61 percent and 67 percent. 

Rome wasn’t built in a day. When a country starts replicating China’s manufacturing model, it often has to export low value-added products first, such as apparel and shoes. While Vietnam is quickly moving up the ladder into smartphones and semiconductors, the biggest chunk of its exports to the U.S. last year remained textiles. Who stitches clothes and sews shoes? Women. 

The strong Rosie culture is one reason why Vietnam is the only emerging Asian nation outside of China that received net foreign portfolio inflows in this bear-market year. Many investors are betting Vietnam will be the big winner as the trade war between the U.S. and China drags on. And even before the sparring started, Chinese companies, such as textile manufacturing giant Shenzhou International Group Holdings Ltd., had already opened factories there.

To be sure, it’s not all blue skies. According to McKinsey Global Institute, the perceived wage gap for similar work is much higher in Vietnam than in neighboring Malaysia or the Philippines. Unfortunately, just like China and India, boys are seen as the better sex – the sex ratio at birth is a stubbornly high 1.10 as women abort female babies. As the middle class becomes wealthier, women may be discouraged by gender income inequality and prefer to stay at home. 

For the time being, though, Vietnam is still the hot destination for foreign investments, and it has its strong, capable women to thank. 

To contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.

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