From US Diplomat to AmCham Vietnam: An Insider’s View of Vietnam’s Growth and Potential
Mary Tarnowka, a former US diplomat and member of the Senior Foreign Service, and former Executive Director at AmCham Vietnam discusses the dynamism and potential of Vietnam, reflects on her past work in the public and private sectors, and offers advice for companies looking to succeed in Southeast Asia.
With your extensive experience in Asia, what inspired you to focus on Vietnam, including your recent role as Executive Director at AmCham Vietnam?
Mary Tarnowka: It’s really the dynamism in Vietnam. I was already aware of the importance of Vietnam in the region from serving in other economies, whether it was Taiwan, China, or Korea. In Korea, we worked closely with Samsung because of their extensive presence in the US. It was around 2015 and they already had more than 100,000 employees in Vietnam, and Samsung Electronics alone was responsible for around 25% of Vietnam’s exports. Vietnam is also one of the fastest-growing economies in the region, if not the world. In many ways, it reminded me of how Shanghai felt in the early 2000s – just incredible energy, a sense of possibility, dynamism, and very welcome to US and other foreign investors. There’s incredible potential in Vietnam, certainly now, and in the medium to long term.
Can you speak about the experience of moving from the public to the private sector? How did your former role of US Consul General in Ho Chi Minh City inform your subsequent work?
Mary Tarnowka: It was actually moving back to the private sector. I started my career as a CPA and tax consultant tax manager with one of the big four accounting firms, KPMG, in San Francisco. At that point, I was working on a lot of inbound foreign direct investment into the US from Asia. Beyond that, I worked closely with AmChams throughout my career as a diplomat, from serving as an honorary liaison to the Board, both in Shanghai and again in Seoul, to working closely with the Chambers in Delhi and Taiwan. From all of that experience, I had a pretty good understanding of the roles of AmChams, and in many ways, there were similar interests in my role as Consul General. In my role as Consul General, I focused on three key roles: the security partnership, the economic partnership, and people-to-people ties. While my role at AmCham Vietnam did not focus so much on the security aspect, I continued to focus on the other two.
As probably anywhere, but certainly in Asia, relationships are key. From my time working in the region, I have established relationships and a sense of trust with both the Vietnamese government and the US government from my time as Consul General, which is important when you’re working together on areas of mutual interest. I think that made it easier to adjust to my role at AmCham.
One of the things I am most proud of from my role at AmCham Vietnam is our response during the COVID-19 pandemic. In 2020, Vietnam closed its borders and put in place extensive quarantine procedures as well as contact tracing, so we kind of had a bubble of freedom. AmCham members supported these efforts with donations of medical equipment and supplies and an ambulance. However, when the Delta wave hit in 2021, Vietnam was really caught short without an adequate vaccine supply. We at the Chamber made the case to the US government on how badly Vietnam needed more vaccines and how critical it was to get them in order to maintain US supply chains. We advocated to the US government to provide vaccines, and not just for Americans or members of the American Chamber, but for Vietnam, and those vaccines were distributed according to the priority risk groups defined by the World Health Organization. For that position we took, we actually received criticism from some Americans. Ultimately, though, I believe Vietnam received over 42 million vaccines from the US. That situation was an area where my understanding of both the US government perspective and the private perspective made it possible to work together. So our companies were able to share their experiences, how their employees were camping out in the factories, or stuck on factory floors to keep operations going; it was a really compelling justification. It also helped that Vietnam was very effective in vaccine distribution.
Bilateral tensions between the US and China have been a concern for businesses worldwide. How do you see these tensions playing out in the Southeast Asian region?
Mary Tarnowka: For many countries in Southeast Asia, I think many of them are very appreciative of the fact that the US government is re-engaging and strengthening its relationships with allies and partners in the region. At the same time, they also don’t want to get caught in the fray. So ultimately, the want tensions to deescalate. US-China tensions put a lot of the countries in Southeast Asia in an uncomfortable position they don’t want to be forced to choose between the two. They want to be treated with respect, they want to retain their territorial integrity and sovereignty.
Given the current circumstances you just laid out, what advice would you offer for US companies looking to succeed in Southeast Asia?
Mary Tarnowka: For all businesses operating in the region, it’s crucial to be informed and do your homework, not just in terms of being aware of the political realities, but also understanding the situation in the country where you’re investing. In the early 2000s, I was in China, and I remember companies showing up to invest in China because they had heard about it from one of their golf buddies, without conducting any due diligence. That’s why it’s essential to make an informed investment wherever you invest. You need good advisors and should check in with organizations like AmCham, where you can get expert advice on operating in the region. Every day, we see news about actions that may affect US businesses in China or vice versa, so it’s crucial to stay informed. As many companies are realizing, it’s also vital to diversify your operations to reduce reliance on any one country.
As the trend of off-shoring shifts to “friend-shoring,” what do you see as some of the advantages and disadvantages for American companies operating in China?
Mary Tarnowka: In recent years, many companies have become aware of the lack of resilience in their supply chains. When COVID first broke out, almost all of our member companies in Vietnam realized that they were reliant on supplies from China, whether for key components in the tech industry or ingredients in the soft drink industry. This has made supply chain management more critical than ever before, and companies and countries are now seeking ways to increase resiliency in this area. As a result, there is more opportunity for reshoring or friend-shoring to reduce reliance on any one country, creating opportunities for countries like Vietnam.
As countries like Vietnam attract more foreign investment, what do you see as the opportunities and challenges?
Mary Tarnowka: Vietnam is clearly one of the countries that companies are considering when they look to diversify their operations outside of China. There are many strengths that Vietnam offers, including its advantageous geographical location. It’s close to source countries and consumer countries, has a stable government, a young, tech-savvy, and affordable workforce, and a strong and large market of about 100 million people with a rapidly growing middle class. Moreover, Vietnam has been welcoming of foreign direct investment (FDI) and is globally integrated through a network of free trade agreements.
As for challenges, Vietnam’s infrastructure needs improvement. It doesn’t have anywhere near the transportation or energy infrastructure that China has, nor does it have the network of local suppliers that US and other foreign companies have built up and developed for decades. Furthermore, while the workforce is young and tech-savvy, it still requires ongoing development. The education system and workforce development will be critical to ensure that the country does not become trapped in the middle-income gap. The government is looking to continue to develop education in a variety of areas, including research, critical analysis, ability, and hands-on learning. It’s not just about rote memorization, as was traditional ten to twenty years ago. Vietnam will need to continue to invest in education and workforce development.
What are your predictions for the US-China business relationship? Does China’s end to its zero-COVID policy mean we’ll see increased engagement? How much will other Asian countries be impacted by this, with pressure to pick one side or the other?
Mary Tarnowka: There was a lot of relief when China finally ended the zero COVID policy, both for other countries in the region, and for many Chinese and foreigners themselves living in China. But, has this really increased engagement with business? Some of the political issues that I noted earlier are continuing to cause challenges, but, the countries in the region are all navigating their foreign policy and interests in their own way. You could look at a country like Vietnam, which has had a long history of practicing multi-directional diplomacy. Clearly the Vietnamese’s partnership with the US is a comprehensive partnership, and it is becoming much more strategic in many ways, even if it may not have that name of strategic partnership. However, Vietnam also understands the importance of maintaining positive constructive relations with its neighbor to the north with which it shares a long border. Ultimately, I believe there are many countries in the region that are going to be looking to maintain constructive relations both with China, the US, and other countries in the region. In that regard, the increased effort by the administration to strengthen those relationships with allies and partners is helpful.
Emerging technologies such as AI and quantum computing are set to transform the business landscape in the coming years. How do you see these technologies impacting the US-China business relationship, and what opportunities and challenges do they present for companies operating in the region?
Mary Tarnowka: There is an increased awareness that China has caught up and may have surpassed the US in some areas of technological development, such as developing AI and quantum. As a result, there is growing awareness that the US government needs to invest in basic research. These are the areas which will be the next sphere of competition, and as such, there will be incredible opportunities along with risks. If you’re a US company operating in China, I would say that’s probably not the area where you want to be, considering the increased export controls on technologies going there.
I’ve spent a large part of my career in the region, and China is a key partner and competitor. China will remain immensely important, so companies need to be well aware of both the risks and opportunities when they are operating there. I don’t think it would be possible to have a complete decoupling, but I do think the US-China relationship will need to be managed more carefully by both countries. There are also still key common interests between the US and China, and that’s where we need to continue to work together.