[International] Moving Away from the China Model, Vietnam's Economy Learns from South Korea's Chaebol Model

In the past, Vietnam's economic development was widely seen as "crossing the river by feeling the stones" (摸著中國過河), learning from China's development trajectory. However, experts believe that in recent years, with the rising importance of private enterprises, Vietnam has diverged from the China model and is instead looking to South Korea's "chaebol" model, vigorously cultivating domestic private conglomerates to enhance its position in the industrial chain. In the bustling streets of Hanoi, the largest Vietnamese conglomerate, Vingroup, is prominent with its VinFast cars; nearby, high-end residential areas and villas are the work of Vinhomes. The ongoing "Hanoi Urban Renewal" project sees Vingroup undertaking many infrastructure development projects, such as the high-speed rail project worth billions of dollars connecting Hanoi with Ha Long Bay in the northeast, which is being handled by Vingroup's VinSpeed in collaboration with Germany's Siemens Mobility. No Longer "Crossing the River by Feeling the Stones": Diverging from the China Model Vietnam's economic development model has often been described as "crossing the river by feeling the stones," centered on "the Communist Party's centralized one-party rule combined with a market economy," and learning from China's "Doi Moi" (renovation and opening-up) policies. Separation of politics and economy, state ownership of land, and dominance by state-owned enterprises, following China's "world's factory" path, Vietnam's economic reforms lagged about 10 years behind China's, with many policy tools and regulations often adjusted by referencing China's experiences. Under the China model, large infrastructure contracts are awarded to state-owned enterprises. Vietnam also heavily relied on state-owned enterprises for economic growth in the past, but some of these enterprises eventually incurred heavy debts and were mired in corruption scandals. Therefore, Vietnam entrusting the high-speed rail project to Vingroup, a domestic private industrial group, signifies a symbolic policy shift. This trend is also evident. In May last year, the Central Committee of the Communist Party of Vietnam issued Resolution No. 68, which for the first time officially elevated the private economy to be the "most important driving force" of Vietnam's economy. Previously, private enterprises were mostly positioned as "important driving forces" or "supplementary forces," considered a historic turning point for the development of the private economy by Vietnamese economists. The resolution aims to double the number of private enterprises to 2 million by 2030, while also calling to "eliminate outdated concepts, attitudes, and prejudices towards the private economy," and to guarantee private property rights, business freedom, and fair competition. This largely represents a significant "divergence" from China's economic path in recent years. Although both countries are governed by Communist parties and have undergone reforms from planned to market economies, they have chosen opposite directions in recent economic structural adjustments. Learning from South Korea's Domestic Chaebol System: Vietnam Cultivates Domestic Leading Conglomerates A Financial Times analysis on the 11th reported that as part of a comprehensive reform, Vietnam's most powerful leader in decades, To Lam, is attempting to replicate the "South Korean chaebol model" to create national-level leading enterprises, prioritizing them for large projects and providing them with land and financing channels. Nguyen Ba Hung of the Asian Development Bank told the newspaper, "Resolution No. 68 has boosted confidence in the private sector's investment in long-term assets (such as infrastructure), seemingly drawing lessons from the Korean chaebol model." The Financial Times wrote that since the 1960s, the chaebol system has been key to South Korea's rapid industrialization and the "Miracle on the Han River." Seoul encouraged the development of family-run, diversified, export-oriented conglomerates through incentives, low-cost financing, and tax breaks, transforming South Korea's economic landscape. Driven by foreign investment for years, Vietnam has been one of the biggest beneficiaries of the US-China trade war, with many production lines shifting from China. Currently, the US accounts for nearly one-third of Vietnam's total exports. However, the China model has its limitations. Vietnam aims to escape the "middle-income trap" and no longer wants to be just a "Made in Vietnam" global assembly plant, hoping to transform its industrial chain from the bottom up through technological advancement. To change its economic model, which is overly reliant on exports and foreign direct investment, analysts point out that Hanoi is learning from South Korea to build domestic corporate giants. Last year, the private sector accounted for half of Vietnam's total GDP, while the public sector accounted for 21%. Besides Vingroup, other potential chaebols include Vietnam's largest automotive manufacturer and mechanical industrial enterprise, Truong Hai Auto Corporation (THACO), steel manufacturer Hoa Phat Group, and telecommunications technology leader FPT. South Korean Chaebol Model May Disadvantage SMEs; Focus on Execution According to World Bank statistics, from 2025 to April 2026, Vietnam has enacted over 86 laws and 300 decrees to streamline bureaucracy and remove regulatory obstacles. Jian Xin Heng, Senior Analyst for Country Risk, Asia at Fitch Solutions' research arm BMI, told the Financial Times that Vietnam's economic weaknesses are primarily low productivity growth and the excessive role of the public sector in economic activities. This series of reforms in Hanoi is intended to address these long-term structural economic deficiencies. While analysts generally agree on the need to empower the private sector, some point out that Vietnam's leading enterprises may face similar challenges as South Korean chaebols. Nguyen Ba Hung stated, "It is reasonable to support a few leading enterprises to play a leading role. However, at the same time, they are likely to form natural monopolies in the domestic market, making it difficult for smaller enterprises to benefit." Jian Xin Heng added that if subsidies and government support are misdirected, public resources will be wasted. The World Bank's May report indicated that Vietnam's policy direction is generally correct, but the question of whether execution can keep pace is more challenging. (Editor: Liu Xianghua)