Chinese investors recall horror of riot, think twice about Vietnam

"I can only speak in a low voice. We called police, but it seemed they won't come very soon," Wen Yong, a Chinese businessman in Vietnam's southern Binh Duong province, told Xinhua as he recalled the horror on May 13 when the anti-foreign riot started.

Like Wen, who owns the Yong Hao Shoe Company in Vietnam's southern Binh Duong province, many Chinese investors were severely affected by the riot.

At the time, Wen and other Chinese staff were hiding in their upstairs office, as the office downstairs was already ruined by rioters with broken glasses and smashed furniture scattering everywhere..

"Nearly 20,000 people are rioting out there. Police used rubber bullets and tear gas but failed to take control over the crowd," Wen said.

Security forces had been deployed to Ho Chi Minh City to protect the country's economic hub, leaving Binh Duong out of control, he said.

"Any Chinese here?" a mobster asked the Vietnamese employees who stayed downstairs. "No, already fled," came the answer from the employees and Wen breathed a sigh of relief.

Wen, who arrived in Vietnam 10 years ago from China's southern Jiangxi province and established the company, couldn't have imagined that his business was attacked three times on May 13. He also could not remember how many rioters had entered his office looking for Chinese.

There was no need to check what happened to his factory, Wen knew by looking outside at the shoe-maker Xiang Hong across the road. Dozens of rioters destroyed the gate, making the way for throngs of motorcycles and people to sack the plant and haul out large boxes.

The riots in central and southern Vietnam have tarnished the country's image as a safe investment environment.

Since opening its door to foreign investors, Vietnam has offered preferential land and tariff policies to attract foreign investment. After entering the World Trade Organization (WTO) in 2007, foreign investment to Vietnam hit a peak of 71.7 billion U.S. dollars in 2008, but then slid following the global financial crisis.

In 2013, Vietnam lured 21.6 billion U.S. dollars in foreign direct investment, up 54.5 percent year-on-year thanks to the favorable external factors including China's industry upgrade, which has created many opportunities for its neighbor since 2011, according to government figures.

Taking the textile industry as an example, Vietnam's 600 garment and textiles companies earned more than 20 billion U.S. dollars from exports in 2013, up 18.5 percent year-on-year, creating five million direct and 2.7 million indirect jobs, government figures show.

During the riots in central and southern Vietnam, Chinese companies including those from China's mainland, China's Taiwan and China's Hong Kong, suffered the most.

Reporters learned that, on May 13 alone, at least 19 companies from those three areas were burned down, 15 of them in Binh Duong.

In addition, 10 companies from Japan, 55 from South Korea and some Singaporean companies were also damaged and forced to close.

Preliminary estimates show the direct losses of Taiwan-funded enterprises in Binh Duong and its neighboring provinces reached hundreds of millions of U.S. dollar, rising to billions if indirect losses are counted.

Taiwan-based Formosa Plastics Group planned to invest 23 billion U.S. dollars in Vietnam's central Ha Tinh province; however, riots there cost it 3 million dollars, and losses due to construction delays are far bigger.

The riots in central and southern Vietnam also have affected the country's economic situation.

The conglomerate's investment in Ha Tinh contributes nearly half the province's tax budget.

When Xinhua reporters arrived in Ha Tinh on May 18, though order had been restored, the Vung Ang economic zone appeared unusually quiet.

Several sand and gravel plants along the road from Ha Tinh to Nghe An province were still shut, shops were closed and there were few cars.

Formosa Plastics has claimed 3 million dollars in compensation for property damage.

Other Taiwanese-funded enterprises in Binh Duong and other neighboring provinces also have claimed damages worth hundreds of millions of dollars, and 1 billion dollars if indirect damages are included.

Compensation claims from other countries and regions would be a colossal burden for Vietnam. Vietnam is considering reducing land and corporation taxes and providing preferential loans among other measures to compensate enterprises affected by the riots.

"We don't want those. What we want is cash," a Taiwanese businessman told Xinhua, saying many foreign enterprises in Vietnam engaged in export processing were in need of capital.

Wen Yong, the shoe company owner, told Xinhua that, "if there is any feeling of insecurity again, we will not be able to continue (to invest in Vietnam)."

On May 14, Vietnamese authorities threatened to use live ammo to disperse the rioters. Wen and other Chinese staff then left Binh Duong for Ho Chi Minh City.

"I have to send them to Ho Chi Minh first, then come back to deliver wages for the employees, otherwise they would think that I left without paying them," Wen said. "I cannot disappoint those who followed me for years."

Like Wen, the managers of Taiwanese-funded My Thanh company in Binh Duong province sent a notice to employees, saying it was calculating losses and making plans to return to operation as soon as possible. The company also announced a full month salary for employees in May.

Talking with Binh Duong authorities on May 20, My Thanh representative Wu Hao Chih said: "Our company has operated in Vietnam for 15 years. Our factory was burnt and cannot continue production. We are looking to build a new plant. I want to continue to invest here and stay in Vietnam; however, we want to know the country's policies to support us," reported the Nguoi Lao Dong online newspaper (the Laborer), published by the Ho Chi Minh Confederation of Labor.

Zang Xiaohua, a representative of Taiwan's Allover World, expressed hope the Vietnamese authorities would strengthen security for foreign investors and their employees.

Vietnamese Minister of Planning and Investment (MPI) Bui Quang Vinh early on May 16 told MPI publication Vietnam Investment Review each Vietnamese had responsibility to protect foreign investors and employees, otherwise the country's investment reputation would be hurt.

Vinh said protests had been infiltrated by people pretending to be workers, who incited the riots.

The image of a safe investment environment Vietnam had built in the past 20 years was turning very ugly, he said.