In the wake of the South China Sea tribunal, Chinese companies in Vietnam say that though tensions have increased, relations are still friendlier than in 2014 when anti-China riots broke out. In general, locals have been slow to accept Chinese companies compared to firms from other countries, partially due to political issues between the two countries.
Deng Yanan, general manager of Chinese electronics manufacturer TCL in Vietnam, has felt under pressure, for which he blames anti-China feelings in the Southeast Asian country.
"There haven't been any incidents or protests against our company, but data shows that our monthly sales volume is only 70 or 80 percent of what it used to be, so the anti-China sentiment that exists here is affecting us and exerting pressure on sales," he said.
The Permanent Court of Arbitration at the Hague made its award on the South China Sea on July 12, after the Philippines initiated the arbitration, rejecting China's territorial claims in the waters.
After that, demonstrations broke out in Vietnam, whose maritime claims also overlap with China's, with crowds gathering in front of the Chinese embassy in Hanoi.
When Sino-Vietnamese ties get tense, Chinese companies in Vietnam are among the first to take a hit. They say they have to deal with surging nationalism in Vietnam, which spikes whenever there is major news about the South China Sea, as well as the difficulty of trying to shed their bad reputation.
Gradually, Chinese companies are learning to play by the rules in hope to open up the market in Vietnam.
Low acceptance
Chinese national Yang Kaiyong, First Vice President of the Linh Trung Export Processing Zone, still remembers the horror of the 2014 riots, when Vietnam saw some of the fiercest anti-China protests in years. Thousands of people took to the streets, and many rioters targeted Chinese companies, burning and smashing shops and factories.
The Linh Trung Export Processing Zone started construction in 1995, in order to push forward cooperation between Chinese and Vietnamese companies. Right now, companies from China and other surrounding countries are stationed in the park.
"During that night, we were surrounded, and we could see thugs outside the area shouting,'This is the Chinese people's turf, let's smash everything!'" Yang said.
He remembers seeing the office door of a nearby Japanese company being flung open, and a rioter holding a stick to the manager's throat, saying, "Say you support Vietnam, or we'll smash your factory!"
Police officers as well as local officials stayed in the park throughout the night, in order to prevent fires from being lit and making sure every foreign worker living there was safe, Yang recalls, adding that there were more than 700 SWAT and regular officers deployed to the park.
The night was a vivid example of the danger posed by high bilateral tensions. However it is increasingly hard for Chinese companies to win over the Vietnamese.
"Honestly speaking, Vietnamese consumers don't recognize Chinese brands, they mostly recognize Japanese, Korean or Western brands," said TCL manager Deng.
He believes the situation has a few causes including genuine quality issues with Chinese products, the media's exaggeration of these issues and the fact that some Chinese companies have behaved in either insensitive or illegal ways.
A well-known case was when a Taiwan-funded steel production company under the Taishuo Corporation was found to have polluted water in Vietnam in April this year.
Around that time, Vietnamese media outlets reported that four provinces saw significant numbers of fish dying from pollution, including some endangered species. In May, hundreds of locals took to the streets, pointing to the company as the source of the problem.
In June, the Vietnamese government published a report describing the pollution problem and fined the company $500 million. As of today, the company has stopped production in Vietnam.
Taishuo invested more than $15 billion on this factory, but now it has stopped production, a worker from the company who wishes to remain anonymous said. Before this incident happened, it employed about 10,000 workers, and now it's down to about 3,000.
The worker said there was a massive protest against the firm two weeks ago, during which he was confined to his dormitory until things calmed down.
"It's awful here, when we go to the market sometimes to buy supplies, people just say to my face, 'China should get out of Vietnam!'" he said.
An article written by a Vietnamese journalist and published by news portal asianews a few years ago is an example of this suspicion. In the piece, the writer complains about the unbalanced trade relationship between the two countries, argues that Chinese companies produce "toxic" substances that Vietnam cannot deal with and claims that Chinese companies which make "very bad quality" products are "invading" Vietnam to make it an "industrial wasteland."
TCL's Deng said he thinks nationalism accounts for some of the protests in Vietnam, but their negativity about Chinese firms is also partially due to Vietnamese people's perception of Chinese products as opposed to Western or Korean products.
"They think Korean, Japanese or Western products represent advanced technology and reliable quality," he said. "When I pass by Mercedes Benz or BMW shops, I could always see slogans that read 'Technology from Europe.'"
TCL has been in Vietnam for 17 years and is now the country's fourth largest electronics firm by market share. When TCL first came to the country in 1999, salespeople needed to go from city to town to village in order to advertise their products. But after hearing it's a Chinese brand, many simply turned away.
