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Learning to be CapitalistsEntrepreneurs in Vietnam's Transition Economy$

Annette Miae Kim

Print publication date: 2008

Print ISBN-13: 9780195369397

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780195369397.001.0001

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(p.186) Appendix Method of Study

(p.186) Appendix Method of Study

Learning to be Capitalists
Oxford University Press

Identification of the Field of Study

The case firms chosen for this study are private land development organizations that, in the period from 1995 to 2001, actively developed infrastructure and residential projects larger than one hectare on the periphery of HCMC, for sale to the general public.

I chose to study this subgroup of new Vietnamese entrepreneurs for many reasons. First, within Vietnam, I focused on Ho Chi Minh City's real estate market because of the magnitude of the physical and institutional changes and its relatively more open and feasible research environment. I decided to focus on those working on projects in the urban periphery of HCMC, because this was the site of some of the largest projects and most rapid development. I limited my cases to firms that were doing larger-scale residential projects, defined as those involving more than one hectare of land. Larger projects are more challenging; they require more capital and coordination as well as the assembly of parcels from several landowners. They also require central government approval in Vietnam. Because of the added challenges of large-scale projects and because of the (p.187) institutions that can be developed over a number of projects, these organizations are well suited to a comparative analysis of the ways in which they navigate their economic environment.

My final choice was to focus on private organizations. What constitutes “private” is more nuanced in the context of Vietnam's high level of government intervention than it is in a traditional capitalist state. Nevertheless, it is clear that these organizations have more autonomy in their day-to-day operations than the state-owned enterprises I interviewed. Private firms were at a disadvantage as compared to state-owned enterprises in getting timely approvals and financing, so I was curious to learn how they were able to make such large projects feasible. Moreover, by 2000, when I began my longest period of fieldwork, it had become surprisingly easy to conduct interviews with private organizations: government permissions were not needed to hold meetings, and firm members felt free to speak openly in our discussions.

Selection of Cases

After defining the general criteria for the subgroup of private firms I would study, I wanted to make sure that I chose appropriate cases to represent this subgroup. During eight months of fieldwork, from October 2000 to July 2001, I spent the first two months visiting the sites of the new urban development projects that were reshaping HCMC, making a preliminary selection of firms on which to build cases and verifying their suitability with key informants. My informants estimated that roughly 200 private real estate companies were operating in HCMC, with about 40–50 actively developing projects eight years after the 1993 Land Law was promulgated. Using the technique of snowball interviews and my own social networks, I found that there were four types of private land development organizations operating in HCMC. This was not a preconceived framework, but rather one that I conceptualized only after significant fieldwork. I verified the completeness and validity of this typology with key informants (p.188) associated with land development: bankers, academics, and my case firms themselves. A version of these general types is also corroborated by other studies of Vietnam (Gainsborough 2003).

As mentioned in chapter 2, the four types of firms include investor groups, professional companies, equitized companies, and foreign joint-ventures. Investor groups can be viewed as a variation of the household developers who band together to achieve economies of scale, benefit from any connections and advantages individual members may have, and purchase large sites they could not afford individually. They are flexible groups that form for a specific project, some of which are very large. All of the members have other occupations, and the business does not have a formal office or name. Professional companies, by contrast, have brick-and-mortar offices, a name, and a full-time staff. Equitized firms are formerly state-owned companies that have now been allowed to become private. They can have more autonomy in the management of their operations and access to private capital. Foreign joint-ventures are initiated by foreign investors, who partner with a Vietnamese company and contribute equity to a new entity that may engage in commercial property development and other investment activity in the country.

I should note that these firms pursue development, not land speculation. They have actually invested capital and are adding value to land in order to sell serviced parcels and houses to households. The organizations are private in the sense that they are not state-owned entities. Many of them in fact are owned and managed by former state employees or current state employees who are engaged in private real estate businesses on the side. Furthermore, in some of the companies, state bodies hold minority shares. All are managed privately, however, and are under the purview of private business and land development laws and regulations.

I ended up developing 14 in-depth case studies of private land development organizations in HCMC that had actively pursued projects between 1995 and 2001 (see table 3.1). I subsequently verified through key informants that these firms (p.189) represented the range of types of private firms that are currently operating in HCMC. I did not choose the cases randomly, nor are they statistically representative. Rather, I wanted to make sure I included a sampling of the variety of firms currently operating in the market. I chose case firms within each of the four types that varied by size, productivity level, and geographic distribution of their projects within the city. I also included all of the significant organizations whose projects are impacting the direction of urban growth in HCMC—that is, the ones everyone talks about in the industry and newspapers.1

Identifying Key Economic Actions

Real estate development in any context is a complex endeavor requiring the juggling of many tasks. At the beginning of my fieldwork, I was open to the possibility that different firms might have different development procedures. But because of the strong state control, I found that they all face the same general process (outlined in table 3.2). One can see that despite HCMC being the most streamlined of all Vietnamese cities in terms of land development processes, it is still complicated.

Through my preparatory fieldwork and my open-ended key informant interviews, it became clear that a few of these steps were more challenging than others, and I learned that there were a variety of ways the firms surmounted these challenges. The four steps in the development process that could make or break project feasibility or determine its profitability were: 1) finding land for potential project sites; 2) negotiating a compensation price with the current users, usually farmers; 3) assembling development capital; and 4) processing the many permits and approvals needed to implement the project.

For each case study, I systematically collected several kinds of information. I located the entrepreneurial decision-makers—the ones who decide in which location and how much land they will try to develop, how many units to subdivide the project into, how they will arrange the financing and infrastructure (p.190) development, and who will be their target market. These decision-makers were people who had been with the organization for a long time and were involved in its day-to-day operations; some were the founder or leaders of the firm or the heads of departments. I first asked these respondents factual questions about their background, noting social identity groups of which they might be a member: hometown region, fields of expertise, university, army, Communist Party membership, and so forth. These easy, nonthreatening questions allowed respondents to become comfortable with the interview situation, but they also enabled me to contextualize their social identity. One of the things I wanted to learn was where these developers came from. Was there some common social position variable that privileged them to become entrepreneurs?

Next, I would ask respondents more easy, factual questions about the history and structure of their organization. This is how I happened to find the parameters of the differences in firm types. It also showed areas where they might have formalized functions in the development process that would indicate which steps in the process take considerable effort.

I next asked them for information about the projects they produce—their location, size, program, and timing. I then began systematically asking more detailed questions about their development projects. I retraced step by step their development process, their considerations in making decisions about their specific projects, and how they implemented each phase. At this point, the interview could go off in a variety of directions, because I wanted to allow them to tell me the way they saw the development process without my imposing a framework or focus of observation. I wanted to be open to new discoveries and the need to alter my research questions.

At the end of the meetings I would ask them about institutional factors that they had not brought up or had mentioned only briefly, in order to probe whether these were an issue in their perception or not. This approach was used in order to capture anything they may have forgotten without biasing the direction of the interview or suggesting answers.

(p.191) I then followed up with interviews of the network of people they had worked with to develop their projects—these included landbrokers, design and permitting consultant companies, banks, district and ward officials, and government departments. If possible, I spent time in respondents' informal social gatherings. I also interviewed many key informants to get additional insights on these developers, and I asked the developers about one another in order to get some critical perspective on their responses. In addition to these interviews, I visited developers' offices, if they had any, reviewed their project designs and documents, and walked their project sites.

The units of analysis for a comparison of firms of different types and firms with similar political privilege and social position were the four development steps outlined earlier. I retraced with the developers how they were able to overcome the challenges of making the four actions. I also studied how the firms' choices and strategies affected their ability to consistently pull off projects and the number of units they were able to supply, the location of their projects, and project completion time. Firm productivity provides some indicator of the effectiveness of the strategies the firm chose. Profitability indicators would have been ideal, but I could not be certain of an even comparison among the firms' financial data. But given the great housing demand, the availability of investment opportunities in other sectors, open entry and exit in this market, it was reasonable to assume that all projects completed during this period were net positive. The appreciation of residential land value was rapid throughout this period.

Ultimately, I ended up with a large quantity of interview notes that surveyed the real estate industry in HCMC from a variety of perspectives. Besides the members of the case firms and their associates, I had interviewed ministry officials from the central government in Hanoi, HCMC government officials at the city, district, and ward level, and Vietnamese university professors and academics in both Hanoi and HCMC. I interviewed the dominant state-owned companies, banks, property lawyers, and journalists who cover the real estate market.