Vietnam's economic transformation: getting rid of the Chinese model and learning from Korean chaebols to build local private groups

(Central News Agency reporter Zeng Tingxuan, special report from Hanoi on the 15th) In the past, Vietnam was generally considered to be "crossing the river by touching China" in terms of economic layout and learning from China's development trajectory. However, experts believe that as the importance of private enterprises has increased in recent years, Vietnam has parted ways with the Chinese model, and instead borrowed South Korea's "chaebol" model to vigorously cultivate local private groups to enhance its status in the industrial chain.

In the busy urban area of ​​Hanoi, the streets are filled with VinFast cars owned by Vingroup, Vietnam's largest enterprise group; high-end residential areas and villas on the side are the work of Vinhomes.

The "Hanoi metropolitan area" is currently in full swing. Many infrastructure development projects are contracted by Vingroup. For example, the multi-billion-dollar high-speed rail project connecting Hanoi and Halong Bay in the northeast is also handled by Vingroup's VinSpeed, in conjunction with Germany's Siemens Mobility.

●No longer crossing the river by touching China, and drifting away from the Chinese model

Vietnam's economic development model was often described as "crossing the river by touching China", with its core being "one-party political centralization of the Communist Party combined with a market economy" and learning from China's implementation of similar "reform and opening up" (Đổi mới) policies.

With the separation of politics and economy, state-owned land, dominance of state-owned enterprises, and inheritance of China's "world factory" route, Vietnam's economic reform is about 10 years later than China's. Many policy tools and regulations are often regarded as being gradually adjusted based on the path China has taken.

Under the Chinese model, large-scale infrastructure contracts are handed over to state-owned enterprises. Vietnam has also relied heavily on state-owned enterprises to promote economic growth in the past, but some companies ended up burdened with heavy debts and were mired in corruption scandals.

Therefore, Vietnam’s entrustment of high-speed rail to Vingroup, a local industrial private group, marks a symbolic policy change.

This is also traceable. In May last year, the Political Bureau of the Communist Party of Vietnam Central Committee promulgated Resolution No. 68, which promoted the private economy as the "most important driving force" of Vietnam's economy for the first time in an official document. Previously, private enterprises were mostly positioned as "important driving forces" or "supplementary forces" and were regarded by the Vietnamese economic community as a historic turning point in the development of the private economy.

The resolution hopes to double the number of private enterprises to 2 million by 2030. It also requires "eliminating outdated concepts, attitudes and prejudices against the private economy" and protecting private property rights, business freedom and fair competition.

To a large extent, this represents a significant "divergence" from China's economic path in recent years. Although the two countries are both governed by the Communist Party and have both gone through the reform path of "transforming from a planned economy to a market economy," in recent years, when facing economic structural adjustment, the two countries have chosen exactly the opposite direction.

●Change to South Korea’s local chaebol system and Vietnam cultivates local leading groups

An analysis report by the British Financial Times on the 11th pointed out that as part of comprehensive reforms, To Lam, Vietnam's most powerful leader in decades, is trying to copy "South Korea's chaebol model" to build national leading enterprises, giving priority to these enterprises to undertake large-scale projects, and provide land and financing channels.

Nguyen Ba Hung of the Asian Development Bank told the newspaper that "Resolution 68 has increased the confidence of the private sector to invest in long-term assets such as infrastructure and appears to be borrowing from the Korean chaebol model."

The Financial Times wrote that since the 1960s, the chaebol system has been the key to South Korea's rapid industrialization and the creation of the "Miracle on the Han River." Seoul has changed South Korea's economic landscape by encouraging the development of family-owned, diversified, and export-oriented business groups through incentives, low-cost financing, and tax incentives.

Driven by years of rapid growth driven by foreign investment, Vietnam is one of the biggest beneficiaries of the U.S.-China trade war. As a result, many production lines have been transferred from China. The United States now accounts for nearly 1/3 of Vietnam's total exports.

However, the Chinese model has its limitations. Vietnam is trying to get out of the "middle-income trap" and no longer wants to be the world's assembly plant "Made in Vietnam". It hopes to rise from the bottom of the industrial chain through technological transformation. In order to change its economic model that relies too much on exports and foreign direct investment, analysts pointed out that Hanoi is learning from South Korea and is committed to building a local corporate giant.

Last year, the private sector accounted for half of Vietnam's overall gross domestic product (GDP), while the public sector accounted for 21%. In addition to Vingroup, Vietnam's largest automobile manufacturing and comprehensive machinery industry enterprise Thang Hai Group (THACO), steel manufacturer Hoa Phat Group and telecommunications technology leader FPT are also potential chaebols.

●South Korea’s chaebol model may be detrimental to small and medium-sized enterprises; the focus is on execution

According to the World Bank, Vietnam has enacted more than 86 laws and 300 decrees from 2025 to April 2026 to streamline bureaucracy and remove regulatory obstacles.

Jian Xin Heng, senior analyst of Asia country risk at BMI, a research arm of Fitch Solutions, told the Financial Times that the first weakness of Vietnam's economy lies in the low productivity growth rate, and the other is the overweight role played by the public sector in economic activities. This series of reforms in Hanoi is aimed at solving long-term structural deficiencies in the economy.

While analysts agree on the need to give more power to the private sector, some note that Vietnam's leading companies may face the same challenges as South Korea's chaebols.

Ruan Boxiong said: "It is reasonable to support a few leading companies to play a leading role. But at the same time, they are likely to form a natural monopoly in the domestic market, and smaller companies may not benefit from it." Jian Xin Heng said that if subsidies and government support flow in the wrong direction, public resources will be wasted.

The World Bank pointed out in its May report that Vietnam's policy direction is generally correct, but whether its execution ability can keep up is a more difficult issue.