rearing, market gardening, printing, minting of coins, silkworm breeding,
porcelain manufacture and international trade to Vietnam. In addition,
Chinese models of bureaucracy, judicial systems and education systems were
implemented in Vietnamese society. Even the written language was based on
the Chinese characters. This fundamental influence still exists in contempo-
rary Vietnamese society.
After World War II, Vietnam was divided into North and South, until uni-
fication in 1975. For many years, Vietnam has been the focal point of the
struggle for and against colonialism, of the ideological war between capitalism
and socialism and, more recently, of the conflict between different approaches
to economic reforms. In Vietnam certain cultural and socio-economic differ-
ences between North and South pre-date the formal separation of the two
regions in 1954 (Beresford, 1989). However, the socialist central planning sys-
tem based on neo-Stalinist doctrine dominated the country from 1954 in the
North and since 1975 in the South. The development of heavy industry was
the state’s first economic priority. State-owned enterprises and collective-
owned enterprises (COEs) were the only sectors permitted to operate in this
economic system. Their activities were heavily subsidised and all prices were
fixed by the state.
Vietnam took its first steps towards economic reform in 1986, marked by
the Sixth National Congress of the Vietnamese Communist Party’s resolution
of ‘doi moi’, namely economic renovation (Perkins, 1993; Ljunggren, 1993).
Under the doi moipolicy, the government wanted to promote economic develop-
ment by introducing a market-oriented economic system with enterprise
autonomy and by opening the economy for international trade and invest-
ment (Chan and Norlund, 1999; Zhu and Fahey, 2000). Among the reform’s
initiatives, changing the employment relations system is the critical point at
which economic imperatives spill over into social and political considerations.
Pre-reform period (1975–1986)
Under the pre-reform system, SOEs were integrated into a system of mandatory
state planning. Enterprise inputs, including labour, were assigned by govern-
ment plan. Enterprises did not necessarily acquire labour with the right skills
set and were invariably overstaffed because the labour administration arranged
employees for individual firms (Doanh and Tran, 1998). In addition, enter-
prises had few ways to motivate or discipline employees. The reward system
had only an indirect relation to enterprise efficiency and individual labour
effort. It was based on a narrowly defined egalitarianism as well as the tendency
to reward labour on the grounds of seniority and contribution to the party as
well as to the war effort in the past. In the area of personnel management, it
had a rigid function in the areas of allocating jobs and managing personnel
files. Due to the absence of a well-developed external labour market, pre-reform
personnel management was inward-looking, with the focus on issues such as
212 International Human Resource Management