US embassy cable - 03HOCHIMINHCITY621

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000621 
 
SIPDIS 
 
State for EB/IPC:DRBEAN, EAP/BCLTV and EB/ODC 
State also pass USTR Burcky/Alvarez and Bryan 
State also pass to USPTO for Urban 
State also pass to Library of Congress for Tepp 
USDOC for 3132/OIO/EAP/Kelleher 
USDOC also for 1431/MAC/AP/HPPho 
USDOC also for ITA/TD/OTEA/JJanicke and ITA/TD/SIF/CMuir 
 
E. O. 12958: N/A 
TAGS: ECON, KIPR, SOCI, VM, IPROP 
SUBJECT: HO CHI MINH CITY: COMPUTER RETAILING GETS MODERN - WITH 
SAME OLD IPR PROBLEMS 
 
1.  Summary.  On a visit to Ho Chi Minh City's newest Computer and 
IT superstore, ConGen EconOff, accompanied by a Vietnamese 
assistant, saw a local attempt at modern American-style computer 
retailing, but with the same old Vietnamese IPR problems.  The 
computers assembled by the company and sold under the company's 
trademark (which it is trying to promote and protect) use 
unlicensed software.  Some licensed software -- along with the 
usual assortment of pirated software -- is being offered for sale, 
however.  End Summary. 
 
2.  EconOff and Vietnamese assistant visited the recently opened 
Ho Chi Minh City branch of Nguyen Hoang Informatics on July 8. 
The company, which was founded in 1999 and is Vietnamese-owned and 
operated, also has branches in Danang, Vung Tau, Dong Nai and Buon 
Ma Thuot.  The store, whose opening was covered by the local 
press, bills itself as a computer superstore and is homegrown 
effort at modern computer retailing.  Unlike many of the mom and 
pop stores that crowd electronics districts in Ho Chi Minh City, 
Nguyen Hoang has wide aisles, a full line of products on display, 
catalogues prominently displaying prices and specs, and full 
warranty service.  Most notably, the store even has a Brand 
Manager who is trying to build the company trademark. 
 
3.  Nguyen Hoang Informatics sells pre-assembled computer units 
under the Nguyen Hoang trademark ranging in price from about $335- 
600.  The store also sells units from Acer, Hewlett-Packard, and 
SingPC and laptops from Acer, Compaq, Toshiba, IBM, NEC and 
MacIntosh.  Its catalog advertises other hardware accessories such 
as printers, scanners, speakers, and fax machines.  The shop also 
carries a full range of computer peripherals.  It is a licensed 
distributor for Intel.  Both the store-branded products and the 
name-brand machines carry warranties. 
 
4.  If the shop is an example of modern retailing, it is 
definitely modernization Vietnamese style.  This was revealed 
immediately when EconOff asked the company's brand manager, who 
was working the floor that morning, what software came loaded onto 
the pre-assembled units for sale.  His reponse: "Whatever you 
want, we'll load it.  No problem. You want Windows 2000?  Windows 
ME?  We've got it, I've got a disk in the back, I'll set it up for 
you."  When asked whether those copies were licensed, he became 
very quiet, looked down at the floor, looked back up and said 
"Sure."  Not surprisingly, however, the Microsoft country director 
later advised that while he was familiar with the store, to his 
knowledge none of the software loaded onto Nguyen Hoang's own 
brand computers is licensed. 
 
5.  EconOff observed several glass cases full of software in the 
store.  Based on price and packaging, some of the software 
appeared to be licensed.  The top of the line by far was a full- 
case display of AutoCad and AutoDesk promotional material, with 
each product priced at US $3300.  When asked why these products 
were so expensive, a store clerk smiled and replied "Because they 
are licensed.  We have a license to sell this software."  The 
clerk noted that she had not received any orders for it yet, and 
said that if they ever did receive an order they would request a 
copy from their distributor and it would take some time for the 
product to arrive.  Elsewhere in the display case, however, 
Vietnamese licensed software, most of which was for English 
language study, was selling for between VND 50,000-120,000 
(approximately US $3.20-7.74). 
 
6.  The real bargains, however, were in another glass cabinet, 
where several pirated games, music CDs and software programs were 
displayed in cellophane packets.  Among them were Microsoft 2000 
operating system, Microsoft Millenium Edition operating system, 
and Microsoft Professional XP Suite -- all selling for VND 7500 
(approximately fifty US cents). 
 
7.  Comment:  It may be a positive sign that Ho Chi Minh City's 
first computer superstore has recognized the importance of 
developing and protecting trademarks -- specifically its own -- 
and offers at least some licensed software for sale.  But what is 
worrisome is that "modern" computer retailing in HCMC still 
includes nurturing a generation of consumers who believe 
developing countries have a right to cheap prices.  In a country 
where consumers are generally unwilling to pay for licensed 
copies, it is not surprising that what Nguyen Hoang Informatics 
has loaded onto its computers and most of what it has in stock is 
pirated.  This is standard Vietnamese observance of software IPR. 
In a separate conversation, Microsoft's company director noted 
that at HCMC's 8th "ComputerWorld Expo", virtually all of the 
computers on display were running on unlicensed software.  Modern 
retailing or not, IPR protection has a long way to go in the IT 
industry here.  End Comment. 
YAMAUCHI