Vietnam’s Foreign Direct Investment

Notably, the rioters did not single out Chinese companies, but also vandalized companies owned by Hong Kong and Taiwan, which have little stake in the ongoing maritime disputes in the South China Sea. If the violence continues, countries could suspend or even forego their investment, which Hanoi desperately needs. In fact, roughly 20 percent of Vietnam’s foreign investment comes from China, Hong Kong and Taiwan.

Subsequent violence could also imperil Vietnam’s investor confidence. Social stability has been a tenet of the business environment for the past few decades, and so Hanoi knows it must maintain that stability to maintain investor confidence. But it also must drum up just enough nationalist sentiment so that it has the mandate to take a stronger stance against China, particularly in regard to its territorial claims in the South China Sea. Hence, Hanoi’s dilemma.