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Cablegate: Ho Chi Minh City: Computer Retailing Gets Modern - With

This record is a partial extract of the original cable. The full text of the original cable is not available.

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

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