Justified, perhaps, but what is not so forthcoming is an admission that the promise of quick profits so intoxicated many investors that they were incapable of making sober assessments of Vietnam's business environment.

Lo Kwok Luen, chairman of the Hong Kong Business Association and a Vietnam resident for 10 years, is one foreign long-timer who has decided to tough it out.

'One of the biggest problems is that people still don't seem to realise that Vietnam has only just started its economic transition,' he said.

'It's getting better, but there are still many hangover aspects of a central economy which make business a challenge.' Greg Lockhart, director of the Asian Business Culture Programme at the Australian National University, said many foreign investors had miscalculated.

'It is often forgotten that Vietnam does not have a 'free market'. What it fostered in the 1990s was a transformation from a 'socialist' to a 'market economy' in which the dominant role of the state has never been seriously questioned,' he said.

The still-dominant role of the state, nearly 15 years after Vietnam took its first steps towards opening its economy, is apparent in recently released World Bank figures.

Local-invested private enterprise accounts for 7 per cent of gross domestic product, and foreign-invested private enterprise 10 per cent. Household firms and small private farms account for 34 per cent. In comparison, state-owned enterprises produce a whopping 49 per cent of domestic economic output even though they have more than US$14 billion in debt.

'Dealing with state-owned enterprises and the bureaucracy is just a headache,' said one foreign businessman, an import-export consultant with six years' experience in Vietnam.

'State companies just are not interested in profit, their managers and workers get paid at the end of the day whether they are productive or not.' He said the bureaucracy often behaved 'like Vietnam was still at war with foreign invaders'.

'For example, customs will get an arbitrary value on imports for tax purposes. It doesn't matter if you pay US$2 a [kilogram] for, say, Belgian chocolates. Customs will value them at US$5 per kilo and levy tax accordingly.

'Everybody wants their personal cut and are genuinely offended when you refuse to pay sweeteners or kickbacks.' An absolute ethical position on corruption is easy when government officials and business executives are well paid. But when they earn just US$60 a month, is a bribe still a bribe, or does it become a reasonable fee for service? What Westerners consider corruption is not exclusive to Vietnam, but a closer look at Vietnamese history reveals that filial loyalty and patterns of patronage in business and government have for centuries been a feature of the culture.

The 'guild mentality', consigned to history in Western Europe at the dawn of the Industrial Revolution, is still alive in Vietnam, where groups of traders set up in particular streets or neighbourhoods.

'We band together to bargain for prices with suppliers,' said 45-year-old Thi Thanh Tan, the owner of a shop on Hanoi's Hang Dao street, where many clothing retailers are concentrated.

'We also agree on minimum prices. If someone gets a better price that is OK, but if they sell at a lower price they will be ostracised,' she said.

Some would describe that set-up as a cartel guilty of price-fixing, anathema to the free-market mechanism and illegal in most Western jurisdictions.

But changing attitudes and procedures is a long and difficult process.

'Business cannot be separated from culture. Business practices the world over are inflected by local language, history and values,' Dr Lockhart said.

'[An understanding] of the local 'business culture' is what you need to do serious business in any country.' Huw Watkin in Hanoi