Coca-Cola is facing a boycott in Vietnam in response to reports the American company hasn’t paid any taxes over the past decade of exploiting consumers there.
Vietnamese media say Coca-Cola’s financial reports show $120 million in revenue and $129 million in expenses for 2010, for a loss of $9 million. Since the company began its Vietnamese operations a decade ago, a $180 million cumulative loss has been reported. Therefore, no corporate tax has been due.
The Vietnamese public doesn’t believe it. The perception is that the company has used transfer pricing to take losses while continuing to make heavy investments to exploit Vietnamese consumers. Local newspaper reports inflamed public opinion, while Coca-Cola was announcing a $300 million expansion plan for Vietnam over three years.
In addition to claims Coca-Cola evaded taxes while gaining Vietnam’s largest share of the soft drink market, the company got in hot water with local authorities in Danang for trying to add 4,700 square meters of land even though it hasn’t used all the land that already had been allocated.
And health authorities in Vietnam aren’t happy about rising obesity among children that they say is partly explained by consumption of Coca-Cola’s products.
Coca-Cola’s public relations nightmare in Vietnam is a problem for US businesses in general. American investors need to be supportive — not just exploitive — partners in Vietnam. That’s what sets them apart from China and others in one of the world’s most dynamic frontier markets.