Following the reunification of Vietnam, The ethnic Hoa in South Vietnam suffered most from the socialist transformation. A major challenge for the government was how to regulate and control sensitive market activity, especially in Ho Chi Minh City, where Chinese-owned businesses dominated much of the commercial economy. Following Vietnam's break with China in 1978, some Vietnamese leaders evidently feared the potential for espionage activities within the Chinese business community. On the one hand, Chinese-owned concerns controlled trade in a number of goods and services, such as pharmaceuticals, fertilizer distribution, grain milling, and foreign-currency exchange, that were supposed to be state monopolies. On the other hand, savvy Chinese entrepreneurs provided excellent access to markets for Vietnamese exports through Hong Kong and Singapore. This access became increasingly important in the 1980s as a way of circumventing the boycott on trade with Vietnam imposed by a number of Asian and Western Nations. An announcement on 24 March outlawed all wholesale trade and large business activities, which forced around 30,000 businesses to close down overnight, followed up by another that banned all private trade. Further government policies forced former owners to become farmers in the NEZ or join the armed forces and fight at the Vietnam-Cambodia border and confiscated all old and foreign currencies, as well as any Vietnamese currency in excess of the US value of $250 for urban households and $150 by rural households.

While such measures targeted all bourgeois elements, such measures hurt the Hoa the hardest and resulted in the expropriation of Hoa properties in and around major cities. Hoa communities offered widespread resistance and clashes left the streets of Cholon "full of corpses". These measures, combined with external tensions stemming from Vietnam's dispute with Cambodia and China in 1978 and 1979 caused an exodus of the majority of the Hoa, of whom more than 170,000 fled overland into the province of Guangxi, China, from the North and the remainder fled by boat from the South. China received a daily influx of 4–5,000 refugees, while Southeast Asian countries saw a wave of 5,000 boat people arriving at their shores each month. China sent unarmed ships to help evacuate the refugees but encountered diplomatic problems as the Vietnamese government denied that the Hoa suffered persecution and later refused to issue exit permits after as many as 250,000 Hoa had applied for repatriation. In an attempt to stem the refugee flow, avert Vietnamese accusations that Beijing was coercing its citizens to emigrate, and encourage Vietnam to change its policies towards ethnic Hoa, China closed off its land border in 1978. This led to a jump in the number of boat people, with as many as 100,000 arriving in other countries by the end of 1978. However, the Vietnamese government by now not only encouraged the exodus but took the opportunity to profit from it by extorting a price of five to ten taels of gold or an equivalent of US$1,500 to $3,000 per person wishing to leave the country. The Vietnamese military also forcibly drove the thousands of border refugees across the China-Vietnam land border, causing numerous border incidents and armed clashes, while blaming these movements on China by accusing them of using saboteurs to force Vietnamese citizens into China. This new influx brought the number of refugees in China to around 200,000. One family was split. An ethnic Chinese man was deported while his ethnic Vietnamese wife and child were left behind. For those who lacked the resources to pay their way out remained to face continued discrimination and ostracism, including forced retirement, reduction of food rations and exclusion from certain fields of study, a measure considered necessary for national security.

Quảng Ninh was the worst affect province. Some 160k Hoa was force to leave. Corresponding to approximately 22 per cent of the total population. The Chinese provided much needed manpower to the industrial and mining sectors and the economy of the province was devastated by the departure of virtually the entire Chinese community.

The size of the exodus increased during and after the war. The monthly number of boat people arriving in Southeast Asia increased to 11,000 during the first quarter of 1979, 28,000 by April, and 55,000 in June, while more than 90,000 fled by boat to China. In addition, the Vietnamese military also began expelling ethnic Hoa from Vietnamese-occupied Cambodia, leading to over 43,000 refugees of mostly Hoa descent fleeing overland to Thailand. By now, Vietnam was openly confiscating the properties and extorting money from fleeing refugees. In April 1979 alone, Hoa outside of Vietnam had remitted a total of US$242 million (an amount equivalent to half the total value of Vietnam's 1978 exports) through Hong Kong to Ho Chi Minh City to help their friends or family pay their way out of Vietnam. By June, money from refugees had replaced the coal industry as Vietnam's largest source of foreign exchange and was expected to reach as much as 3 billion in US dollars. By 1980, the refugee population in China reached 260,000, and the number of surviving boat people refugees in Southeast Asia reached 400,000. (An estimated 50% to 70% of Vietnamese and Chinese boat people perished at sea.)