Name: Maisha Anzum

Id: 6194235053

Question : Why Mercedes Benz company decided to established a manufacturing plant in Vietnam?

Answer:

Mercedes Vietnam does not only produce for the export market but for the home market too, which is
developing slowly but steadily Although Mercedes offers the course in a bid to sell cars to Vietnam’s top
earners, they also have road safety courses for the rest of the population.

Mercedes Benz’s plant is in Ho Chi Minh City in southern Vietnam. It has about 500 employees including
six Germans in management positions. In the production hall, cars and minibuses that are ready to go
on sale roll off the assembly line. None are completely “made in Vietnam, “however, explains Lörsch:
“We import our parts from Germany. We don’t only do assembly here though; we also weld and
varnish. We’re not allowed to only do assembly.”

Udo Lörsch is the firm’s manager in Vietnam: “We do quite a lot to improve road safety. For example,
we offer safety training courses for taxi drivers and transport firms along with the People’s Committee.
We also work with the police.” There are over 12,000 road traffic deaths a year in the country of 84
million inhabitants. In 2005, 170 vehicles were sold. This figure doubled in 2006. And in 2007, 600 were
sold. The firm hit the 1,000 marks in 2008. About 1,500 commercial vehicles are sold annually.

An average wage at Mercedes Vietnam is 180 US dollars a month. But low wages are not the reason why
the company assembles cars in Vietnam, according to Lörsch: “We only do it because of the customs
duties, which are very high for finished cars.”

“These countries -- Vietnam, Thailand, Malaysia and Indonesia -- are trying to build up their own auto
industry and that can only work with customs duties. But the duties are lower if we manufacture here.”

Avoiding High parts duty, cost effecting are the main reason to decided to establish manufacturing
Mercedes Benz at Vietnam .