CAPTURE THE BUSINESS

OPPORTUNITIES IN
VIETNAM
BUSINESS SWEDEN
August 2015
Business Sweden in Vietnam
 INTRODUCTION

VIETNAM HAS BEEN ONE OF THE FASTEST GROWING

ECONOMIES IN ASIA THE PAST 30 YEARS
BUSINESS OPPORTUNITIES IN VIETNAM
 Vietnam has been one of the fastest growing economies
in Asia the past 30 years – bringing it from poverty to a
lower middle income market
 Political stability, large infrastructure investments and the
manufacturing sector makes it interesting to Swedish
companies, as well as its newer consumer market role
 Sweden exports products such as machinery for
processing and manufacturing purposes, electronics,
and pharmaceuticals to Vietnam, while importing e.g.
mobile phones, clothing, shoes and food products
 Infrastructure investments, the manufacturing industry,
and newer consumer market present many opportunities;
 Sourcing of clothing, textile, shoes and furniture
 Automation and productivity solutions for electronics
manufacturing and food & beverage sectors
 Infrastructure investments within e.g. transport sector
 Healthcare market, especially medical devices
BUSINESS SWEDEN IN VIETNAM
 Business Sweden has been present in Hanoi since 1999
and is, together with the Bangkok office, responsible for
the Mekong region, including Thailand, Vietnam,
Myanmar, Cambodia and Laos
 In Vietnam, Business Sweden, supports and advises
Swedish companies with their market entry and/or
growth in Vietnam
 Type of support and advice include market entry and
growth strategies, stakeholder analysis and
management, facilitation of government relations,
identifying partners, manufacturers and acquisition
targets, and more
 Contact us to discuss your
company’s business opportunities
in Vietnam!
Vivianne Gillman
Trade Commissioner to Vietnam

BUSINESS SWEDEN 19 AUGUST, 2015 2

INTRODUCTION TO ASEAN

THE ASEAN ECONOMIC TRADING BLOC WAS FORMED

1967 TO PROMOTE GROWTH, STABILITY AND PEACE
ASEAN - THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS
MYANMAR

VIETNAM

LAOS
THAILAND
PHILIPPINES

Cambodia
CAMBODJA

MALAYSIA
BRUNEI
INDONESIA
SINGAPORE

ASEAN HAS OVER TIME DEVELOPED TO BECOME A REGIONAL FORCE IN ASIA

BUSINESS SWEDEN 19 AUGUST, 2015 3

INTRODUCTION TO VIETNAM

HIGH GROWTH HAS BROUGHT VIETNAM FROM POVERTY

TO
KEY A LOWER
FACTS MIDDLE INCOME MARKET IN 30 YEARS
VIETNAM

GEOGRAPHICAL OVERVIEW OF VIETNAM KEY CHARACTERISTICS

STRONG GROWTH

~10% around millennium shift

5.4% (2013), 6% (2014), 6.2% (2015f)
GDP per capita 2014: USD 3,515

LARGE LABOR FORCE

Population 2014: App. 93 mil., Population in

working age: App. 77% (2014)

HIGH FDI LEVELS

Registered FDI 2014: USD 20.2 bil.

More than half from South Korea, Hong Kong
and Singapore

VIETNAM REMAINS IN A PERIOD OF STRONG ECONOMIC GROWTH

SOURCE: GENERAL STATISTICS OFFICE OF VIETNAM, 2014; HSBC 2015

BUSINESS SWEDEN 19 AUGUST, 2015 4

INTRODUCTION TO VIETNAM

VIETNAM IS A DYNAMIC NATION WELL-LOCATED IN

SOUTH EAST ASIA
GEOGRAPHICAL OVERVIEW OF VIETNAM ADVANTAGES AND DISADVANTAGES WITH VIETNAM

Strategic location Infrastructure

Socio-Political stability
Legislation and policy
Reform commitment
Transparency
Economic growth

Fast urbanization rate

Corruption
Emerging middle
Bureaucracy
class

Labor cost Productivity

CHALLENGES ALWAYS EXIST IN FAST DEVELOPING COUNTRIES, BUT OPPORTUNITIES COUNT

SOURCE: DESKTOP RESEARCH
BUSINESS SWEDEN 19 AUGUST, 2015 5
INTRODUCTION TO VIETNAM

VIETNAM IS DIVIDED INTO 3 CLEARLY DIFFERENT

REGIONS, ALL VARYING IN FOCUS AND CULTURE
KEY COMMERCIAL HUBS IN VIETNAM DESCRIPTION OF THE COMMERCIAL HUBS

Hanoi is the political center. The North is

North Vietnam
also becoming an industrial hub for
Ha Noi Heavy industries
heavy manufacturing activities

Da Nang, a dynamic emerging city in

Da Central Vietnam Central Vietnam, is ranking high in high
Nang IT & Tourism tech development and IT infrastructure.
It is also a popular tourist spot.

Ho Chi Minh City is the commercial hub,

South Vietnam the financial center and headquarters of
Ho Chi Minh Financial center many foreign and Vietnamese private
City companies.

DEPENDING ON YOUR INDUSTRY, DIFFERENT REGIONS WILL BE RELEVANT FOR YOU

SOURCE: DESKTOP RESEARCH

BUSINESS SWEDEN 19 AUGUST, 2015 6

INTRODUCTION TO VIETNAM

VIETNAM HAS SHIFTED FROM A CENTRALLY PLANNED

NATION TO A TRADE-DEPENDENT ECONOMY
OVERVIEW OF THE ECONOMIC INTEGRATION OF VIETNAM

ASEAN + CHINA
Vietnam was Vietnam joined ASEAN
ASEAN + JAPAN
reunified and and the regional Free Vietnam became the
ASEAN + KOREA
became a Trade Area (AFTA) 150th member of WTO
ASEAN + INDIA
Communist Country accordingly
ASEAN + AUS/ NZ

1986 2000 2008 2015

1976 1995 2007 2004 - 2011

Under negotiations:
“Doi moi” or Renovation
RCEP
process began to
Vietnam – US Bilateral Vietnam – Japan ASEAN – EU
change Vietnam from a
Trade Agreement Economic Partnership TPP (12 countries)
planned economy to a
signing Agreement signing Vietnam – EU
"socialist-oriented
Vietnam – Korea
market“ one
and still more...

TRADE LIBERALIZATION AND INTERNATIONAL ECONOMIC INTEGRATION ARE THE KEY WORDS FOR VIETNAM
SOURCE: DESKTOP RESEARCH

BUSINESS SWEDEN 19 AUGUST, 2015 7

KEY INDUSTRIES IN VIETNAM

VIETNAM OFFERS SEVERAL SECTORS OF INTEREST FOR

SWEDISH COMPANIES

Electronics & ICT Sourcing Infrastructure Healthcare

A preferred global A new manufacturing Vietnam will invest more The Vietnamese
center for electronics alternative to China, than USD 20 billion in healthcare market is
production and IT India and other Asian infrastructure from expected to grow from
outsourcing countries 2015-2020 USD 7.2 billion to USD
2014: BUSD 35 exports The country offers This includes BRT 25.2 billion between
of electronics + competitive manpower systems, metros and 2010 and 2010
hardware cost of less than half of airport projects in the More than 95% of
2015: No. 1 global Chinas costs cities of Hanoi, Da Nang medical devices and
outsourcing location* and Ho Chi Minh City 90% of drugs are
imported

* According to Cushman & Wakefield

VIETNAM OFFERS BUSINESS OPPORTUNITIES IN SEVERAL AREAS FOR SWEDISH COMPANIES

SOURCE: WORLD ECONOMIC FORUM (2014), BUSINESS MONITOR (2015)

BUSINESS SWEDEN 19 AUGUST, 2015 8

KEY INDUSTRIES IN VIETNAM [ELECRONICS & ICT]

VIETNAM IS BECOMING A GLOBAL ELECTRONICS

MANUFACTURING HUB – EXPORTS EXCEED IMPORTS
ELECTRONICS-HARDWARE IMPORTS & EXPORT KEY OPPORTUNITIES
2008 – 2013 , USD BILLION

Exports Imports Reasonably low labor costs and

Vietnam as a
favorable taxation policies for the
manufacturing
sector are factors for setting up
hub
electronics production here

26,4 The establishment of large

electronics MNCs as Samsung,
Supplying to
Microsoft Mobile, Intel, LG, etc.in
OEMs
19,4 the market bring opportunities for
sub suppliers

10 34,7 Vietnam is an emerging center for

Vietnam as an
22,8 software development and IT
7,6 outsourcing
6,5 services outsourcing. The
5,7 10,9 destination
3,4 5,7 government support the trend
2,8
2008 2009 2010 2011 2012 2013

VIETNAM IS AN EMERGING DESTINATION FOR ELECTRONICS PRODUCTION AND OUTSOURCING SERVICES

SOURCE: 2014 WHITE BOOK ON INFORMATION AND COMMUNICATION TECHNOLOGY IN VIETNAM, ITU

BUSINESS SWEDEN 19 AUGUST, 2015 9

KEY INDUSTRIES IN VIETNAM [SOURCING]

VIETNAM IS EMERGING AS AN ALTERNATIVE SOURCING

DESTINATION IN ASIA, COMPETING WITH CHINA
ANNUAL WAGE COMPARISONS KEY OPPORTUNITIES
2013, USD

3534 Swedish companies can consider

Labor-
3337 Vietnam for labor-intensive
3169 intensive
manufacturing industries as
manufacturing
3107 3012 garment, shoes and bags

2472
Industries require manual work
1648 1581 Cost effective such as wooden furniture, large
1515 manual work steel structures and machine parts
1296 are also cost-effective in Vietnam

The long experience of Swedish

Valuable
sourcing companies and offices in
Malaysia China Thailand Philippines Vietnam predecessors’
Vietnam can be very useful for new
experience
Annual minimum wage comers to the market.
Adjusted for employer social insurance contribution

COMPANIES MOVING TO VIETNAM DON'T LOOK ONLY FOR LOW COST LABOUR, BUT GOOD ENVIRONMENT
SOURCE: CHINA BRIEFING 2014

BUSINESS SWEDEN 19 AUGUST, 2015 10

KEY INDUSTRIES IN VIETNAM [INFRASTRUCTURE]

HEAVY INFRASTRUCTURE INVESTMENTS PRESENTS

OPPORTUNITIES FOR COMPANIES IN INFRASTRUCTURE
VIETNAM – EXAMPLES OF NEW PROJECTS 2015-2020 KEY OPPORTUNITIES

Until 2020, nearly USD 35 billion

New
Hanoi  Four metro lines will be required for building new
infrastructure
roads, metro/ monorail/ railways,
projects
 North-South Express airports and seaports
Train Study

Some 60% of the required funds

Fair chances
will come from the private sector or
Da Nang  A BRT system to foreign
development soft loans, giving
companies
fairer chances to foreign firms

Opportunities for Swedish players

What Swedish will lay in: vehicle supply, concept/
 A BRT system firms can offer architectural design, and
Ho Chi Minh City engineering consultancy services.
 Metro lines
 Expectedly a new airport

VIETNAM’S WEAK TRANSPORT INFRASTRUCTURE EXPOSES OPPORTUNITIES TO FOREIGN COMPANIES

SOURCE: WORLD ECONOMIC FORUM, THE GLOBAL COMPETITIVENESS REPORT 2014-2015, NOV 2014
BUSINESS SWEDEN 19 AUGUST, 2015 11
KEY INDUSTRIES IN VIETNAM [HEALTHCARE]

THE VIETNAMESE HEALTHCARE MARKET WILL MORE

THAN TRIPLE BETWEEN 2010 - 2020
GROWTH OF VIETNAM HEALTHCARE MARKET KEY OPPORTUNITIES
2010 – 2020, USD BILLION
Heavily laden public hospitals
Many new
leading to new facilities (private +
25,2 hospitals will
public) of thousands of beds in total
be built
to be built in big cities until 2020
CAGR: 52%
Over-the-counter drugs are very
14,4 Branding and popular in Vietnam, so good
advertising sell branding and advertising will help a
OTC drugs lot in product promotion and sales

7,2

Vietnam currently imports up to

Medical device
95% of medical devices, 90% of
and drugs
ingredients and 60% of drugs, a
ingredients
2010 2015 2020f market worth of 20BUSD in 2020.

SALES OF MEDICAL DEVICES AND DRUGS OFFER THE LARGEST OPPORTUNITIES

SOURCE: 2014 WHITE BOOK ON INFORMATION AND COMMUNICATION TECHNOLOGY IN VIETNAM, ITU

BUSINESS SWEDEN 19 AUGUST, 2015 12

SWEDEN IN VIETNAM

SWEDISH BUSINESS HAS A LONG HISTORY IN VIETNAM,

BUT THERE IS A BIG OPPORTUNITY FOR GROWTH

Approximately 40 Swedish companies are established in Vietnam,

including ABB, Atlas Copco, AstraZeneca, Electrolux, Ericsson,
Sandvik, SKF and TetraPak
The trade between Sweden and Vietnam quadrupled between 2004-
2014
Prioritized sectors: Healthcare, Manufacturing and Sourcing, ICT and
Outsourcing, Transport and Automotive

1967 1969 1980 1993 2002 2008 2013

Swedish Two-way
First aid Embassy set trade volume
projects up in Hanoi reached
>$US 1bil

MORE AND MORE SWEDISH COMPANIES COME TO DIRECTLY DO BUSINESS IN VIETNAM OR VIA PARTNERS
SOURCE: EMBASSY OF SWEDEN

BUSINESS SWEDEN 19 AUGUST, 2015 13

SWEDEN IN VIETNAM

TODAY, THERE ARE APPROXIMATELY 40 SWEDISH

COMPANIES IN VIETNAM
EXAMPLES OF SWEDISH COMPANIES DOING BUSINESS IN VIETNAM
Larger Medium Smaller Through
Sized Sized Sized Partners

 ABB  Consilium  Niteco  ActSafe System

 Alfa Laval  Gunnebo Security  Tellbe  Alentec & Orion
 Atlas Copco  New Wave Group  Terraco  AssaAbloy
 AstraZeneca  Oriflame  Elekta
 Blåkläder  Securitas  ESAB
 Electrolux  Rudholm Group  Gambro
 Ericsson  ÅF Consult  GANT
 IKEA  Getinge
 Sandvik  Maquet
 SKF  Opsis
 Snickers Europe  PrimeBlade
 Tetra Pak
 DeLaval
 Elof Hansson
 Seco Tools

MANY SMES CHOOSE TO WORK THROUGH PARTNERS FOR A WIDER GLOBAL MARKET COVERAGE
SOURCE: BUSINESS SWEDEN AND EMBASSY OF SWEDEN, HANOI

BUSINESS SWEDEN 19 AUGUST, 2015 14

SWEDEN IN VIETNAM

SWEDEN - VIETNAM TRADE VOLUME QUADRUPLED

BETWEEN 2004 - 2014
SWEDEN-VIETNAM TRADE VOLUME OF GOODS
2004 – 2014, SEK BILLION

400%
2004-2014 1,17
CAGR Swedish Export: 1.6%
CAGR Swedish Import: 19.2%
0,87

0,90
1,01 6,46

1,80 1,70 4,22

1,18 1,43
1,02 3,24
0,98 0,93 2,65
1,31 1,46 1,58 1,70 1,86
0,94 1,06

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Swedish Imports Swedish Exports

SWEDEN IMPORTS SIGNIFICANTLY MORE FROM VIETNAM THAN IT EXPORTS TO THE COUNTRY
SOURCE: STATISTICS SWEDEN

BUSINESS SWEDEN 19 AUGUST, 2015 15

SWEDEN IN VIETNAM
SWEDEN MINALY EXPORT MAINLY MACHINERY FOR
PROCESSING AND MANUFACTURING PURPOSES
SWEDISH EXPORTS TO VIETNAM, 2014
SEK Million
Textile & Garment
Other
Petrochemicals
Metal and mineral products
Pulp & Paper and wood
products
Pharmaceutical products
Computers, electrical and
electronics devices
Other machines
Total
SWEDISH EXPORTS TO VIETNAM HAVE STAYED QUITE STABLE OVER THE PAST FEW YEARS
SOURCE: STATISTICS SWEDEN
BUSINESS SWEDEN
COMMENTS:
 Machinery with computers, electrical and
18 electronics devices took up the largest parts
of Swedish exports to Vietnam in 2014
66  However, the hardware device exports had
been decreasing since 2010 with an
91 average of -20% per year (CAGR)
104  The Machinery segment also saw a declining
trend, but took a significant reverse in 2014,
137 increasing 7.1 times compared with 2010
 Meanwhile, drug exports grew 14% during
142 2010 - 2014, ranking 3rd in the export list. F&B
and petrochemicals were also on generally
295 increased
318  Pulp & Paper and wood exports from Sweden
to Vietnam saw a jump in 2014 with a CARG
1 171 value of 15.5% since 2010
19 AUGUST, 2015 16
FORMS OF ESTABLISHMENT

THERE ARE VARIOUS ESTABLISHMENT FORMS,

SUITABILITY DEPENDING ON ACTIVITY TYPE
Type of activity  Allowed activities
Export to Import from Sales in Manufacture in
Form of establishment Vietnam Vietnam Vietnam Vietnam

Agent/Distributor

 
Representative
Office

   

Level of stake
Joint Venture with

and control
VN company

Limited Liability
Company
   
VARIOUS FORMS OF DOING BUSINESS ARE ALLOWED IN VIETNAM –CHOOSE WHAT SUITS YOU BEST
BUSINESS SWEDEN 19 AUGUST, 2015
SOURCE: BUSINESS SWEDEN’S LAWFIRM

BUSINESS SWEDEN 8/19/2015 17

 DO’S AND DONTS

UNDERSTANDING THE VIETNAMESE CULTURE WILL

HELP AVOID MAKING MISTAKES
OVERVIEW OF SWEDISH CULTURE OVERVIEW OF VIETNAMESE CULTURE

 Quite a homogeneous culture  A rich culture country, the regions are all different

 Rule-based  There is always flexibility, and a “But…”

 Punctuality  Time accurateness is still an issue

 "Saying what you mean and meaning what you say“  A “YES” may mean “NO” and vice versa

 Silence is not awkward  Silence during meetings may look strange

 Focus on product and technical excellence  “Know-who” often beats out “know-how”

 Negotiate fairly, offer best price first  Discounts – negotiate “good deals”

 Long-term planning  Last minute changes in appointments (follow up)

 Flat structure and risk adverse  Top-down structure and risk taking

IT IS IMPORTANT TO BE AWARE OF CULTURAL DIFFERENCES WHEN DOING BUSINESS IN VIETNAM

BUSINESS SWEDEN 19 AUGUST, 2015 18

 DO’S AND DONTS

KEEP THE FOLLOWING ISSUES IN MIND WHILE DOING

BUSINESS IN VIETNAM
OVERVIEW OF KEY SUCCESS FACTORS FOR DOING BUSINESS IN VIETNAM

Do your Vietnam is a country full of customers, competitors and colleagues. Apply a fact based
homework approach and develop a strategy for your entry and growth in Vietnam.

Take a long Vietnam is a long term market. Plan establishment in phases and bring patience and
term view perseverance. Expect red tape, bureaucracy and lengthy procedures.

Hire the best Doing business in Vietnam can be tougher than most markets – send you best
people man/woman for the job. Hire carefully and go for competence and attitude – not low cost!

Have a
strategy for Vietnam can be very profitable, if you have a strategy for price and cost.
price/ cost

Be objective Focus on business objectives – Expect things not to go according to your plan
oriented Study negotiation techniques – They will come handy both in business and privately

Be careful
The right partner can make it – the wrong partner may break it! Be thorough in screening
when
of local partners and choose carefully. Be very careful before entering a Joint Venture.
partnering

DO YOUR HOMEWORK BEFORE ENTERING THE VIETNAMESE MARKET!

BUSINESS SWEDEN 19 AUGUST, 2015 19

BUSINESS SWEDEN IN ASEAN

WITH 5 OFFICES IN SOUTH EAST ASIA WE ARE AT HOME

ON YOUR FOREIGN MARKETS
BUSINESS SWEDEN’S PRESENCE IN ASEAN BUSINESS SWEDEN’S SERVICE OFFERINGS
Business Sweden makes it easier for
VIETNAM Swedish companies to grow internationally

EVALUATE OPPORTUNITIES

THAILAND
CHOOSE STRATEGY

ESTABLISH PRESENCE

MALAYSIA
SINGAPORE GROW BUSINESS

INDONESIA

MYANMAR, LAOS, CAMBODIA, BRUNEI AND THE PHILIPPINES ARE COVERED BY THE ABOVE OFFICES

BUSINESS SWEDEN 19 AUGUST, 2015 20

CONTACT US
BUSINESS SWEDEN IN VIETNAM

Contact information

Business Sweden
Commercial Section at The Swedish Embassy in Vietnam
No.2 Nui Truc Street, Van Phuc
Ba Dinh district, Hanoi, Vietnam
T: +84 4 3726 0402
E: asean@business-sweden.se
W: www.business-sweden.se
BUSINESS SWEDEN 21