Vietnamese

Business Context

Joy Koh
SeungYeon
Eun
Song Toan Le
(Zet)
Tae Hyun Koh
 01 Introduction

02 Vietnamese Culture

Contents 03 Market

04 Current Situation

05 Negative Effect from Foreign Investmen

06 Conclusion
Introductio
n
 Environmental Aspects
01

02
Located in India-china peninsula,
03 adjacent border line with Cambodia,
04 Laos and China
Generally tropical and monsoonal
05
climate, which led Vietnam to
06
develop agricultural industry
Main natural resources are coal,
copper, crude oil, gold, iron,
manganese, silver, and zinc
Composed of 21% arable, 28% forest
and woodland, and 51% other
 Social Aspects
01

02
Demographics of Vietnam Education In Vietnam
03
0-14 29.4 literate illiterate
04
15-24 16.8
05
25-54 40.8
06
55-64 7.4
94%
65- 5.6

91.7 million people, growing 1.2 percent per year.

Age of 15-64 are 65% of whole population -> abundant
workforce
Literacy rate is around 94% -> high quality workforce
 Historical, Political Aspects
01
Historical Aspects
02
Won
Continuous independence
03
struggle for from France
04 independenc which led to
e from China North and
05
till 14th South division
06 century
US retreated in 1973 which led
Worried about communists
unification by the communist
growth, US started Vietnam
party in 1975
war

Political aspects

Single party socialist republic

2nd highest corruption rate in Asia
 Economical Aspects
01

02 Economical reformation called Doi Moi

03 in 1986
More market oriented economy
04
More than 30,000 private businesses,
05
7% of economic growth rate due to Doi
06 Moi
Vietnam GDP % growth, annual

7 GDP has shown drastic increase

6.8 Current GDP of Vietnam is 193.599
6.6
billion USD (2015)
6.4
6.2
The GDP growth rate was 6.7% (2015)
6
2012 2013 2014 2015 2016f
Vietnames
e Culture
 Core Cultural Factors
01

02

03
Allegiance Non- Social
04 Confucian
to verbal Relationship
Family -ism
05 Communi-
cation
06
Prioritize Collectivism Frequent Extension of
family and and high non-verbal family
community power communic relationship
value distance ation Face saving
Emphasize Showing Indirect Social usage
harmony respects when of language
Filial piety, Avoiding showing differs to
strong confrontation emotions & listeners
attachmen expression
t with s
parents
 Business Manners
01
Small talks, compliment and
02 First show understanding about their
Impression
03 history is good (be aware of
dispute with China)
04
Building Be aware of style of Vietnamese
05 Relationshi and differences between North
p and South people
06
Meaning of smiles

Avoid to make confrontation

Negotiatio
Keep your eye on non-verbal
n
expressions

It takes time for them to make

Decision
decisions
Making
Checking written paper
agreement is essential part.
Market
 Trends of Vietnam Economy
01

02

03

04

05

06

Vietnams economy is on growing trends based on not only GDP

growth but also income per capita.
Those prove that Vietnams economy is developing from the start
of 21th century.

Source: General Statistic Office of Vietnam

 Trends in Detail by Sectors
01
Distribution of gross domestic product (GDP) in
02 Vietnam
03

04

05

06

Service occupies largest part of GDP but industries follows right after the
service.

Source: Tradingeconomics
 Foreign Direct Investment by Sectors
01
Major Industry for Foreign Investment in Vietnam in
02 total (1988 to 2016)
03

04

05

06

In terms of foreign direct investment, the manufacturing industry is the

majority.

Source: Tradingeconomics
 Detailed Trend in Manufacturing
Industry
01

02 Textile and Clothing Industry

The largest contributor to Vietnams
03 exports
Vietnams textile industry now comes
04
second to China as the top clothing and
05 footwear supplier of the USA

06 Electronics Industry
Electronics has become the second
largest contributor to Vietnams exports
The electronics sector drove Vietnams
exports to grow by 15.4% between 2012
to 2013

Other industries such as motor vehicles, shipbuilding, food processing,

steel, petrochemicals, and software are also increasing.
These manufacturing industries are mostly located in Ho Chi Minh.
 Free Trade Agreement between Vietnam and
Others
01

02

03

04

05

06

Asia-Pacific Economic Cooperation Trans-Pacific Partnership Regional Comprehensive Economic Partnership

 Incentive Policies
01
Investors in certain can receive tax
02 Incentive breaks or exemptions
tax Besides that, investors receive
03
incentives in their income tax
04
Carrying When there is loss after completion of
05 forward tax finalization, it is permitted to carry
loss losses forward to the following year
06

The maximum rate is not more than

Fixed asset
depreciatio twice the depreciation as stipulated
n by regulations on depreciation of
fixed assets

Investors should be entitled to an

Incentives
exemption from payment of or a
of land use
reduction of land rent and land use
fees
 Current
Situation
 FDI Increase by Taking Chinas Market Share
01
20~23% cheaper labor cost
02 Cheap compared to China
Labor Cost
03

04
Eff ective Government control of inflation
05 Regulation and currency devaluation
s Construction permit procedures
06
half the length of China

Credit
Accessibilit Easier access to credit than
y China

Cheap Cheaper exporting cost

Exporting compared to China
Cost
 Major FDI Projects for 2017
01

02

03
Samsung Samsung LG
Intel Samsung
04 CE Display Display
Project Project
Complex Project Project
05

06
$1 billion $3 billion $1.4 billion $1 billion $1.5 billion
Intel Samsung Samsung Samsung LG Display
Project in Thai CE Display project in
Ho Chi Nguyen Complex project in Hai Phong
Minh Phase 2 in Ho Chi Bac Ninh
Minh
 Effects Resulting from FDI
01

02

03

04

05

06 Drastic GDP Job creation Intangible Government

growth and regional spill-over efforts to
development effects attract more
(technologica FDI
l transfusion,
labor skills,
etc)

There would be many positive effects due to FDI and it is expected

to create more benefits to Vietnam.
 Negative
Effect from
Foreign
Investment
 Negative Effects from Foreign
Investment
01

02 Low work skills

Machined and assembled workers
03
Foreign companies use expatriate workers to
04 play important roles and keep technological
secrete
05
Effect of China
06 Companies import products from China instead
of producing in Vietnam

Less supports to local companies

Compared to many incentive policies for
international companies in Vietnam, support for
local business is lack
 Negative Effects from Foreign
Investment
01

02 Weakness in fanancial management

Finance ministry has showed weakness in
03
managing tax for the government
04

05 Environment pollution
Environmental problems will consume about
06
0.6% of Vietnam's annual GDP until 2020
Foreign-invested firms in charge of 60% of those
wastes environmental standards.

Imbalance between industries

Machining and real estates hold 70% of foreign
investment fund in Vietnam
Conclusion
 Recommendations
01

02 How to increase and apply

foreign investment effectively
03
in Vietnam?
04 How to do the better business
05 in Vietnam? What else to
consider?
06

For Vietnam For foreign enterprises

Reduce corruption to Vietnamese governmental
attract more FDI inefficiency can be a
Promote more joint-venture problem
approaches to FDI in order Ideal demographic and
to lessen influence of economic factors are
foreign capital over attractive aspects of
domestic economy investment
Q&A