“Vietnam’s Emerging Market Potential” What problems might a company encounter wh
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“Vietnam’s Emerging Market Potential”
What problems might a company encounter while conducting market research in Vietnam?
acticing International Management Case Vietnam's Emerging Market Potential round 25 years ago, Vietnam's government first introduced 10 days a month on their official salary. with the majority purchasing power coming from moonlighting activities and busi- ness conducted in the informal economy. i moi. This "renewal" policy initiated free-market reforms while preserving a communist political system. In 1990. Vietnam's communist government announced that non-Vietnamese manufac- turers were welcome to set up shop in the In late 2001, Vietnam and the United States signed a trade Southeast Asian country that gave Vietnam normal trade status with the United States. This meant that Vietnam could ship goods to the U.S. market at the compalowest possible tariff rates, Meanwhile, U.S. companies are gain- Vietnam. As a result. Vietnam's . Korea's Daewoo (www.dm.co.kr) quickly established it as the number-one investor in Vietnam. Other well-known nies, including Toshiba (www.toshiba.co.jp) Peugeot (www.peuing continually greater access to Vi geot.com), and British Petroleum (www.bp.com) also took Hanoi export activity (worth around $100 billion in 2014) is booming. up on its invitation. due largely to its cheap, efficient workforce and growing foreign The absence of trade and diplomatic relations between the investment. Vietnam's exports to the United States are doubling United States and Vietnam, however, meant that U.S. comp each year. The diversified nature of the country's exports-in- nies had to sit on the sidelines. Nearly four years later, the U.S. cluding commodities, agricultural products, and manufactured government lifted the trade embargo with Vietnam, paving the goods-means it is somewhat immune to large swings in the price way for a host of U.S. companies to pursue opportunities there o any one export. Vietnam is now the world's largest exporter of Vietnam's location in the heart of Asia and the presence of a liter pepper, it may soon overtake Thailand in rice exports, and it even ate, low-wage workforce are powerful magnets for international exports tea to India. companies Vietnam has become one of Asia's best-performing econo Today, there are many challenges for investors in Vietnam. The mies. Over the past decade, Vietnam grew nearly 8 percent a year population of around 82 million is very poor, with an annual per In fact, throughout the currency crisis that gripped Southeast capita income (at purchasing power parity) of only about $2,900 Asia in the late 1990s, Vietnam's economic growth rate never The infrastructure is undeveloped: Only 25 percent of roads are dipped below 4.8 percent. The recent global slowdown, however paved, electricity sources are somewhat unreliable, and the banking did tug down on Vietnam's upward trajectory. Still, the nation's system is undeveloped. And although Vietnam holds tremendous trade-driven economy has lifted many Vietnamese out of poverty it may be two decades before Vietnam reaches Whereas the World Bank labeled as much as 70 percent of the oday.population poor in the 1980s, that number was less than 18 percent Thailand t the level of economic development found even in In addition, the Communist Party of Vietnam is struggling in 2014. to adapt to the principles of a market economy, and the layers of bureaucracy built up over decades of communist rule slow the Thinking Globally pace of change. Despite the efforts of the State Committee for 2-10. What do you think western Cooperation and Investment, the government sometimes still con ducts itself in a way that leaves international investors scratching 12-11. What problems might a their heads. In one incident, Hanoi embarked on a "social evils crackdown" that included pulling down or painting over any sign12-12. Reflecting on your perception of or billboard printed in a language other than Vietnamese. And laws concerning taxes and foreign exchange are in constant flux. countries could do t o help im- prove the business climate in Vietnam? while con- ducting market research in Vietnam? Made in Vietnam," does the type of product affect your perception? Explain et an emerging entrepreneurial class in Vietnam has devel- expensive products such as Nikon (www.nikon oped a cojp)cameras and Ray-Ban Sownes: "Touchable After All," The Economist. August 25, 2012, p.32; "V Not Yet for Victory. The Economist (www economist.com), September 24, -ban com) sunglasse sunglasses- economic sta- But if official economic sta money 2009."Half-Way from Rags to Riches." The Economist, Special Report, April both of which are available in stores. come large unofficial economy. It is 262008, pp. 1-16; "Good Morning at Last." The Economist. August 5, 2006. pp. 37-38:"Vietnam's Export Worth $22.3 Billion. Vietnam Ministry of Trade to afford such luxury items? The answer is found in the typical for a person to live only Sor Il us that many Vietnamese are poor, where does the press release. July 25. 2006Explanation / Answer
Answer: The following are some of the issues which might be encountered while conducting a marketing research in Vietnam.
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