Understanding of the Vietnamese Economy and Business Environment 2011
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Understanding of the Vietnamese Economy and Business Environment 2011 Presentation Transcript

  • 1. VIETNAMICA.NET Socio-Economic Insights on Vietnam Understanding ofThe Vietnamese Economy and Business Environment
  • 2. Bonjour Vietnam, 2006 Raconte-moi ce nom étrange et difficile à prononcer Que je porte depuis que je suis née Raconte-moi le vieil empire et le trait de mes yeux bridés Qui disent mieux que moi ce que tu noses dire Je ne sais de toi que des images de la guerre Un film de Coppola, des hélicoptères en colère Tell me all about this name, that is difficult to say. It was given me the day I was born. Want to know about the stories of the empire of old. My eyes say more of me than what you dare to say. All I know of you is all the sights of war. A film by Coppola, the helicopters roar.Musician: Marc Lavoine (French)Singer: Pham Quynh Anh (Belgian)
  • 3. Vietnamese Tourism2000-2005: Welcome to Vietnam2006-2010: Vietnam: The Hidden Charm(by Dr. Adam McCarthy, + 30% foreignvisitors)Curious? Then What Next?
  • 4. The Last Frontier• First investment funds in Vietnam: early 1990s – First half 1990s: Eight funds; US$700 Mln. – After 1997: only two (Vietnam Enterprise Investment Fund run by Dragon Capital Vietnam, and Vietnam Frontier Fund by Finasa)• 2002-2005: – Quite period – Mekong Capital, VinaCapital, IDG, VietFund, PXP Asset Management• 2006-2007: – Booming period – More: 22 funds and 17 fund management companies• 2009-2010: – Closing, exiting, leaving (Indochina Capital exited in May 2009) – Poor perfomance (May 16, 2011) • VMFVF1: 9.8; PRUBF1: 5.3; MAFPF1: 4.1 • Par value: 10• The charm is no more hidden!
  • 5. Vietnam Stock Market
  • 6. US$ GDP per capita2,1501,6501,150 650 150 1969 1975 1981 1987 1993 1999 2005 2015
  • 7. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%19 8619 8819 9019 9219 9419 9619 9820 0020 0220 04 GDP Growth20 0620 0820 10
  • 8. The Stock of FDI in Vietnam (As of Dec. 22, 2010) Type of Investment No. of Projs Registration Statutory100% foreign-owned 9,599 119,252 39,258Joint venture 2,209 60,586 16,964Business cooperation contract 223 5,053 4,574Joint-stock company 193 4,795 1,405BOT, BT, BTO contracts 11 3,599 903Investment holding 1 98 83Total 12,236 193,382 63,186(As of Oct. 20, 2009) 10,805 174,715 56,527Source: GSO and Vietnam Economic Times, 2010. Registration and statutorycapital figures in million of USD.
  • 9. Major FDI Sources, 2009Source: Vietnam Economic Times, 2009.Data point: Country; Cumulated FDI registration; Relative contribution inpercentage; Value: US$ Bln
  • 10. Major FDI Sources, 2010 Chinese Taipei, 22.8 , 12% Others, 38.5 , 20% Korea, 22.1 , 11% Thailand, 5.8 , 3% Caym an Islands, 7.4 , 4% Singapore, 21.7 , 11% Hongkong, 7.8 , 4% USA, 13.1 , 7% Japan, 20.8 , 11% BVI, 14.5 , 7% Malaysia, 18.3 , 10%Source: Vietnam Economic Times, 2010.Data point: Country; Cumulated FDI registration; Relative contribution inpercentage; Value: US$ Bln
  • 11. Vietnam: A Destination for American Companies • Pros: – The 2001 US-Vietnam Bilingual Trade Agreement – Vietnam’s full membership of WTO in 2007. – A promising market of 87 million people. The nation GDP per capita was about US$1,200 in 2010. – A reasonable alternative for China-based production since the Chinese production cost is increasing • Cons: – Business environment: Organized Chaos – Emerging and transiting economy • Fact: No American FDI in Top15 (4-M 2011)
  • 12. Trade DeficitsUS$ Mln. Exports of Goods Imports of Goods100000 80000 60000 40000 Exports ~ Imports 20000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
  • 13. Trade Balance
  • 14. Agricultural Products Exports US$ MlnAquacultural Products 4,953 6.9%Vegetable 451 0.6%Cashew nuts 1,136 1.6% • The nation’s comparative advantageCoffee 1,763 2.5%Tea 197 0.3% • Renewable resourcePepper 425 0.6%Rice 3,212 4.5% • Green development and climate changeCasava 556 0.8%Coal 1,549 2.2%Crude Oil 4,944 6.9%Total Export Value 71,629
  • 15. Agricultural ProductsJohn Richard "Jack" Simplot, 1909-2008 Dang Le Nguyen Vu, born 1971King of Potato Trung Nguyen CoffeeForbes (2007): # 273, US$3.2 billion Financial Times Case Study Apr. 27, 2011
  • 16. Tourism Industry
  • 17. Socio and Cultural Aspects• Chinese-originated Confucianism – Hierarchy – Face-saving – Relation business• Social Ranking “Sĩ – Nông – Công –Thương” – Gentry Scholar/Intellectual Official – Farmer – Craftsman – Trade/Businessman• The Hidden Entrepreneur’s Aspiration to Become a Non- Entrepreneur
  • 18. ‘Seed’ Capital• Most Vietnamese business people are enthusiastic about discussing collaboration opportunities• Perception: foreigners bring – Future profits – AND immediate revenues• Knowledge of the local market should be an asset for the potential partnership• Face-saving keeps Vietnamese business people not asking for what they really want• `Seed’ capital for long-term partnership
  • 19. Cultural Interpreter• There is a gap between what the local partner proposes what he has done or is able to do• “Cultural Interpreter” – local professional business and consulting firm – understanding and expertise of the business and administrative processes
  • 20. Disguised Entrepreneurs• Who are disguised entrepreneurs? – A bunch of ideas and proposals – NO risk-taking, NO implementing, ect. – Trying to be on the “safe-side”• Middle man: – Willing to facilitate the foreigners’ smooth businesses in Vietnam – Gains: profits, business relations, images and brands• Keep encouraging them to do their best for business collaboration.
  • 21. Strategic Planning• Many set up and start running a new company with: – A list of wishes – No business plan• New fashion of the Vietnamese large corporations: – Doing “big things,” – Thinking globally, – Developing strategy• Strategic planning services: a multi-million dollars market• High prices for: – Well-known consulting brands (experts, professors) – The business owner’s ex-ante strategy – Higher prices of equity
  • 22. What is Strategy?
  • 23. Reference Reading• Vuong, Q.H., Dam, V.N, Van Houtte, D. and Tran, T.D. (2011) “The Entrepreneurial Facets as Precursor to Vietnam’s Economic Renovation in 1986,” Working Paper Series Centre Emile Bernheim, SBS-EM – ULB, No. WP-CEB 11-010, April.• Nancy K. Napier and Vuong Quan Hoang (2011) “Getting to the Real Story: What Vietnamese business people wish foreigners understood about doing business in emerging and transition countries like Vietnam – BEFORE they start,” Int. J. Human Resources Development and Management, accepted-forthcoming.• Quan Hoang Vuong and Tri Dung Tran (2011) “Vietnam’s Corporate Bond Market, 1990-2010: Some Reflections,” The Journal of Economic Policy and Research, Volume 6, Number 1, pp. 1-47, October 2010 – March 2011.• Vuong Quan Hoang, Tran Tri Dung, and Nguyen Thi Chau Ha (2010) “Mergers and Acquisitions Market in Vietnam’s Transition Economy,” The Journal of Economic Policy and Research, Volume 5, No. 1, pp. 1-54 (ISSN: 0975-8577), Mar. 2010. Institute of Public Enterprises, Hyderabad 500-007.• Vuong Quan Hoang (2010) Financial Markets in Vietnam’s Transition Economy: Facts, Insights, Implications. (ISBN: 978-3-639- 23383-4) VDM-Verlag, Feb. 2010, Saarbrücken, Germany.• Quan-Hoang Vuong and Tran Tri Dung (2009) “The Cultural Dimensions of the Vietnamese Private Entrepreneurship,” The IUP Journal of Entrepreneurship Development, Vol. VI, No. 3 & 4 (Sept. and Dec. 2009), pp. 54-78.• Vuong Quan Hoang and Tran Tri Dung (2009) “Financial Turbulences in Vietnam’s Emerging Economy: Transformation over 1991-2008 Period,” in Jagadeesha and Deene, eds., Contemporary Issues in Finance, pp. 43-61, Excel Books, New Delhi, ISBN 978- 81-7446-725-6 (Amazon link). Available at SSRN: http://ssrn.com/abstract=1486204• André Farber, Nguyen Huu Tu ,Tran Tri Dung, and Quan-Hoang Vuong (2008) “The financial storms in Vietnam’s transition economy: A reasoning on the 1991-2008 period,” Working Papers CEB 08-023.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB), November.
  • 24. www.VIETNAMICA.net• Quality Insights on Vietnam’s Economy and Business • Financially and Time-Saving Tool For Your Making Well Informed Decisions.