Alibaba.com Sourcing Intelligence Series - Vietnam (FULL version)
Professional Sourcing Club Alibaba.comSourcing Intelligence Series – Vietnam November, 2011 Prepared by Allan Yau & Thuy
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Content Country Profile Alibaba.com in Vietnam Tips in Doing Business in Vietnam
Vietnam - Benefits for International Trade Geography – Strategic location: Asia Pacific region gateway to the world – Long coastline: over 4000 km – Convenience seaport Labor force – Young generation – Low labor cost compared with other countries – Hard work and skillful worker Market openness – Trade relation with other countries Natural resource Key Government bodies in promoting export activities
Vietnam Vietnam today is a country undergoing continued development at a rapid pace. While the old image of Vietnam lingers in history textbooks, today’s Vietnam is increasingly being shaped by a dynamic young population. With change comes new technology, new ideas, and new social issues
Vietnam Capital Hanoi Capital website: http://www.hanoi.gov.v n - Hanoi is the capital of Vietnam. Its a wonderful city.
Vietnam Economic Hub Hochiminh City website: http://www.hochiminhci ty.gov.vn - Hochiminh City is an economic hub of Vietnam, a dynamic city. Its very good if you can get more information about this city, where your first business trip may come here.
Climate Vietnam is located in both a tropical and a temperate zone. It is characterized by strong monsoon influences, but has a considerable amount of sun, a high rate of rainfall, and high humidity. Regions located near the tropics and in the mountainous regions are endowed with a temperate climate.
Religion The major religious traditions in Vietnam are Buddhism (which fuses forms of Taoism and Confucianism), Christianity (Catholicism and Protestantism), Islam, Caodaism and the Hoa Hao sect.
Geographic Profile Vietnam is composed of 58 provinces & 5 centrally controlled municipalities
Regional Characteristics Vietnam is further divided into 8 regions: Northwestern Northeastern Red River Delta North Central Coast South Central Coast Central Highlands Southeastern Mekong Delta
Country Profile - Overview Location: Southeast Asia, bordering the Gulf of Thailand, Gulf of Tonkin, South China Sea. Next to China, Laos and Cambodia. Area: 331,210 sq. km – at 66 position among the world. Population: 90,543,390 (July 2011 est.) People Age Structure • 0-14: 25.2% • 15-64: 59.3% • 65 or above: 5.5% • Medium Age: 27.8 years old
Country Profile – GDP & Labor GDP (PPP) : 276.6 billion (2010 est.) (Position: 42) GDP Growth: 6.8 % (2010 ext.) GDP by sector Agriculture: 20.6% Industry: 41.1% Services: 38.3% Labor Force: 47.37 (12 of the world) (2010 Est) Labor Force by occupation (2009) Agriculture: 52.9% Industry: 20.3% Service 25.8%
Country Profile – Import & Export Exports Value: $72.07 billion (Position 40) Key Export Items: Clothes, Shoes, Marine Products, Crude Oil, Electronics, Wood Products, Rice and Machinery Key Export Partners: US (20%), Japan (10.7%), China (9.8%), South Korea (4.3%) (2010 ext) Key Import Items: Raw Materials for Clothing & Shoes, Electronics, Plastics, Automobiles, Ma chinery & Equipment Key Import Partners: China (23.8%), South Korea (11.6%), Japan 10.8%, Taiwan (8.4%), Thailand (6.7%) (2010 ext.)
Country ProfileVietnam’s Long Term Prosperity Growth (1975-2009)
Country ProfileDrivers of Structure Change: Economic OpennessSource: EIU (2010)
Market Openness Vietnam have become a business partner with a many other countries and international associations that help to make Vietnam product become more competitive at importing countries with FTA – Member of WTO, APEC (1998), ASEAN (1995), ASEM, WB and IMF – BTA with USA (2001) – ASEAN (AFTA), – ASEAN – China (ACFTA), – ASEAN – Korea (AKFTA). – ASEAN - Japan (AJCEP), – ASEAN-Australia –New Zealand (AANZFTA), ASEAN-India (AIFTA), ASEAN- EU – Going to complete FTA with Chile in Nov 2011
Doing business in Vietnam Vietnam has become official member of WTO in last 11th January 2007. – Complying with commitments of Vietnam in WTO, there will be many coming changes in laws and regulations in Vietnam. As the result, it has made Vietnam economy turning to be a very attractive market for investment and business growth. – The are more companies listed in stock market, more states companies are privatized. The economy mechanism has gradually changed into market and dynamic economy. Information from government is nowadays updated and more transparent.
Country ProfileVietnam’s Cluster Export Portfolio (1997 – 2009)
Country ProfileRelative Wages: Selected CountriesSource: Philippines Department of Labor & Employment (2010)
Young Generation With 65% of the population aged 30 or younger, Vietnam is a country of youth. This population “bonus” will be critical in determining Vietnam’s destiny over the next decades.
Country ProfileVietnam’s Rate of Inflation of selected countries (2000-2009) % Change in CPISource: EIU 2010
S.W.O.T Analysis Strengths Opportunities - Favorable trade policies - Large young - Competitive labor cost population - Convenient seaports - Emerging market Weakness Threads - Lack of raw - High inflation materials resources - Competition from - Hidden costs other SEA countries
Country ProfileInternet Usage In 2010, Vietnam had a little over 25 million Internet users or about 27% of the population (Source: www.itu.int). Public internet cafes and home use are dominant, however mobile (tablet, smartphone, etc) use is making significant gains. In major cities, use of public Internet terminals is highly affordable, at about 4000 VND ($0.20 USD) per hour.
Country ProfileSocial Network Usage In 2010, Vietnam’s use of social media saw a huge leap in numbers. Young Vietnamese are increasingly quite tech-savvy, making use of various platforms including Facebook, Twitter, Blogs, For ums, and the like.
Doing business in Vietnam – Ministry of Industry & Trade : http://www.moit.gov.vn where you can find updated information, law and regulation, new policies about import/export and commerce – Ministry of Planning and Investment http://www.mpi.gov.vn/ where you can find updated information, legal issues and guides showing you how to invest into Vietnam, how to apply and get investment license, which project Vietnam calling foreign direct investment... – Vietnam Chamber of Commerce and Investment (VCCI): http://www.vcci.com.vn Which is an independent, non-governmental and national organization representing the Vietnamese business community, business associations, and employers for the promotion and protection of their interests in domestic and international relations.
What did Alibaba.com Do?- Co-operation with VCCI Signing ceremony of co-operation between Alibaba.com, OSB and VCCI to run pilot program for VN exporters on Jan 15, 2010
What did Alibaba.com Do?- Cooperation with VCCISeminar “To explore export Seminar “To explore exportopportunities to APEC and AFRICA” opportunities to APEC and AFRICA”in Hanoi on May 28, 2010 in HCM city on June 02, 2010
What did Alibaba.com Do?- Cooperation with VCCIPromoting Export to USA via Exploring export opportunities toecommerce on Mar 30, 2011 APEC and AFRICA” in Can Tho city on May 31, 2010
What Does Alibaba.com Do? Training of Suppliers To Understand Better of Buyers’ Requirements Organized 2 Supplier Days in Hanoi (Sep 27) and in HCM City • Target to Senior Executive of Our Members • Give Specified Training on their preparation to buyers’ inquiry and further request
Corporate Culture Most decisions are made by committee in Vietnam. "Yes" may not mean "yes“; No problem," you can take it to mean "Yes, there is a problem.” Your local partner in Vietnam is very important and should be chosen very carefully. Payoffs, kickbacks and "gifts" are quite common.
Corporate Culture Business name cards are usually exchanged. Give and receive a business card with both hands. The Vietnamese are generally quite punctual and expect foreigners to be the same. Few Vietnamese speak English well. An interpreter is usually necessary. A foreigner doing business in Vietnam will have to deal with government officials. Direct contact with the ministry officials who is responsible for granting or approving your permits and licenses is very important.
Doing business with your VN partner Business Hints: – Keep closed contact with official agencies; – Your documents should be presented in French or English - or even better in Vietnamese; – The negotiation is long sometime, so do not become discouraged too quickly; – To build up a good interpersonal relationship is the key to do business success in Vietnam; – The necessity to building the trust is by constant communications and regular contacts.
Hints for your first successful business trip to Vietnam GET YOUR MONEY - THE PAYMENT METHOD – Exchange regulations in Vietnam involve specific measures preventing the Dong from being freely convertible into foreign currency. Most exchange operations must be authorized by the central bank. The best currency for billing, or at least the most commonly used, is the US dollar. The best payment method remains an irrevocable letter of credit at sight. YOUR MONEY THERE - THE BANKING SYSTEM – As part of the reform, the most of the commercial banks were established and authorized to perform foreign currency operations. Some major banks like: Industrial and Commercial Bank of Vietnam (ICBV), Agricultural Bank of Vietnam (Agribank), Foreign Trade Bank (Vietcombank), Bank for Investment and Development of Vietnam (BIDV), Saigonbank and Eximbank. And now there are some other international financial banks likes HSBC, Standard and Charter and City Bank etc.
Hints for your first successful business trip to Vietnam THE MOST IMPORTANT TIP - BUSINESS ETIQUETTE – One of the keys to business success in Vietnam is understanding that local customs and behavioral practices have a significant effect on business relationships. While there are few formal limitations to doing business in Vietnam, there are some informal barriers and practices which differ from Western norms. Bureaucratic difficulties are not uncommon, particularly in relation to customs and documentation. However, patience, persistence and sound business advice can help in overcoming these obstacles.
Hints for your first successful business trip to Vietnam Establishing Contacts & Networks – Although the Vietnamese will agree to appointments with unknown contacts, it is far easier if the first meeting is through introduction from a known business contact in Vietnam, through friend or through an official channels. Vietnamese companies may not have access to the internet or other forms of information and feel more secure when the company has been introduced to them. – Personal business introductions are a fundamental way of doing business in Vietnam and "cold calling" can often mean that you end up speaking with someone totally unrelated to the issue you wish to discuss.
Hints for your first successful business trip to Vietnam Business Entertainment – Aware that Vietnamese are a very polite people and will often smile and agree with you when in fact they may not have fully understand what you have said. The smile and head nod are usually to confirm that they acknowledge you have spoken, and may not always indicate a firm agreement. – It is advisable to have bilingual sales literature, including business cards and product manuals, for more complex negotiations. It is useful to have an agenda and relevant papers translated in Vietnamese prior to the meeting so both sides are clear on what they wish to discuss. – Eating and drinking are a major part of doing business in Vietnam. Dinners with local agents and customers help to develop networks and cement relationships.