Vietnam Market Entry Decisions
Vietnam Market Entry Decisions
When thinking of the position many Multi-National Companies were in during 1998, it is easy to see why there was hesitation when considering entering the Vietnamese market. The countries political, economic, and social situations could adversely affect these companies if they are not careful in their entries. However, it may not be too late for companies to enter this market and take advantage of its workforce, resources, & consumers. First and foremost, it is important to look at Vietnam’s market as a whole to see whether it really is an attractive investment opportunity. To do that, we must look at the recent events in Vietnam’s history. In the aftermath of the Vietnam War in April 1975, the Communist Party, which controlled the government, spent a few years regulating the country and helping to build up their largest city, Ho Chi Minh City, to become the productive center of the nation. Then, in 1986, the government decided to implement an economic renovation, referred to as Doi Moi in Vietnamese. This resulted in a great deal of inflowing FDI as well as new Vietnamese-owned organizations that were privately owned. The government made it clear that they wanted to allow these investments to encourage industrial growth as long as it did not impact Vietnamese industries. After almost doubling their FDI in a matter of years, by 1995 the total GDP in Vietnam was a whopping $19 billion, with their major investment sectors being in oil, gas, hotels, real estate, and services. As investment increased, so did privatization. This is the key element these MNC’s need to look at, since a politically Communist country would have to have some pretty serious regulations when it comes to private companies. However, by the end of 1995, private investment was almost level with FDI. With these regulations allowing privatization, the government also put into effect some policies that encouraged citizens who fled to return, so many people who
When thinking of the position many Multi-National Companies were in during 1998, it is easy to see why there was hesitation when considering entering the Vietnamese market. The countries political, economic, and social situations could adversely affect these companies if they are not careful in their entries. However, it may not be too late for companies to enter this market and take advantage of its workforce, resources, & consumers. First and foremost, it is important to look at Vietnam’s market as a whole to see whether it really is an attractive investment opportunity. To do that, we must look at the recent events in Vietnam’s history. In the aftermath of the Vietnam War in April 1975, the Communist Party, which controlled the government, spent a few years regulating the country and helping to build up their largest city, Ho Chi Minh City, to become the productive center of the nation. Then, in 1986, the government decided to implement an economic renovation, referred to as Doi Moi in Vietnamese. This resulted in a great deal of inflowing FDI as well as new Vietnamese-owned organizations that were privately owned. The government made it clear that they wanted to allow these investments to encourage industrial growth as long as it did not impact Vietnamese industries. After almost doubling their FDI in a matter of years, by 1995 the total GDP in Vietnam was a whopping $19 billion, with their major investment sectors being in oil, gas, hotels, real estate, and services. As investment increased, so did privatization. This is the key element these MNC’s need to look at, since a politically Communist country would have to have some pretty serious regulations when it comes to private companies. However, by the end of 1995, private investment was almost level with FDI. With these regulations allowing privatization, the government also put into effect some policies that encouraged citizens who fled to return, so many people who