3 (February 14) – Vietnam: market entry decisions
Answer the following questions:
1. Does Vietnam represent an attractive investment opportunity?
Vietnam is 12th nation in the world with more population and its economic growth is expected to keep increasing in the following years. Thanks to the Doi Moi economic reforms since 1994 the country’s GDP is the third in growth rate in Asia, the inflation has decreased from 775% to 14% and the FDI is everyday more important. Moreover, the population of the country is young (the 50% has 21 years or less) well educated and hard-working and accept low wages. Investing in Vietnam in this moment may be key to be positioned as one of the most important companies when the economy becomes stronger.
On the other hand, there are still some obstacles that the companies must face. Firstly, poverty is one of the main problems of the country. The GDP per capita is only 235$ compared to 2000$ in Thailand and a 80% of the population is still rural. Furthermore, Vietnam is governed by the only communist party. Even though the measures taken over the last years point to the direction of opening the economy of the country, the political stability is not assured. The government is highly corrupted and it is not consistent with its regulations (high tariffs and new laws could be adopted at any time). Finally, the infrastructures in the country are still underdeveloped, partially caused by the armed conflicts suffered by Vietnam over the last decade. Power, water and telecommunications services are not reliable and the banking system is inefficient.
2. Is it too late for US companies to enter Vietnam?
No, the Vietnamese market is still developing and there are plenty of opportunities for new investors. The government is trying to attract new sources of foreign direct investment and this is a key moment to enter in the market while it is still developing. Moreover, the repatriated Vietnamese who know U.S. brands are...
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