Current Issues in the Global Economy: A Comparative Analysis: Vietnam and China
Current Issues in the Global Economy
Comparative analysis: Vietnam & China
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11th of August, 2009
Introduction Chapter 1
With its booming economy, huge manufacturing base, enormous supply of natural resources, and expanding consumer spending, it’s no surprise that China is high on the agenda for businesses around the world. More than 90 percent of multinational companies say that China is important to their global strategies, with 52 percent calling it critical (Marsh, 2006). In the past decade, China has been growing at an extremely rapid pace resulting in a huge increase in the number of middle class consumers creating many opportunities for foreign companies. However, along with the opportunities from doing business in China, risks occur and as a result do foreign companies face different challenges when they invest in China.
Although many westerners still imagine Vietnam through the lens of war, it is in reality one of the fastest growing economies in Asia and offers many opportunities for investors in different markets. Vietnam is a country still transforming into a bigger player on the global market and is still in transition stage. Currently, they are changing from a centrally-run to a market economy. Vietnam, with this new policy, wants to catch up with countries like India and China. However, when investing in Vietnam one should be aware of the fact that it will take some time to run a profitable company. It will take typically between five to 10 years before positive results occur. Vietnam is nearing that peak, but China is cooling down (i.e. maturity stage).
Foreign firms are faced with different opportunities and challenges in both countries. Both countries require different approaches to implement a successful strategy. Furthermore, a firm needs to analyze the major characteristics of a country before an investment eventually will become a success. These characteristics help a firm to identify which
Comparative analysis: Vietnam & China
[pic]
11th of August, 2009
Introduction Chapter 1
With its booming economy, huge manufacturing base, enormous supply of natural resources, and expanding consumer spending, it’s no surprise that China is high on the agenda for businesses around the world. More than 90 percent of multinational companies say that China is important to their global strategies, with 52 percent calling it critical (Marsh, 2006). In the past decade, China has been growing at an extremely rapid pace resulting in a huge increase in the number of middle class consumers creating many opportunities for foreign companies. However, along with the opportunities from doing business in China, risks occur and as a result do foreign companies face different challenges when they invest in China.
Although many westerners still imagine Vietnam through the lens of war, it is in reality one of the fastest growing economies in Asia and offers many opportunities for investors in different markets. Vietnam is a country still transforming into a bigger player on the global market and is still in transition stage. Currently, they are changing from a centrally-run to a market economy. Vietnam, with this new policy, wants to catch up with countries like India and China. However, when investing in Vietnam one should be aware of the fact that it will take some time to run a profitable company. It will take typically between five to 10 years before positive results occur. Vietnam is nearing that peak, but China is cooling down (i.e. maturity stage).
Foreign firms are faced with different opportunities and challenges in both countries. Both countries require different approaches to implement a successful strategy. Furthermore, a firm needs to analyze the major characteristics of a country before an investment eventually will become a success. These characteristics help a firm to identify which
Bibliography: Chapter 5 Association of Southeast Asian Nations (2008) ‘Macroeconomic Indicators’ Available at: http://www.aseansec.org/18135.htm Deloitte Research (2003) “China’s Consumer Market: Opportunities and Risks” Marsh (2006) “Understanding China’s Business Risk Environment”, Risk Alert, Volume V, Issue 3 University of Salford et al