In September 1995, John Peter, a marketing manager of Hewlett Packard Asia Pacific (HPAP) was evaluating the companyÃ¢â‚¬â„¢s long term strategic investment options for doing business in Vietnam. Hewlett Packard Asia Pacific was a subsidiary of the Hewlett Packard (HP) Company, and its headquarters was located in Singapore. Vietnam had recently adopted an open-door policy after the U.S. lifted its embargo on the country in February 1994. The country had a population of over 70 million, and foreign investment in the country had climbed steadily to reach almost US$12 billion by the end of 1994.
An environmental and market analysis revealed that the information technology (IT) market in Vietnam had potential. John needed to make a recommendation on whether HPAP should enter the Vietnam market in a more strategic fashion, that is, to give a serious consideration of Vietnam as a major market for HP.
In January 1995, John made a business visit to Vietnam to assess first-hand the business climate and investment opportunities. The first stop was Ho Chi Ming City, a bustling city of 5 million people, 1 hour and 25 minutes from Singapore by air.
He had several meetings with various companies:
Meeting with Dr Vo Van Mai, Managing Director of HiPT, HPÃ¢â‚¬â„¢s distributor in Vietnam:
Dr Mai expected the IT market in Vietnam to hit US$500 million by the year 2000. The market size had doubled each year for the past few years and Dr Mai expected the IT market to grow even more rapidly in the next two years.
Currently, IT took the form of mainly personal computers (PCs) with some limited local area networks. Vietnam, being an IT Greenfield, looked likely to adopt client-server technology in a big way, bypassing legacy and proprietary systems common in most developing and developed countries. The PC brands available in Vietnam included Compaq, HP. ACER, Wearnes, AST, Digital, Unisys and IBM.
Dr Mai felt that the most attractive segments of the IT market would be finance, utilities, telecommunications, petrochemical and airlines. Today, within Vietnam, the primary means of data transmission was using phone lines and modem. Between Hanoi and Ho Chi Ming City, more sophisticated and higher bandwidth transmission methods were available through Fiber Optic Links and X.25.
Dr MaiÃ¢â‚¬â„¢s conclusions were that it would be three to four years before the Vietnamese market became really significant in IT revenues. He felt that the next two years would be critical in establishing a presence and building relationships and awareness of products and services. Obtaining budgets for IT expenditure was still a problem. The governmentÃ¢â‚¬â„¢s IT-2000 plan, however, was a clear indication of the governmentÃ¢â‚¬â„¢s commitment to IT.
Meeting with Ross Nicholson, General Manager of DHL Worldwide Express:
Ross Nicholson felt that it had access to good market information as DHL had been operating in Vietnam since 1988. DHL worked through the Vietnam Post Office as the Vietnamese government still controlled the provision of mail and postal services tightly. Ross told us that things had not boomed as expected since the American embargo was lifted. Some obstacles, like chaotic taxation laws and investment risks, still plagued potential investors. In the short-term, the Mexican peso incident was likely to affect the investor outlook, especially in emerging economies like Vietnam.
In NicholsonÃ¢â‚¬â„¢s opinion, the finance industry had the highest prospects for growth in the immediate future. In time, more technologically advanced production activity would take place. DHL would then have the opportunity to sell logistics services to these new entrants, leveraging on their long experience in the Vietnamese market. DHL would like to get itself integrated into these companies, which would be very happy to listen because they were in start-up mode. Nicolson believed that there would not be anything spectacular for two or three more...
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