CAPTURE THE BUSINESS
OPPORTUNITIES IN
VIETNAM
BUSINESS SWEDEN
August 2015
Business Sweden in Vietnam
INTRODUCTION
VIETNAM HAS BEEN ONE OF THE FASTEST GROWING
ECONOMIES IN ASIA THE PAST 30 YEARS
BUSINESS OPPORTUNITIES IN VIETNAM
 Vietnam has been one of the fastest growing economies
in Asia the past 30 years – bringing it from poverty to a
lower middle income market
 Political stability, large infrastructure investments and the
manufacturing sector makes it interesting to Swedish
companies, as well as its newer consumer market role
 Sweden exports products such as machinery for
processing and manufacturing purposes, electronics,
and pharmaceuticals to Vietnam, while importing e.g.
mobile phones, clothing, shoes and food products
 Infrastructure investments, the manufacturing industry,
and newer consumer market present many opportunities;
 Sourcing of clothing, textile, shoes and furniture
 Automation and productivity solutions for electronics
manufacturing and food & beverage sectors
BUSINESS SWEDEN IN VIETNAM
 Business Sweden has been present in Hanoi since 1999
and is, together with the Bangkok office, responsible for
the Mekong region, including Thailand, Vietnam,
Myanmar, Cambodia and Laos
 In Vietnam, Business Sweden, supports and advises
Swedish companies with their market entry and/or
growth in Vietnam
 Type of support and advice include market entry and
growth strategies, stakeholder analysis and
management, facilitation of government relations,
identifying partners, manufacturers and acquisition
targets, and more
 Contact us to discuss your
company’s business opportunities
in Vietnam!
 Infrastructure investments within e.g. transport sector
 Healthcare market, especially medical devices
BUSINESS SWEDEN
Vivianne Gillman
Trade Commissioner to Vietnam
19 AUGUST, 2015
2
INTRODUCTION TO ASEAN
THE ASEAN ECONOMIC TRADING BLOC WAS FORMED
1967 TO PROMOTE GROWTH, STABILITY AND PEACE
ASEAN - THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS
MYANMAR
VIETNAM
LAOS
THAILAND
PHILIPPINES
Cambodia
CAMBODJA
MALAYSIA
BRUNEI
INDONESIA
SINGAPORE
ASEAN HAS OVER TIME DEVELOPED TO BECOME A REGIONAL FORCE IN ASIA
BUSINESS SWEDEN
19 AUGUST, 2015
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INTRODUCTION TO VIETNAM
HIGH GROWTH HAS BROUGHT VIETNAM FROM POVERTY
KEY A
FACTS
VIETNAM
TO
LOWER
MIDDLE INCOME MARKET IN 30 YEARS
GEOGRAPHICAL OVERVIEW OF VIETNAM
KEY CHARACTERISTICS
STRONG GROWTH
~10% around millennium shift
5.4% (2013), 6% (2014), 6.2% (2015f)
GDP per capita 2014: USD 3,515
LARGE LABOR FORCE
Population 2014: App. 93 mil., Population in
working age: App. 77% (2014)
HIGH FDI LEVELS
Registered FDI 2014: USD 20.2 bil.
More than half from South Korea, Hong Kong
and Singapore
VIETNAM REMAINS IN A PERIOD OF STRONG ECONOMIC GROWTH
SOURCE: GENERAL STATISTICS OFFICE OF VIETNAM, 2014; HSBC 2015
BUSINESS SWEDEN
19 AUGUST, 2015
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INTRODUCTION TO VIETNAM
VIETNAM IS A DYNAMIC NATION WELL-LOCATED IN
SOUTH EAST ASIA
GEOGRAPHICAL OVERVIEW OF VIETNAM
ADVANTAGES AND DISADVANTAGES WITH VIETNAM
Strategic location
Infrastructure
Socio-Political stability
Reform commitment
Economic growth
Legislation and policy
Transparency
Fast urbanization rate
Emerging middle
class
Corruption
Bureaucracy
Labor cost
Productivity
CHALLENGES ALWAYS EXIST IN FAST DEVELOPING COUNTRIES, BUT OPPORTUNITIES COUNT
SOURCE: DESKTOP RESEARCH
BUSINESS SWEDEN
19 AUGUST, 2015
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INTRODUCTION TO VIETNAM
VIETNAM IS DIVIDED INTO 3 CLEARLY DIFFERENT
REGIONS, ALL VARYING IN FOCUS AND CULTURE
KEY COMMERCIAL HUBS IN VIETNAM
Ha Noi
Da
Nang
Ho Chi Minh
City
DESCRIPTION OF THE COMMERCIAL HUBS
North Vietnam
Heavy industries
Hanoi is the political center. The North is
also becoming an industrial hub for
heavy manufacturing activities
Central Vietnam
IT & Tourism
Da Nang, a dynamic emerging city in
Central Vietnam, is ranking high in high
tech development and IT infrastructure.
It is also a popular tourist spot.
South Vietnam
Financial center
Ho Chi Minh City is the commercial hub,
the financial center and headquarters of
many foreign and Vietnamese private
companies.
DEPENDING ON YOUR INDUSTRY, DIFFERENT REGIONS WILL BE RELEVANT FOR YOU
SOURCE: DESKTOP RESEARCH
BUSINESS SWEDEN
19 AUGUST, 2015
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INTRODUCTION TO VIETNAM
VIETNAM HAS SHIFTED FROM A CENTRALLY PLANNED
NATION TO A TRADE-DEPENDENT ECONOMY
OVERVIEW OF THE ECONOMIC INTEGRATION OF VIETNAM
Vietnam was
reunified and
became a
Communist Country
Vietnam joined ASEAN
and the regional Free
Trade Area (AFTA)
accordingly
1986
1976
“Doi moi” or Renovation
process began to
change Vietnam from a
planned economy to a
"socialist-oriented
market“ one
Vietnam became the
150th member of WTO
2008
2000
1995
Vietnam – US Bilateral
Trade Agreement
signing
ASEAN + CHINA
ASEAN + JAPAN
ASEAN + KOREA
ASEAN + INDIA
ASEAN + AUS/ NZ
2007
Vietnam – Japan
Economic Partnership
Agreement signing
2015
2004 - 2011
Under negotiations:
RCEP
ASEAN – EU
TPP (12 countries)
Vietnam – EU
Vietnam – Korea
and still more...
TRADE LIBERALIZATION AND INTERNATIONAL ECONOMIC INTEGRATION ARE THE KEY WORDS FOR VIETNAM
SOURCE: DESKTOP RESEARCH
BUSINESS SWEDEN
19 AUGUST, 2015
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KEY INDUSTRIES IN VIETNAM
VIETNAM OFFERS SEVERAL SECTORS OF INTEREST FOR
SWEDISH COMPANIES
Electronics & ICT
Sourcing
Infrastructure
Healthcare
A preferred global
center for electronics
production and IT
outsourcing
A new manufacturing
alternative to China,
India and other Asian
countries
Vietnam will invest more
than USD 20 billion in
infrastructure from
2015-2020
2014: BUSD 35 exports
of electronics +
hardware
The country offers
competitive manpower
cost of less than half of
Chinas costs
This includes BRT
systems, metros and
airport projects in the
cities of Hanoi, Da Nang
and Ho Chi Minh City
The Vietnamese
healthcare market is
expected to grow from
USD 7.2 billion to USD
25.2 billion between
2010 and 2010
2015: No. 1 global
outsourcing location*
More than 95% of
medical devices and
90% of drugs are
imported
* According to Cushman & Wakefield
VIETNAM OFFERS BUSINESS OPPORTUNITIES IN SEVERAL AREAS FOR SWEDISH COMPANIES
SOURCE: WORLD ECONOMIC FORUM (2014), BUSINESS MONITOR (2015)
BUSINESS SWEDEN
19 AUGUST, 2015
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KEY INDUSTRIES IN VIETNAM
[ELECRONICS & ICT]
VIETNAM IS BECOMING A GLOBAL ELECTRONICS
MANUFACTURING HUB – EXPORTS EXCEED IMPORTS
ELECTRONICS-HARDWARE IMPORTS & EXPORT
2008 – 2013 , USD BILLION
Exports
Imports
KEY OPPORTUNITIES
Vietnam as a
manufacturing
hub
Reasonably low labor costs and
favorable taxation policies for the
sector are factors for setting up
electronics production here
Supplying to
OEMs
The establishment of large
electronics MNCs as Samsung,
Microsoft Mobile, Intel, LG, etc.in
the market bring opportunities for
sub suppliers
Vietnam as an
outsourcing
destination
Vietnam is an emerging center for
software development and IT
services outsourcing. The
government support the trend
26,4
19,4
34,7
10
5,7
2,8
6,5
3,4
2008
2009
22,8
7,6
5,7
2010
10,9
2011
2012
2013
VIETNAM IS AN EMERGING DESTINATION FOR ELECTRONICS PRODUCTION AND OUTSOURCING SERVICES
SOURCE: 2014 WHITE BOOK ON INFORMATION AND COMMUNICATION TECHNOLOGY IN VIETNAM, ITU
BUSINESS SWEDEN
19 AUGUST, 2015
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KEY INDUSTRIES IN VIETNAM
[SOURCING]
VIETNAM IS EMERGING AS AN ALTERNATIVE SOURCING
DESTINATION IN ASIA, COMPETING WITH CHINA
KEY OPPORTUNITIES
ANNUAL WAGE COMPARISONS
2013, USD
3534
3337
3107
3169
3012
Laborintensive
manufacturing
Swedish companies can consider
Vietnam for labor-intensive
manufacturing industries as
garment, shoes and bags
Cost effective
manual work
Industries require manual work
such as wooden furniture, large
steel structures and machine parts
are also cost-effective in Vietnam
Valuable
predecessors’
experience
The long experience of Swedish
sourcing companies and offices in
Vietnam can be very useful for new
comers to the market.
2472
1648
1515
Malaysia
China
1581
1296
Thailand Philippines Vietnam
Annual minimum wage
Adjusted for employer social insurance contribution
COMPANIES MOVING TO VIETNAM DON'T LOOK ONLY FOR LOW COST LABOUR, BUT GOOD ENVIRONMENT
SOURCE: CHINA BRIEFING 2014
BUSINESS SWEDEN
19 AUGUST, 2015
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KEY INDUSTRIES IN VIETNAM
[INFRASTRUCTURE]
HEAVY INFRASTRUCTURE INVESTMENTS PRESENTS
OPPORTUNITIES FOR COMPANIES IN INFRASTRUCTURE
VIETNAM – EXAMPLES OF NEW PROJECTS 2015-2020
Hanoi
 Four metro lines
 North-South Express
Train Study
Da Nang
 A BRT system
 A BRT system
Ho Chi Minh City
 Metro lines
KEY OPPORTUNITIES
New
infrastructure
projects
Until 2020, nearly USD 35 billion
will be required for building new
roads, metro/ monorail/ railways,
airports and seaports
Fair chances
to foreign
companies
Some 60% of the required funds
will come from the private sector or
development soft loans, giving
fairer chances to foreign firms
What Swedish
firms can offer
Opportunities for Swedish players
will lay in: vehicle supply, concept/
architectural design, and
engineering consultancy services.
 Expectedly a new airport
VIETNAM’S WEAK TRANSPORT INFRASTRUCTURE EXPOSES OPPORTUNITIES TO FOREIGN COMPANIES
SOURCE: WORLD ECONOMIC FORUM, THE GLOBAL COMPETITIVENESS REPORT 2014-2015, NOV 2014
BUSINESS SWEDEN
19 AUGUST, 2015
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KEY INDUSTRIES IN VIETNAM
[HEALTHCARE]
THE VIETNAMESE HEALTHCARE MARKET WILL MORE
THAN TRIPLE BETWEEN 2010 - 2020
GROWTH OF VIETNAM HEALTHCARE MARKET
2010 – 2020, USD BILLION
25,2
KEY OPPORTUNITIES
Many new
hospitals will
be built
Heavily laden public hospitals
leading to new facilities (private +
public) of thousands of beds in total
to be built in big cities until 2020
CAGR: 52%
Branding and
advertising sell
OTC drugs
14,4
Over-the-counter drugs are very
popular in Vietnam, so good
branding and advertising will help a
lot in product promotion and sales
7,2
Medical device
and drugs
ingredients
2010
2015
2020f
Vietnam currently imports up to
95% of medical devices, 90% of
ingredients and 60% of drugs, a
market worth of 20BUSD in 2020.
SALES OF MEDICAL DEVICES AND DRUGS OFFER THE LARGEST OPPORTUNITIES
SOURCE: 2014 WHITE BOOK ON INFORMATION AND COMMUNICATION TECHNOLOGY IN VIETNAM, ITU
BUSINESS SWEDEN
19 AUGUST, 2015
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SWEDEN IN VIETNAM
SWEDISH BUSINESS HAS A LONG HISTORY IN VIETNAM,
BUT THERE IS A BIG OPPORTUNITY FOR GROWTH
Approximately 40 Swedish companies are established in Vietnam,
including ABB, Atlas Copco, AstraZeneca, Electrolux, Ericsson,
Sandvik, SKF and TetraPak
The trade between Sweden and Vietnam quadrupled between 20042014
Prioritized sectors: Healthcare, Manufacturing and Sourcing, ICT and
Outsourcing, Transport and Automotive
1967
First aid
projects
1969
Swedish
Embassy set
up in Hanoi
1980
1993
2002
2008
2013
Two-way
trade volume
reached
>$US 1bil
MORE AND MORE SWEDISH COMPANIES COME TO DIRECTLY DO BUSINESS IN VIETNAM OR VIA PARTNERS
SOURCE: EMBASSY OF SWEDEN
BUSINESS SWEDEN
19 AUGUST, 2015
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SWEDEN IN VIETNAM
TODAY, THERE ARE APPROXIMATELY 40 SWEDISH
COMPANIES IN VIETNAM
EXAMPLES OF SWEDISH COMPANIES DOING BUSINESS IN VIETNAM
Larger
Sized















ABB
Alfa Laval
Atlas Copco
AstraZeneca
Blåkläder
Electrolux
Ericsson
IKEA
Sandvik
SKF
Snickers Europe
Tetra Pak
DeLaval
Elof Hansson
Seco Tools
Medium
Sized







Consilium
Gunnebo Security
New Wave Group
Oriflame
Securitas
Rudholm Group
ÅF Consult
Smaller
Sized
 Niteco
 Tellbe
 Terraco
Through
Partners











ActSafe System
Alentec & Orion
AssaAbloy
Elekta
ESAB
Gambro
GANT
Getinge
Maquet
Opsis
PrimeBlade
MANY SMES CHOOSE TO WORK THROUGH PARTNERS FOR A WIDER GLOBAL MARKET COVERAGE
SOURCE: BUSINESS SWEDEN AND EMBASSY OF SWEDEN, HANOI
BUSINESS SWEDEN
19 AUGUST, 2015
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SWEDEN IN VIETNAM
SWEDEN - VIETNAM TRADE VOLUME QUADRUPLED
BETWEEN 2004 - 2014
SWEDEN-VIETNAM TRADE VOLUME OF GOODS
2004 – 2014, SEK BILLION
400%
1,17
2004-2014
CAGR Swedish Export: 1.6%
CAGR Swedish Import: 19.2%
0,87
0,90
6,46
1,01
0,98
0,93
0,94
1,06
2004
2005
1,02
1,43
1,18
1,80
1,70
1,31
1,46
1,58
1,70
1,86
2006
2007
2008
2009
2010
Swedish Imports
4,22
2,65
2011
3,24
2012
2013
2014
Swedish Exports
SWEDEN IMPORTS SIGNIFICANTLY MORE FROM VIETNAM THAN IT EXPORTS TO THE COUNTRY
SOURCE: STATISTICS SWEDEN
BUSINESS SWEDEN
19 AUGUST, 2015
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SWEDEN IN VIETNAM
SWEDEN MINALY EXPORT MAINLY MACHINERY FOR
PROCESSING AND MANUFACTURING PURPOSES
SWEDISH EXPORTS TO VIETNAM, 2014
SEK Million
Textile & Garment
Other
Petrochemicals
66
 However, the hardware device exports had
been decreasing since 2010 with an
average of -20% per year (CAGR)
91
104
Pulp & Paper and wood
products
137
Computers, electrical and
electronics devices
Other machines
Total
 Machinery with computers, electrical and
electronics devices took up the largest parts
of Swedish exports to Vietnam in 2014
18
Metal and mineral products
Pharmaceutical products
COMMENTS:
 The Machinery segment also saw a declining
trend, but took a significant reverse in 2014,
increasing 7.1 times compared with 2010
142
295
318
1 171
 Meanwhile, drug exports grew 14% during
2010 - 2014, ranking 3rd in the export list. F&B
and petrochemicals were also on generally
increased
 Pulp & Paper and wood exports from Sweden
to Vietnam saw a jump in 2014 with a CARG
value of 15.5% since 2010
SWEDISH EXPORTS TO VIETNAM HAVE STAYED QUITE STABLE OVER THE PAST FEW YEARS
SOURCE: STATISTICS SWEDEN
BUSINESS SWEDEN
19 AUGUST, 2015
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FORMS OF ESTABLISHMENT
THERE ARE VARIOUS ESTABLISHMENT FORMS,
SUITABILITY DEPENDING ON ACTIVITY TYPE
 Allowed activities
Type of activity
Form of establishment
Agent/Distributor
Representative
Office
Limited Liability
Company




Import from
Vietnam



Sales in
Vietnam


Manufacture in
Vietnam


Level of stake
and control
Joint Venture with
VN company
Export to
Vietnam
VARIOUS FORMS OF DOING BUSINESS ARE ALLOWED IN VIETNAM –CHOOSE WHAT SUITS YOU BEST
BUSINESS SWEDEN
SOURCE: BUSINESS SWEDEN’S LAWFIRM
BUSINESS SWEDEN
19 AUGUST, 2015
8/19/2015
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DO’S AND DONTS
UNDERSTANDING THE VIETNAMESE CULTURE WILL
HELP AVOID MAKING MISTAKES
OVERVIEW OF SWEDISH CULTURE
OVERVIEW OF VIETNAMESE CULTURE
 Quite a homogeneous culture
 A rich culture country, the regions are all different
 Rule-based
 There is always flexibility, and a “But…”
 Punctuality
 Time accurateness is still an issue
 "Saying what you mean and meaning what you say“
 A “YES” may mean “NO” and vice versa
 Silence is not awkward
 Silence during meetings may look strange
 Focus on product and technical excellence
 “Know-who” often beats out “know-how”
 Negotiate fairly, offer best price first
 Discounts – negotiate “good deals”
 Long-term planning
 Last minute changes in appointments (follow up)
 Flat structure and risk adverse
 Top-down structure and risk taking
IT IS IMPORTANT TO BE AWARE OF CULTURAL DIFFERENCES WHEN DOING BUSINESS IN VIETNAM
BUSINESS SWEDEN
19 AUGUST, 2015
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DO’S AND DONTS
KEEP THE FOLLOWING ISSUES IN MIND WHILE DOING
BUSINESS IN VIETNAM
OVERVIEW OF KEY SUCCESS FACTORS FOR DOING BUSINESS IN VIETNAM
Do your
homework
Vietnam is a country full of customers, competitors and colleagues. Apply a fact based
approach and develop a strategy for your entry and growth in Vietnam.
Take a long
term view
Vietnam is a long term market. Plan establishment in phases and bring patience and
perseverance. Expect red tape, bureaucracy and lengthy procedures.
Hire the best
people
Doing business in Vietnam can be tougher than most markets – send you best
man/woman for the job. Hire carefully and go for competence and attitude – not low cost!
Have a
strategy for
price/ cost
Vietnam can be very profitable, if you have a strategy for price and cost.
Be objective
oriented
Focus on business objectives – Expect things not to go according to your plan
Study negotiation techniques – They will come handy both in business and privately
Be careful
when
partnering
The right partner can make it – the wrong partner may break it! Be thorough in screening
of local partners and choose carefully. Be very careful before entering a Joint Venture.
DO YOUR HOMEWORK BEFORE ENTERING THE VIETNAMESE MARKET!
BUSINESS SWEDEN
19 AUGUST, 2015
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BUSINESS SWEDEN IN ASEAN
WITH 5 OFFICES IN SOUTH EAST ASIA WE ARE AT HOME
ON YOUR FOREIGN MARKETS
BUSINESS SWEDEN’S PRESENCE IN ASEAN
VIETNAM
BUSINESS SWEDEN’S SERVICE OFFERINGS
Business Sweden makes it easier for
Swedish companies to grow internationally
EVALUATE OPPORTUNITIES
THAILAND
CHOOSE STRATEGY
ESTABLISH PRESENCE
MALAYSIA
SINGAPORE
GROW BUSINESS
INDONESIA
MYANMAR, LAOS, CAMBODIA, BRUNEI AND THE PHILIPPINES ARE COVERED BY THE ABOVE OFFICES
BUSINESS SWEDEN
19 AUGUST, 2015
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CONTACT US
BUSINESS SWEDEN IN VIETNAM
Contact information
Business Sweden
Commercial Section at The Swedish Embassy in Vietnam
No.2 Nui Truc Street, Van Phuc
Ba Dinh district, Hanoi, Vietnam
T: +84 4 3726 0402
E: [email protected]
W: www.business-sweden.se
BUSINESS SWEDEN
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