Doing Business in Vietnam
The Political Climate, Business Opportunities,
Currency Volatility, and Culture
By: Duong
At a glance
Climate
• Tropical
°F
Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec
63
84
63
70
75
82
84
84
82
77
72
64
Natural Disasters
POLITICAL CLIMATE
• Full name: The Socialist Republic of Viet Nam
• A Communist state
•
•
•
•
One party
The National Assembly: the highest-level representative body of the people
Head of State: the president
Head of Government: the prime minister
Political Structure
Political Issues
• Vietnam's Anti-Corruption Law 2005: One of the best anti-corruption
legal frameworks in Asia (World Bank)
• Very problematic to implement.
• Example: All Government officials have to declare their assets and income
annually.
• Vietnam ranked 113 (out of 176) on the 2016 Corruption Perceptions
Index (by Transparency International)
Political challenges to doing business
• Corruption and bureaucracy hinders foreign business
• Project timelines often exceed initial projections.
• Ineffective protection of intellectual property
• Piracy rates for software were estimated to be 78 percent in 2015, signaling a
steady decline.
• High tariffs
• Agricultural products, processed foods and nutritional supplements
• State-owned enterprises make up 35 percent of GDP
Business Opportunities
• U.S.-Vietnamese commercial relationship has grown dynamically
since the renewed diplomatic ties in 1995
• The U.S. is now Vietnam’s largest export market
• Conversely, over the last two years, Vietnam has become the United
States’ fastest growing export market (up over 23% from 2014)
(World Bank)
Business Opportunities (Cont’d)
• Strong GDP growth expected to continue for medium term – PwC:
• 1) Strongest average GDP growth till 2050, exceeding 5.1 percent a year
• 2) Move from the 32nd largest economy to the 20th by 2050
• A large population of 93 million
• Half of which are under the age of 30
• Fastest-growing middle and affluent classes in the region
Opportunities for U.S. Companies
• Transportation infrastructure
construction
• Aviation
• Education
• Information technology
• Health care
• Oil and gas exploration
• Telecommunications
• Power generation
• Agriculture
• Environmental project
management and technology
Currency Volatility
• US $1 = VND22,726
• Vietnam Dong’s official rate has been pegged by the State Bank
against the U.S dollar since 1989
First McDonnald’s Store in Vietnam - 2014
• A Big Mac hamburger in Vietnam is
sold at VND60,000, or $2.84 with
the current exchange rate.
Meanwhile, a similar hamburger is
priced at $4.62 in the US.
• Referring to the purchasing power
parity (PPP) theory, the Vietnam
Dong is undervalued by 39% if
compared with the US dollar.
USD/VND Exchange Rate
Business Implications of Undervalued
Currency
• Makes Vietnamese exports cheaper in the U.S.
• Makes imported goods in Vietnam more expensive in the local market
Culture: Vietnamese Festivals
Vietnamese New Year: Tet
Transportation
Vietnamese Food
Assignment
• What are the primary strengths and weaknesses with
doing business in Vietnam?
THANK YOU!
Bibliography
• Trading Economics – Vietnam Currency, Retrieved 27 Sep 2017 from
https://tradingeconomics.com/vietnam/currency
• Vietnam - Market Overview, Retrieved 27 Sep 2017 from
https://www.export.gov/apex/article2?id=Vietnam-Market-Overview
• R.L.W, (2014) Beefed up, The Economist, Retrieved 27 Sep 2017 from
https://www.economist.com/blogs/graphicdetail/2014/02/big-mac-index
Emerging Market Rubric (45points possible)
Assignment - Review content from the presentation provided by Duong Nguyen and using global EDGE
(globaledge.msu.edu) devise answers to the following questions. What are the primary strengths and
weaknesses with doing business in Vietnam? Why? Discuss 3 reasons using information from globalEDGE.
Examine and compare the risk for doing business with Vietnam vs another emerging market country.
1 -1 ½ pages typed/ double spaced.
Please include graphs or visuals from globalEDGE to support your analysis. (30 points)
Content – Well analyzed. Evaluate depth of analysis. Students need to explain why a strength is a strength and a
weakness is a weakness.
➢ Too simplistic or vague – not well expressed – minus 1 to 10 points
➢ Points missed under each category based on quantity - mention 3 strengths and weaknesses making
connections with GlobalEdge data on Vietnam or Duong’s presentation. (Refer to example for possible answers)
➢ Examine and compare the risk for doing business in Vietnam vs. another emerging market - (Brazil, Chile, China,
Colombia, Czech Republic, Greece, Hungary, India, Indonesia, Latvia, Malaysia, Mexico, Morocco, Peru,
Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arad Emirates)
Should be about 1 paragraph length or more comparison.
Must include some graph/ graphics
Written expression – Proper language and grammar observed – minus 1 to 10 points
➢ Misspelled words
➢ Improper grammar
Emerging Market Rubric (sample)
The following are some examples of strengths and weaknesses. I am sharing these with you as phrases but I would
hope that students would write out and explanation and provide proof or evidence since the assignment asks why?
1) What are the primary strengths and weaknesses with doing business in Vietnam? Why?
Strength
Weakness
Example – State the strength and connect it to why
this is an opportunity.
Example – State the strength and connect it to why
this is a business threat.
According to Duong’s presentation, US and
Vietnamese commercial relationship has grown
dynamically since the renewed diplomatic ties in 1995.
This improvement in governmental relationships and
the supporting infrastructure offers opportunities for
businesses in the U.S. because the strengthen
governmental relationships lessens the risks associated
with international businesses.
The current political climate within Vietnam is
communism and State-owned enterprises make up
35% of Vietnam’s GDP. This is a weakness because
communistic governments are less supportive of
free trade. There is an innate political risk in doing
business with communist nations because of the
strength of the governmental control which can
unexpectedly affect the country’s business
environment, company profits and other goals of
the multinational firms.
Strength 2
Weakness 2
Strength 3
Weakness 3
➢ Examine and compare the risk for doing business in Vietnam vs. another emerging market - (Students should
choose from one of the following countries - Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary,
India, Indonesia, Latvia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, South Korea,
Taiwan, Thailand, Turkey, United Arad Emirates)
A paragraph comparing the general risks in doing business in Vietnam vs. another emerging markets.
These are some global edge graphics
Purchase answer to see full
attachment