ENTREPRENEURSHIP MANAGEMENT

Country Analysis
Of

Submitted by:
Deeksha Acharya 01
Pooja Ahire 03
Ria Dogra 16
Hetvi Doshi 17
Pooja Gupta 23
Bhoomi Mandavi 40
Table of Content:

1. Introduction
• Background

• Political/regulatory system
• Anti-competitive practices
2. Economic, political • Product and service standards
and Legal conditions • Intellectual property
• Financial market
• Monetary policy

• Economic infrastructure
3. Infrastructure Analysis
• Social infrastructure

4. Managing and culture • Business and workforce culture

• Staples
5. Analysis
• Entrance vehicles

6. Recommendation • Opportunity
1. Background:
A land of staggering natural beauty and cultural complexities, of dynamic megacities and hill-
tribe villages, Vietnam is both exotic and compelling.
Vietnam is a one party communist state, with the President as the Head of State, and the Prime
Minister as the Head of Government. The Vietnamese legislature is the unicameral National
Assembly, from which the Prime Minister is selected. In practice, the President's position is
only ceremonial, with the Prime Minister wielding the most authority in government, although
the General Secretary also wield a considerable amount of political power. The Socialist
Republic of Vietnam was established in July 1976.

Vietnam is the easternmost country on the Indochina Peninsula. With an estimated 94.6
million inhabitants as of 2016, it is the 15th most populous country in the world. Vietnam is
bordered by China to the north, Laos and Cambodia to the west, part of Thailand to the
southwest, and the Philippines, Malaysia, and Indonesia across the South China Sea to the
east and southeast. Its capital city has been Hanoi since the reunification of North and South
Vietnam in 1976, while its most populous city is Ho Chi Minh City.

Some facts about Vietnam:

Vietnam War:
Vietnam War also known as the Second Indochina War, the Vietnam Conflict or The
American War was a military conflict that took place between Laos, Cambodia and Vietnam
from Nov 1, 1955 to April 30, 1975.
France wanted to control Vietnam after WWII, but Japan had gained control during the War.
However the communists Viet Minh took over the north. The French nor the Vietnamese
wanted the country to be communist, so they fought a civil war. The French lost and the
communist North took over the South Vietnam. The U.S. became involved to stop the spread
the communism.
Later, South Vietnam surrendered to the communists on July 2nd 1976, Vietnam was unified
as a communist country.
The Vietnam War is still the most photographed and filmed conflict of all time, when
photojournalists (and TV journalists) had unrestricted access to the battlefield—in South
Vietnam, that is—bringing the war into many living rooms worldwide. The Vietnamese
estimate that between 1954 and 1975 about one million communist fighters and four million
civilians died. According to US numbers, nearly 60,000 American soldiers died or went
missing in action, 300,000 were injured and about 250,000 South Vietnamese soldiers were
killed.
2. Economic, Legal And Political Conditions:
Vietnam’s Regulatory System
Vietnam is a one-party communist state. The National Assembly is the supreme representative
and legislative body, determining both domestic and foreign policy. It is elected by universal
suffrage every five years, with the last election held in 2016. The Vietnamese legal system
consists of a constitution, codes, laws, ordinances, decrees, decisions, circulars, directives and
official letters.

Hierarchy of political/legal system in Vietnam

In its preparation for accessions to the World Trade Organisation (WTO) in 2007 and other
FTAs, Vietnam revamped much of its legal system, which has resulted in a more business
friendly regulatory environment. The main legislative frameworks of interest to Hong Kong
companies setting up in Vietnam are listed below:
Investment Law (2014) and Enterprise Law (2014)
Law on Customs (2014)
Labour Code (2013)
Law on Anti-Money Laundering (2013)
Law on Intellectual Property (2009)
Law on Tax Administration (2006) with updates made in 2016

A Practical Guide to Doing Business in Vietnam

 Regulatory Environment
 Establishing a Presence
 Intellectual Property Protection
 Staff Recruitment
 Tax Considerations
 Import/Export Procedures
 Further Information
Economic condition
In recent years economic growth averaged 6.2%. Vietnam’s economy grew at 6.8% in 2017.
GDP per capita has increased by 350% since 1991 (2nd only to China) and Vietnam now has
the fastest-growing middle-class in South East Asia. Although slowing in recent years, growth
has now ticked up again, led by the foreign-invested manufacturing sector.

The country has long been an attractive FDI destination, particularly for Japan, South Korea,
Taiwan and Singapore. FDI inflows average 8% of GDP annually, the highest among major
emerging markets in ASEAN and proportionately larger than China. More than half of total
FDI stock is in manufacturing. Electronics and mobile phones, in particular, have since 2010
attracted large investments; around 70% of Samsung’s smart-phones are now made in
Vietnam. Most manufacturing outputs are for overseas markets.

Anti-competitive agreements and other conduct

According to the Competition Law, agreements to restrict competition include the ones that:
 set prices directly or indirectly;
 divide markets or sources of supply;
 limit production, purchase or sales volumes;
 restrict technical/technological development and investment;
 impose conditions or unrelated obligations on the signing of contracts;
 prevent or inhibit others from entering the market;
 preclude from the market enterprises that are not parties to the agreement; or
 Collude in biddings.
Standards

STAMEQ is also responsible for advising the government on issues in the fields of
standardization, metrology, and quality management domestically, as well as representing
Vietnam in international and regional organizations in the fields concerned. This organization
also has the following responsibilities:

 Prepare rules and regulations on standardization, metrology and quality management

and submit them to the appropriate authorities for approval.
 Conduct studies on standardization, metrology, and quality management.
 Organize the supervision and implementation of approved rules and regulations.
 Establish an organizational system on standardization, metrology, and quality
management and then to provide methodological guidance for these activities.
 Organize the formulation of national standards and maintain national metrology
standards. Develop policies and management documents on conformance activities:
accreditation; certification, testing, and inspection.
 Provide product quality and system certifications.
 Implement state supervision on quality of goods and measurements.
 Carry out training and informational activities related to standardization, metrology,
and quality management.
 Vietnam Quality Mark certification for management system and product certification
program and by BoA for the testing laboratory.
 Intellectual Property:

• Vietnam has a comparatively strong intellectual property (IP) framework which

includes several multilateral agreements and other relevant bilateral trade agreements.
• According to the Law on IPR, three major IP rights are protected in Vietnam:
copyright and related rights; industrial property rights; and rights in plant varieties.
• The National Office of Intellectual Property of Vietnam (NOIP) is an agency under
the Ministry of Science and Technology and assumes the functions of exercising state
management and providing services in the field of intellectual property as stipulated
in the Law on IPR and relevant legislation.
• Vietnam is actively trying to address concerns by raising awareness of intellectual
property rights and the penalties attached to infringements, through its work with
international partners. Mainly enforcement on IPR is done through administrative
measures and now Vietnam is putting in place heavier fines and penalties for
copyright infringement.
• However, concern is rising among rights holders that Vietnam’s IP enforcement
system has not yet developed sufficiently to control the rapid growth of piracy and
counterfeiting despite the substantial legislative work completed over the past several
years. Vietnam is a priority country for the UK and remains in the 3rd category of
priority countries for the EU.

Financial Market and Monetary Policy:

Ho Chi Minh City Stock Exchange or Ho Chi Minh Stock Exchange (HOSE or HSX)
The Stock Trading Centre of Vietnam is the official mechanism through which new
government bonds are issued, and it functions as the secondary market for a number
of existing bond issues.
All securities traded on the Stock Trading Centre of Vietnam are denominated in
Vietnamese dong (VND).
According to Law on the State Bank of Vietnam 2010, the SBV Governor decide on
the use of tools for the implementation of the national monetary policy, including re-
financing, interest rates, exchange rates, reserve requirements, open market operations
and other tools and measures as stipulated by the Government.
- Re-financing: Re-financing is a form of credit extension by the SBV, aiming to
provide short-term loans and payment facilities for credit institutions. The SBV
stipulates and performs the refinancing for credit institutions in the forms of granting
valuable paper - mortgaged loans; discounting valuable papers; and other forms of re-
financing. Vietnam’s Refinancing Rate data was reported at 6.250 % pa in Nov 2018
- Interest rates: The SBV shall announce re-financing interest rates, the base interest
rates and other interest rates to implement the monetary policy, and to prevent high-
interest lending. In the case of unexpected developments in money market, the SBV
shall stipulate the mechanism for managing the interest rates applied in lending-
borrowing relationship among credit institutions and with their customers, and other
credit granting activities.
- Exchange rates: The exchange rates of VND shall be determined on the basis of
foreign currencies supply and demand the State -regulated market. The SBV shall
announce exchange rates, decide on exchange rate regime and the mechanism of
regulating exchange rates. The interest rate in Vietnam was last recorded at 6.25
percent. Interest Rate in Vietnam averaged 7.25 percent from 2000 until 2019
- Reserve requirements: Reserve requirements mean the amount of money that
credit institutions must deposit at the SBV to serve the implementation of the national
monetary policy. The SBV shall stipulate the ratio of reserve requirements for each
type of credit institutions and each kind of deposits at credit institutions for the
implementation of the national monetary policy. The SBV shall stipulate the payment
of interest for reserve requirement deposits, and excess deposits applicable to each
type of credit institutions for each kind of deposit.
- Open market operations: The SBV shall perform open market operations through
the purchase and sale of valuable papers with credit institutions; and shall stipulate
types of valuable papers to be traded through open market operations.
Việt Nam’s recent signings of several new-generation trade pacts, including EU-Việt
Nam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP), mean that foreign companies will
gain access to lucrative public procurement of Việtnam – a country with one of the
highest public expenditure against GDP ratios in the world.
3. Infrasturcture Analysis:
a. Economic infrastructure

Due to the war, Vietnam country was being collapsed. Vietnam’s infrastructure is
weak, but steadily improving.
 Agriculture:
Due to several land reforms measures, Vietnam became a major exporter of
agriculture products. The world’s largest producer of Cashew nuts, black pepper and
the second largest rice exporter in the world.
Other primary exports include Tea, Rubber and Fishery products although agriculture
share of Vietnam GDP has fallen in recent decades declining from 42% in 1989 to
20% in 2006 as production in other sector of economy has risen.
 Science and Technology:
Vietnamese scholar has developed many academic fields especially in social science
and humanities. Arithmetic and geometry have been widely taught in Vietnam since
the 15th century.
Vietnam country is working to develop its first National Space Flight Program
especially after the completion of the infrastructure of Vietnam Space Centre in 2018.
 Tourism:
Nowadays, tourism became important element of economic activity in the country,
contributing 7.5% of the GDP. Vietnam is one of the fastest growing tourist
destination in recent years.
The vast majority visitors came from Asia, China, South Korea, and Japan to see a
UNESCO World Heritage Site.

b. Social infrastructure

 Energy:
Vietnam’s energy sector in largely dominated by electricity of Vietnam nationwide.
Most of the powers are generated from either hydropower, fossil fuel power such as
coal, oil and gas.
 Water supply and sanitation:
Vietnam water supply and sewerage association the existing water production
capacity exceeded the demand but the service courage is still very low since most of
clean water supply infrastructure not much developed where it has been delivered to a
small proportion of area.
 Education:
Vietnam has an extensive state-controlled network of schools, colleges and
universities and a growing number of privately run and partially privatized
institutions.
Basic education in the country is relatively free for the poor although some families
may still have trouble paying tuition fee for their children without some form of
public or private assistance.
4. Managing and Culture:
Business and Workforce culture

 Personal relationships play a large role in Vietnamese business culture. Third-

party introductions are almost a necessity, as Vietnamese people prefer to work
with those they know and trust.
 Vietnamese business culture is very hierarchical. Respect should be shown
towards elders and senior figures at all times.
For example- while offering a business card to a Vietnamese, it is necessary to
offer the card with both the hands.
 Female participation in the workplace is high but women still face
institutionalized discrimination. For example, despite significant economic growth
the gender pay gap has widened in recent years. Women are also much more
likely to be employed in vulnerable employment with vulnerability and
informality highest among ethnic minority communities. Job advertisements for
senior positions often indicate a gender preference for men despite this being
illegal.

 Gkta source says that Vietnamese are not geared towards being creative and are
generally good at copying things. This way Vietnam's main business is into
manufacturing and exports.

 Trading- Vietnam is now opening a lot of opportunities to foreign countries to

invest in Vietnam.
 Vietnamese President Tran Dai Quang said India will emerge as the top trading
partner of Vietnam soon and the target of USD 15 billion bilateral trade turnover
by 2020 is feasible.
 He said India can become provider of inputs
for the Vietnam's textile and footwear
industry and his country also wants to
enhance cooperation with India in tourism
sector.
 "Currently, India is among top 10 trading
partner of Vietnam. Soon, India will emerge
as the top trade partner of Vietnam.
 5. Analysis:
• Vietnam is widely known for being a prime location for investors operating in
the textile industry and also there are many other business areas that are seeing
significant growth in the country.
• Vietnam is a key location for high-technology manufacturing, with companies like
Samsung, LG Electronics, Nokia, and Intel making multi-billion dollar
investments into the country.
• There are other business areas include information and communications
technology, automotive, and medical devices.
• Vietnam’s import includes product such as Electrical machinery, equipment (26%
of total imports), Machinery including computers (10.9%), Plastics, plastic articles
(5%), Mineral fuels including oil (4.5%), Iron, steel (4.3%), Optical, technical,
medical apparatus (3.9%), Fish (2.6%), Knit or crochet fabric (2.6%), Vehicles
(2.4%), Cotton (1.8%).
• Automotive industry in Vietnam is a fast growing sector, mainly reliant on domestic
sales.
• Vietnam has a 900 million USD trade surplus in car parts, totalling 4.4 billion
USD of car part exports
• Most of this production is by foreign owned businesses operating in Vietnam like
FIAT, Ford, Honda, Hyundai, Kia, Mazda, Suzuki (6000 motor vehicles and
100000 motor bikes), and Toyota etc. There are domestic brands such as Vinfast.

Staples analysis:
• Vietnam is second largest U.S export for consumer food products in Southeast Asia
after Philippians and it is also major importer of U.S. processed foods.
• Processed food exports to Vietnam includes dairy products,
seafood, Non-alcoholic beverages, Distilled spirits and
other alcoholic beverages, vegetables and pulses etc.
6. Recommendations: Opportunities in Vietnam:

1) Furniture making and Remodelling-Advantage

Furniture making is a good business because almost every
home is focusing on decoration. Besides, a lot of companies
and businessmen in other countries take advantage of wood
and labour from Vietnam, as they establish new company
making interior design with sophisticated design and luxury
2) Restaurant and Bar-Profitable
Vietnamese love good food and drinks, they are willing to pay high fees for a good
restaurant. If you love to invest in the entertainment industry, starting a restaurant and bar is
very profitable niche in this Industry.
3) Agricultural Product Processing-Right Strategy
Any business in the food industry would always make sales as long as the business owner
employs the right strategy to promote and market the business. Vietnam’s environmental
conditions are well suited to fruit trees or industrial crops. Foreign investors can use natural
resources to create a farm and produce agricultural products. You can always find an
agricultural product that you can process for sales and export.
4) Garments and textile Products-Demand
Garment and textile making is high profitable business in
Vietnam because garment and textile are among products that
Vietnam exports. You can invest production line with low
cost and cheap labour. In addition, the demand of fashion by
young generation in the country is very high, and young
clothing is just trendy and suitable for customers and is able
to be sold in both domestic and international market. You can also start an online clothing
store. All these business are equally profitable.
5) Exportation -Import and Export
Vietnam exports a lot of products like rice which is a world staple, coffee, crude oil,
footwear, rubber, electronics and sea food. There are just so many things that you can sell to
buyers from other countries. To get international buyers you can go to websites like
alibaba.com and several other e-Commerce websites. You will find a lot of people looking to
buy stuffs from Vietnam.
You could also become a freight forwarders for people who wish to buy stuffs from Vietnam.
You can also merge importation and exportation together. Some items you can import include
raw cotton, petroleum products, cement, fertilizer, motorcycles and electronics.
Sources:
1. https://www.ceicdata.com/en/vietnam/prime-rate-refinancing-rates-and-discount-
rate/refinancing-rate

2. https://vietnamnatonallaw.vn/blog/top-10-business-investment-opportunities-in-vietnam-
for-sme

3. https://tradingeconomics.com/vietnam/interest-rate

4. https://vietnamnationallaw.vn/blog/top-10-business-investment-opportunities-in-vietnam-
for-sme
5. https://www.gov.uk/government/publications/overseas-business-risk-vietnam/overseas-
business-risk-vietnam
6. https://www.export.gov/article?id=Vietnam-Market-Overview
7. http://research.hktdc.com
8. https://www.vietnam-briefing.com/news/infrastructure-vietnam.html