global business for executives
TRANSCRIPT
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The Doi Moi Plan of 1986 The Vietnam War ravaged country
a) Infrastructure in ruins : physical and economicalb) Sanctions applied
1986 - Doi Moi plana)Bring the country into better standing in the international marketb)Goal = stabilize economy, security, sovereignty and currency
The Impact of The Doi Moi PlanForeign investors started seeing Vietnam’s potential; by 1990, increase foreign direct investment led to new business openings
Vietnam is now one of the top 5 fastest growing economies in ASEAN
Now is an excellent time to make an investment in Vietnam
Demographics and TrendsMiddle class strengthening economicallyIncrease in disposable income
2013: disposable income at $127 billion; expenditures at $111 billion
70% of population aged between 15 and 64 years. GDP increases= consumer expenditure growth
Middle and affluent class to double by 2020Increased perception & demand of western brands
ChallengesHuman capital (local talent) scarcityRelatively low levels of GDP (purchasing power parity) per capita may indicate lack of purchasing power
High inflation rates contribute to higher costs of living and may lead to belt-tightening measures by consumers
Trade barriers may make the entrance and expansion of foreign retailer outlets more difficult
Fledgling retail infrastructurea) Real estate acquisition difficult because
of disproportionately high rents and shortage of reliable property managers
b) Poor logistics and hidden costs impact supply chain and threaten
Vietnam’slow-cost position
Businesses That Would BenefitIndustrial and Agricultural Products (machinery, chemicals, etc.)
Infrastructure Development Related Industries
Food and Beverage Brands
Low cost electronic goods (cell phones, tablets, laptops) Mass Market Health & Beauty AidsAffordable Apparel (Zara, H&M, Havaianas, Fossil, Gap)
Why FMCGs?
Between 2009 and 2013, Vietnam’s retail sector has had the fastest growth rates, with retail sales growing by 60% and forecasted to reach US $109 billion in 2017
Foreign brands have the perception of being safer and higher quality
Affordable electronics to meet educated middle class needs
Growing young population of 90 million with rising income