alibaba.com sourcing intelligence series - vietnam (full version)

Professional Sourcing Club

Alibaba.com Sourcing Intelligence Series – Vietnam

November, 2011Prepared by Allan Yau & Thuy

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Michael MangSenior Managerhttp://buyer.alibaba.com/Skype: michaelmang1119Email: michaelmang@hk.alibaba-inc.comDirect line: 852-22155233Mobile Phone: 852-98455407China Mobile: 86-13732292872

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Content

Country Profile Alibaba.com in Vietnam Tips in Doing Business in Vietnam

Vietnam - Benefits for International Trade Geography

– Strategic location: Asia Pacific region gateway to the world– Long coastline: over 4000 km– Convenience seaport

Labor force– Young generation– Low labor cost compared with other countries– Hard work and skillful worker

Market openness– Trade relation with other countries

Natural resource Key Government bodies in promoting export activities

Vietnam

Vietnam today is a country undergoing continued development at a rapid pace. While the old image of Vietnam lingers in history textbooks, today’s Vietnam is increasingly being shaped by a dynamic young population. With change comes new technology, new ideas, and new social issues

Vietnam Capital

Hanoi Capital website: http://www.hanoi.gov.vn - Hanoi is the capital of Vietnam. It's a wonderful city.

Vietnam Economic Hub Hochiminh City website:

http://www.hochiminhcity.gov.vn - Hochiminh City is an economic hub of Vietnam, a dynamic city. It's very good if you can get more information about this city, where your first business trip may come here.

Vietnam is located in both a tropical and a temperate zone. It is characterized by strong monsoon influences, but has a

considerable amount of sun, a high rate of rainfall, and high humidity.

Regions located near the tropics and in the mountainous regions are endowed with a temperate climate.

Climate

Religion The major religious traditions in Vietnam are Buddhism (which

fuses forms of Taoism and Confucianism), Christianity (Catholicism and Protestantism), Islam, Caodaism and the Hoa Hao sect.

Geographic Profile

Vietnam is composed of 58 provinces & 5 centrally controlled municipalities

Vietnam is further divided into 8 regions: Northwestern Northeastern Red River Delta North Central Coast South Central Coast Central Highlands Southeastern Mekong Delta

Regional Characteristics

Location: Southeast Asia, bordering the Gulf of Thailand, Gulf of Tonkin, South China Sea. Next to China, Laos and Cambodia.

Area: 331,210 sq. km – at 66 position among the world.

Population: 90,543,390 (July 2011 est.) People Age Structure

• 0-14: 25.2%• 15-64: 59.3%• 65 or above: 5.5%• Medium Age: 27.8 years old

Country Profile - Overview

GDP (PPP) : 276.6 billion (2010 est.)

(Position: 42) GDP Growth: 6.8 % (2010 ext.)

GDP by sector Agriculture: 20.6% Industry: 41.1% Services: 38.3%

Labor Force: 47.37 (12 of the world) (2010 Est)

Labor Force by occupation (2009)

Agriculture: 52.9% Industry: 20.3% Service 25.8%

Country Profile – GDP & Labor

Country Profile – Import & Export

Exports Value: $72.07 billion (Position 40) Key Export Items:

Clothes, Shoes, Marine Products, Crude Oil, Electronics, Wood Products, Rice and Machinery

Key Export Partners: US (20%), Japan (10.7%), China (9.8%), South Korea (4.3%) (2010 ext)

Key Import Items:Raw Materials for Clothing & Shoes, Electronics, Plastics, Automobiles, Machinery & Equipment

Key Import Partners: China (23.8%), South Korea (11.6%), Japan 10.8%, Taiwan (8.4%), Thailand (6.7%) (2010 ext.)

Country Profile – Export by Sector

Country ProfileVietnam’s Long Term Prosperity Growth (1975-2009)

Country ProfileDrivers of Structure Change: Economic Openness

Source: EIU (2010)

Market Openness Vietnam have become a business partner with a many other countries and

international associations that help to make Vietnam product become more competitive at importing countries with FTA– Member of WTO, APEC (1998), ASEAN (1995), ASEM, WB and IMF– BTA with USA (2001)– ASEAN (AFTA), – ASEAN – China (ACFTA), – ASEAN – Korea (AKFTA). – ASEAN - Japan (AJCEP), – ASEAN-Australia –New Zealand (AANZFTA), ASEAN-India (AIFTA), ASEAN-

EU– Going to complete FTA with Chile in Nov 2011

Vietnam has become official member of WTO in last 11th January 2007. – Complying with commitments of Vietnam in WTO, there

will be many coming changes in laws and regulations in Vietnam. As the result, it has made Vietnam economy turning to be a very attractive market for investment and business growth.

– The are more companies listed in stock market, more states companies are privatized. The economy mechanism has gradually changed into market and dynamic economy. Information from government is nowadays updated and more transparent.

Doing business in Vietnam

Country ProfileVietnam’s Cluster Export Portfolio (1997 – 2009)

Country ProfileRelative Wages: Selected Countries

Source: Philippines Department of Labor & Employment (2010)

Young Generation

With 65% of the population aged 30 or younger, Vietnam is a country of youth. This population “bonus” will be critical in determining Vietnam’s destiny over the next decades.

Country ProfileVietnam’s Rate of Inflation of selected countries (2000-2009)

% Change in CPI

Source: EIU 2010

S.W.O.T Analysis

Strengths- Favorable trade policies- Competitive labor cost- Convenient seaports

Opportunities- Large young population- Emerging market

Weakness

- Lack of raw materials resources- Hidden costs

Threads

- High inflation- Competition from other SEA countries

In 2010, Vietnam had a little over 25 million Internet users or about 27% of the population (Source: www.itu.int).

Public internet cafes and home use are dominant, however mobile (tablet, smartphone, etc) use is making significant gains.

In major cities, use of public Internet terminals is highly affordable, at about 4000 VND ($0.20 USD) per hour.

Country ProfileInternet Usage

Country ProfileSocial Network Usage

In 2010, Vietnam’s use of social media saw a huge leap in numbers. Young Vietnamese are increasingly quite tech-savvy, making use of various platforms including Facebook, Twitter, Blogs, Forums, and the like.

– Ministry of Industry & Trade : http://www.moit.gov.vn where you can find updated information, law and regulation, new policies about import/export and commerce

– Ministry of Planning and Investment http://www.mpi.gov.vn/ where you can find updated information, legal issues and guides showing you how to invest into Vietnam, how to apply and get investment license, which project Vietnam calling foreign direct investment...

– Vietnam Chamber of Commerce and Investment (VCCI): http://www.vcci.com.vn Which is an independent, non-governmental and national organization representing the Vietnamese business community, business associations, and employers for the promotion and protection of their interests in domestic and international relations.

Doing business in Vietnam

What did Alibaba.com Do? - Co-operation with VCCI Signing ceremony of co-operation between Alibaba.com, OSB

and VCCI to run pilot program for VN exporters on Jan 15, 2010

Seminar “To explore export opportunities to APEC and AFRICA” in Hanoi on May 28, 2010

Seminar “To explore export opportunities to APEC and AFRICA” in HCM city on June 02, 2010

What did Alibaba.com Do? - Cooperation with VCCI

Promoting Export to USA via ecommerce on Mar 30, 2011

Exploring export opportunities to APEC and AFRICA” in Can Tho city on May 31, 2010

What did Alibaba.com Do? - Cooperation with VCCI

What Does Alibaba.com Do?

Training of Suppliers To Understand Better of Buyers’ Requirements

Organized 2 Supplier Days in Hanoi (Sep 27) and in HCM City• Target to Senior Executive of Our Members• Give Specified Training on their preparation to

buyers’ inquiry and further request

Event Photos – Hanoi &HCM City

Tips in Doing Business in Vietnam

Corporate Culture

Most decisions are made by committee in Vietnam.

"Yes" may not mean "yes“; No problem," you can take it to mean "Yes, there is a problem.”

Your local partner in Vietnam is very important and should be chosen very carefully.

Payoffs, kickbacks and "gifts" are quite common.

Business name cards are usually exchanged. Give and receive a business card with both hands.

The Vietnamese are generally quite punctual and expect foreigners to be the same.

Few Vietnamese speak English well. An interpreter is usually necessary.

A foreigner doing business in Vietnam will have to deal with government officials. Direct contact with the ministry officials who is responsible for granting or approving your permits and licenses is very important.

Corporate Culture

Doing business with your VN partner

Business Hints:– Keep closed contact with official agencies; – Your documents should be presented in French or

English - or even better in Vietnamese;– The negotiation is long sometime, so do not become

discouraged too quickly;– To build up a good interpersonal relationship is the

key to do business success in Vietnam;– The necessity to building the trust is by constant

communications and regular contacts.

Hints for your first successful business trip to Vietnam

GET YOUR MONEY - THE PAYMENT METHOD – Exchange regulations in Vietnam involve specific measures preventing

the Dong from being freely convertible into foreign currency. Most exchange operations must be authorized by the central bank. The best currency for billing, or at least the most commonly used, is the US dollar. The best payment method remains an irrevocable letter of credit at sight.

YOUR MONEY THERE - THE BANKING SYSTEM– As part of the reform, the most of the commercial banks were

established and authorized to perform foreign currency operations. Some major banks like: Industrial and Commercial Bank of Vietnam (ICBV), Agricultural Bank of Vietnam (Agribank), Foreign Trade Bank (Vietcombank), Bank for Investment and Development of Vietnam (BIDV), Saigonbank and Eximbank. And now there are some other international financial banks likes HSBC, Standard and Charter and City Bank etc.

THE MOST IMPORTANT TIP - BUSINESS ETIQUETTE– One of the keys to business success in Vietnam is

understanding that local customs and behavioral practices have a significant effect on business relationships. While there are few formal limitations to doing business in Vietnam, there are some informal barriers and practices which differ from Western norms. Bureaucratic difficulties are not uncommon, particularly in relation to customs and documentation. However, patience, persistence and sound business advice can help in overcoming these obstacles.

Hints for your first successful business trip to Vietnam

Establishing Contacts & Networks – Although the Vietnamese will agree to appointments with

unknown contacts, it is far easier if the first meeting is through introduction from a known business contact in Vietnam, through friend or through an official channels. Vietnamese companies may not have access to the internet or other forms of information and feel more secure when the company has been introduced to them.

– Personal business introductions are a fundamental way of doing business in Vietnam and "cold calling" can often mean that you end up speaking with someone totally unrelated to the issue you wish to discuss.

Hints for your first successful business trip to Vietnam

Business Entertainment– Aware that Vietnamese are a very polite people and will often

smile and agree with you when in fact they may not have fully understand what you have said. The smile and head nod are usually to confirm that they acknowledge you have spoken, and may not always indicate a firm agreement.

– It is advisable to have bilingual sales literature, including business cards and product manuals, for more complex negotiations. It is useful to have an agenda and relevant papers translated in Vietnamese prior to the meeting so both sides are clear on what they wish to discuss.

– Eating and drinking are a major part of doing business in Vietnam. Dinners with local agents and customers help to develop networks and cement relationships.

Hints for your first successful business trip to Vietnam

Contact Us

Michael MangSenior Managerhttp://buyer.alibaba.com/Skype: michaelmang1119Email: michaelmang@hk.alibaba-inc.comDirect line: 852-22155233Mobile Phone: 852-98455407China Mobile: 86-13732292872

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