Công ty TNHH Thương Mại & Dịch Vụ 2AM Việt Nam
Why doing Business in Vietnam ?
Cập nhật: 21/09/2016
With a high economic growth and political stability, Vietnam has received numerous honorable titles in recent years: Tiger State, Next Eleven, China plus one, CIVITS Emerging market countries, ambitious successor of the BRIC countries, etc.
Whatever the title is - For us Vietnam has an interesting past and an exciting future with great potentials!
Six reasons - Why Vietnam is important for your business
There are six main reasons why Vietnam is important for our clients and their business strategies. What is important to you?
1. Hard and Dedicated Workers
The labor costs in Vietnam are one of the lowest in Asia: unskilled laborers earn on average 125 USD while skilled workers make an average of 275 USD per month. Regardless of the continually low wage costs, Vietnamese are perceived to have high work ethics and strong quality awareness.
Vietnam's labor force is as eager to learn, with great apprehension and high morale. The country has very good basic education, with the literacy rate of 94.5%. The working population is very young, hence a great number of school-leavers enter the labor market every year.
Therefore, "Made in Vietnam" stands for high-quality products at a relative low costs.
2. Stable Economic Growth of > 5 %
Vietnam's economy is steadily growing with a rate of 5 – 6% per year. Even during the Asian crisis (1997), as well as the recent global recession, the growth trend has not changed. For the period 2016-2020, the Vietnamese government targets a GDP growth rate of 6.5 - 7%. The increase in industrial production in recent years at an average of 10 percent per year (period 2009 – 2015), coupled with rising FDIs and exports offer a particularly optimistic perspective.
Additionally, Vietnam saw more manufacturing and technology-based investment projects during the recent years. Companies such as Intel, Samsung, Nokia or LG are some of the enterprises that, with their investments, are showing long-term commitment to operating in Vietnam.
Finally, studies carried out by McKinsey, A.T. Kearney and the World Bank acknowledge the investments in infrastructure that Vietnam commenced, while forecasting a strong growth, especially in the retail and consumer sector of the tiger economy.
3. Retail, Sales, Consumption
With a young population of 94.3 million people, Vietnam is one of the TOP retail markets in the world. Due to the dynamic economic growth, the disposable income of the population is steadily increasing. Following this trend, a high-spending middle class is emerging, especially in the larger cities. As an example, the average annual GDP per capita in Ho Chi Minh City is 4,500 USD, where the young population is especially asking for foreign brands.
Many areas of the Vietnamese market are still young, and therefore not densely occupied. Additionally, the local population has strong brand awareness, and Western products enjoy high reputation.
4. In the Center of ASEAN
Vietnam is located in the middle of one of the fastest growing regions in the world. ASEAN does not only provide Vietnam with a safety net in regards to regional and global problems, but it also constitutes a bridge to the wider world and offers its members numerous Free Trade Agreements.
For foreign companies, the central location offers two advantages:
· Sales opportunities within the entire ASEAN region, as well as other big Asian economies such as China, Japan and South Korea
· Diversification of country risk
5. Stability and Security
In addition to its extremely strong economic growth, Vietnam is considered a stable macro-economy. Inflation, one of the major economic issues that Vietnam was experiencing in recent years is steadily diminishing. The inflation rate dropped from 18.7% in 2011 to less than 1% in 2015, with the average rate of 7.8% in the last 5 years.
Vietnam is a very peaceful and safe country. According to World Bank's Political Stability and Absence of Violence Index, Vietnam ranks considerably better than most Southeast Asian countries, taking second place after Singapore. Moreover Vietnam faces very little ethnic or religious tensions. The crime rate is among the lowest in Southeast Asia, and violent crimes are extremely rare. Generally, the Vietnamese are law-abiding people.
6. Vietnam and the World
The integration of Vietnam into the global economy, which started with the Doi Moi reforms of 1986 continues to scale. After Vietnam signed a bilateral trade agreement with the US in 2000, and joined the WTO in 2007, the country saw a major number of new trade agreements being signed in 2015. Namely, Vietnam signed bilateral FTAs with South Korea and the EU, as well as agreed to participate in the Trans Pacific Partnership agreement (TPP). The TPP agreement gathers 12 Pacific Rim countries, including some of the world's major economies, such as the US, Canada, Japan and Australia.
Furthermore, being a full member of the ASEAN, Vietnam enjoys FTAs that this organization signed with Australia and New Zealand, as well as with Chile, Japan and China.
In 2015, Vietnam exported goods worth 162 billion USD, which is an increase of 7.9% over the previous year. On the other side, the country imported goods valued at 165 billion USD, presenting a 12% increase over 2014.
The main exported goods were telephones and mobile phones (30.2 billion USD), textiles and garments (22.8 billion USD), computers and electrical products (15.6 billion USD), footwear (12 billion USD) and machine equipment (8.2 billion USD). It is also important to notice that the exports mobile phones and computers, being the higher value added industries, grew on a much higher rate year on year (28% and 37% respectively) compared to textiles and garments (9%) and footwear (16%). Finally, exports of machine equipment grew with the rate of 12%.
(Source: bdg-vietnam)
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