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Economic Analysis

Reginald G. Walker, J r.
April 23, 2012
International Marketing
Dr. J . Wu



France began the conquering of Vietnam in 1858 and ended it successfully in 1884.

After World War II Vietnam gained its independence from French Indochina. France ruled over

Vietnam until 1954 when the Communist forces under Ho Chi Minh defeated the French. The

country was divided into north and south and after two years, the North Vietnamese invaded

the South and the country was brought together under Communist rule. Vietnam had little

economic growth for over a decade because of bad leadership and the persecution of its own

people. Authorities in Vietnam have enacted doi moi which means renovation.this policy

means the authorities are committed to increased economic liberalization.and modernize

the economyto produce more competitive export-driven industry. The Leadership is

communist and they have control and have many human right issues to deal with. Vietnam

continuously experience protests from different groups of its people.


The Vietnamese population consists of different ethnic groups: Kinh 85.7%, Tay 1.9%,

Thai 1.8%, Muong 1.5%, Khmer 1.5%, Mong 1.2%, Nung 1.1% and other 5.3% (2009 census).

The official language is Vietnamese and English is increasingly favored as a second language.

There is also some Chinese and French and Khmer. Some Religions are Buddhist 9.3%,

Catholic 6.7%, Hoa Hoa 1.5$, Cao Dai 1.1% and Protestant .5%, Muslim .1% and none 80.8%

(1999 census).

The population in J uly 2012 est. was 91,519,289 people. The population growth rate in

2012 is 1.054% and the birth rate is 16.83 births for every 1000 people. The death rate is 5.95

death for every one thousand people. For Distribution of population in Vietnam the majority of

people are between the ages of 15 64 years old (69.3%) with just over thirty one million being


male and just over thirty one million being female. In the age range of 0 14 years old we find

25.2% of the Vietnamese population with just under twelve million being male and just under

eleven million being female. Only 5.5% of Vietnams population is over the age of 65 years old

with just under two million being males and just over three million being female. The median

age for males is 26.8 years and the median age for females is 28.9 year.

The migration rate is -0.34 migrants for every thousand people in the population. The

urban population equals roughly 30% of the total population with the rate of urbanization

being a 3% annual rate of change. The populations in the major cities are as follows: Ho Chi

Ming City 5.976 million, HANOI the capital 2.668 million, Haiphong 1.941 million and Da

Nang 807,000 (2009).

Economic statistics and activity

The GDP per capital is $3300 in 2011 and $3200 in 2010. The GDP by sector is broken

up with 22% being agriculture, 40% being industry and 38% being services. The GDPs real

growth rate was 5.8% in 2011 and 6.8% in 2010. The Labor force is comprised of 46.48 million

people. The unemployment rate is only 2.3% but 14.5% of the population live below the

poverty line. The lowest ten percent of household incomes comprise 3.2% of the total

population and the highest ten percent of household income comprises 30.2% of the total

Vietnamese population.

Minerals and Resources
Vietnam is usually primarily known for its agriculture and farming habits as a nation but
they have been a country that participates in mining for a very long time. Copper, zinc, tin and
gold have been mined in Vietnam since the Bronze Age and silver, iron and some non-metallic
since the 1st century B.C. They were mainly extracted by Chinese miners, migrating to Vietnam

during the Ming Dynasty; to honor those Chinese miners, their workings can be found on
numerous mineral deposits around the country of Vietnam.
Many foreigners have exploited the mineral resources of Vietnam like the French and the
J apanese along with the Europeans throughout their Vietnam history. Nonetheless, Vietnam has
withstood the battles and frustrations and by being exploited, it allowed and help the country of
Vietnam discover other resources that they probably wouldnt have found themselves.
Many may not know this but Vietnam is a country full of diversified and plentiful
mineral resources. Among fuel-power resources like oil (4-5 billion tons of oil), coal
(approximately 220 billion tons of coal), and gas reserves which are throughout the nation,
Vietnam has almost all types of metal minerals. There most remarkable one being iron, which
are mostly located in the Northern mountainous and Central regions with reserves of 1.8 billion,
just in the Northern area of Vietnam alone. The variety of minerals and natural resources
provided in the country of Vietnam include but are not limited to---iron, petroleum, manganese,
chromite, nickel, copper, zinc, tin, aluminum, titanium, zircon, gold, rubies and sapphires,
graphite, phosphates, limestone, silica sand, and even rare earths.

Surface Transportation
Vietnam has been said to be a very dangerous country when it comes to transportation
especially for tourists. The country is already affected by, what we know as, the bird flu and
other plagues; however, plagues are only less than 1% of all overseas traveler deaths in Vietnam.
The leading cause of death in Vietnam comes from motor vehicle accidents because road
infrastructures are so terrible. From 1992 to 2002, reported motor fatalities increased from 2,755
to about 13,000. Many Vietnamese ride bicycles so you are focused, as a tourist, to share to

roads of Vietnam with everything from cars to water buffalos from time to time. The traffic gets
hectic at times.
Vietnam is a developing country so even though vehicle ownership is rising very quickly,
car ownership is still low and road traffic is mostly dominated by motorcycles and bikes.
Transportation also includes minibuses, cabs and public buses.
Similarly, vehicular movement in the large and medium sized cities is dominated by two
wheelers. In 2001, there were only 100,000 four wheelers in capitol city of Hanoi compared with
1.5-1.6 million motorcycles. Motorcycles account for about 60% of the traffic in the major cities
and bicycles about roughly 30%.
Railways operate over a 2,600 km route, comprising seven main lines and several branch
lines. The network is all of single track, mainly with 1,000 mm gauge, but also with some 1,435
mm gauge and dual-gauge sections. In the 1990s, the former Ministry of Railways (MOR) was
reorganized into a series of SOEs including 3 regional operating companies, 20 enterprises for
infrastructure and a number of industrial SOEs covering repair and construction of rolling stock,
tourism services, cargo services and education, including a junior college and a railway technical
school. In 2003, the sub-sector was reorganized again into a Railway Authority in charge of
policy, regulation and safety matters and Vietnam Railway Corporation (VR) in charge of rail
operations. VR now consists of 3 rail transport companies, two for freight and one for passengers
and a number of financially independent SOEs, which will gradually become joint stock
companies. Government is responsible for financing VRs infrastructure, and collects 10% of
VRs operating revenue for use of the infrastructure. The railway has about 41,600 staff but their
productivity is low compared with other countries in the region. In 2000, VR operated 65
passenger trains and 91 freight trains daily. It had 377 locomotives (337 diesel), 887 passenger

cars and 4,455 freight cars. Rail traffic volumes of both passenger and goods have been
gradually increasing.
Vietnams ports are under the Ministry of Transport (MOT)s jurisdiction through the
Vietnam National Maritime Bureau (VINAMARINE). Few ports (Nghe Tinh, Quy Nhon and
Nha Trang) are managed directly by VINEMARINE, while most of the ports are owned and
operated by the state sector. These include the ports (Haiphong, Saigon, Danang and Can Tho)
managed by the Vietnam National Shipping Lines, and other SOEs of local governments and
ministries, other than the MOT. The main gateway ports suffer from shallow water depth,
inadequate infrastructure and cargo handling equipment. In spite of these constraints, cargo
traffic has been constantly increasing, and port productivity increased by over 50% between
1995 and 2000.
Productivity is hampered by the port condition but progress is being made. Port fees have
been reduced and are now competitive with those of neighboring countries, custom services have
improved and paper work reduced, IT systems are being introduced. The main constraint, in
HCMC is now on the land side due to road congestion and prohibition of trucks through the city
during daylight hours, thus increasing operating costs.
Communication Systems
Since Vietnam is a developing country, they are dedicating a lot of time into
modernization and expansion of its telecommunication (rank 18th in the world with 16.4 million
main lines in use) system. As of this moment, all regional exchanges are connected to the major
cities of Hanoi, Da Nang, and Ho Chi Minh City by fiber-optic cable or microwave radio relay
networks; main lines have been increased and as with almost everything else in the country of
Vietnam, the use of mobile telephones (rank 7th in the world with 154 million mobile cellular

devices in Vietnam) is growing quickly. Vietnam is also rank 17th in the world when it comes
down to internet users with 23, 382 million in 2009.
Concerning broadcast media, the government controls it all. Exercising oversight through
the Ministry of Information and Communication (MIC); government-controlled national
television provider, Vietnam Television (VTV), operates a network of 9 channels with numerous
provincial broadcasting centers. Government-controlled Voice of Vietnam, the national radio
broadcaster, broadcasts on 6 channels and is repeated throughout Vietnam via AM, FM and
shortwave stations.
Working Conditions
The most discussed working conditions in Vietnam pertain to the sweatshops.
Sweatshops are environments in which workers participate in work activities that are considered,
by many, to be unacceptably dangerous or extremely difficult. Critics cite the long hours
employees work, the very low pay employees receive, the use of child labor, dangerous working
environments, employer abuse and lack of worker rights as cons to why that are completely
against sweatshops.
Although Vietnam has been the poster child for anti-sweatshop activism, very little has
been done to change sweatshop working conditions in the country. The only thing that activists
have been able to do is ask foreign companies to make sweatshops in Vietnam better work and
living environments for their employees and hope that those same foreign companies would
listen. Many foreign clothing, textile and fashion companies choose to open factories in Vietnam
due to the huge monetary saving opportunities by paying awfully low wages to their workers.
The best case scenario would be the example of former Nike sweatshops in Vietnam.

A study done in 2001 by the Vietnam Labor Watch documented several cases of labor
exploitation in Vietnamese Nike factories. The study found that Nike was hiring workers under
the age of eighteen. Workers who were interviewed for the study complained that they were only
being paid $1.60 a day even though they needed at least $3.00 a day to make ends meet. The
study lists documented cases of humiliation and corporal punishment being administered to
workers in factories for various violations. During an eight hour shift, workers were only allowed
to go to the bathroom once and were not allowed to drink water more than twice. If workers did
not work overtime, the factory would threaten to withhold their wages. Many workers ended up
working 80 hours of forced overtime per month. The study also found that there were not enough
doctors and nurses in the factories to provide medical care for the workers. Although there were
several health and safety policies that the Ho Chi Minh City Health Department recommended,
none of them were ever implemented. Sounds like modern-day slavery, right?

The Economy (Principal Industries, Foreign Investment & International Trade Statistics)
Vietnam is a densely-populated developing country that in the last 30 years has had to
recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the
rigidities of a centrally-planned economy. While Vietnam's economy remains dominated by
state-owned enterprises (SOEs), which still produce about 40% of GDP, Vietnamese authorities
have reaffirmed their commitment to economic liberalization and international integration. They
have moved to implement the structural reforms needed to modernize the economy and to
produce more competitive export-driven industries. Vietnam joined the WTO in J anuary 2007
following more than a decade-long negotiation process. Vietnam became an official negotiating
partner in the developing Trans-Pacific Partnership trade agreement in 2010.

Agriculture's share of economic output has continued to shrink from about 25% in 2000 to about
22% in 2011, while industry's share increased from 36% to 40% in the same period. Deep
poverty has declined significantly, and Vietnam is working to create jobs to meet the challenge
of a labor force that is growing by more than one million people every year. The global recession
has hurt Vietnam's export-oriented economy, with GDP in 2009-11 growing less than the 7% per
annum average achieved during the last decade. In 2011, exports increased by more than 33%,
year-on-year, and the trade deficit, while reduced from 2010, remained high, prompting the
government to maintain administrative trade measures to limit the trade deficit.
Vietnam's managed currency, the dong, continues to face downward pressure due to a persistent
trade imbalance. Since 2008, the government devalued it in excess of 20% through a series of
small devaluations. Foreign donors pledged nearly $8 billion in new development assistance for
2011. However, the government's strong growth-oriented economic policies have caused it to
struggle to control one of the region's highest inflation rates, which reached as high as 23% in
August 2011 and averaged 18% for the year. In February 2011, Vietnam shifted its focus away
from economic growth to stabilizing its economy and tightened fiscal and monetary policies. In
early 2012 Vietnam unveiled a broad "three pillar" economic reform program, proposing the
restructuring of public investment, state-owned enterprises and the banking sector.
Vietnam's economy continues to face challenges from low foreign exchange reserves, an
undercapitalized banking sector, and high borrowing costs. The near-bankruptcy and subsequent
default of the state-owned-enterprise Vinashin, a leading shipbuilder, led to a ratings downgrade
of Vietnam's sovereign debt, exacerbating Vietnam's borrowing difficulties (CIA, 2012).
The notable statistics are---GDP (purchasing power parity): $229.2 billion, GDP (official
exchange rate): $123.6 billion, GDP (real growth rate): 5.8%, GDP (composition by sector):

agriculture 22%, industry 40%, and services 38%, Labor force (by occupation): agriculture 48%,
industry 22.4%, and services 29.6%, Unemployment rate: 2.3%, Population below poverty line:
14.5%, Investment (gross fixed): 34.6% of GDP---roughly $357.22 million, Budget: revenues
$32.8 billion and expenditures $35.7 billion, Budget surplus (+) or deficit (-): -2.3% of GDP,
Current account balance: -$4.74 billion, Reserves of foreign exchange and gold: $16.76 billion,
Stock of direct foreign investment (abroad): $7.7 billion, Exchange rates---dong (VND) per
USD: $20,585.6, Exports: $96.3 billion, Imports: $105.3 billion, Exports (partners): U.S. 18%,
China 11%, J apan 11%, Germany 3.7%, Imports (partners): China 22%, South Korea 13.2%,
J apan 10.4%, Taiwan 8.6%, Thailand 6.4%, Singapore 6.4% (CIA, 2012).
Channels of Distributions and Import Trading Rights
Vietnam, under both its WTO Commitments and its domestic laws, extends import and
export activities to all foreign individuals and enterprises (including foreign-invested
enterprises).In effect, with the import right, a foreign-invested company can be the importer of
record; and can sell its imported products to distributors (licensed wholesalers or retailers) in
Vietnam; but with just the import right alone, it cannot sell its imported products to final
consumers. Vietnam has reserved the right to import certain goods to state trading companies. In
brief, these goods are: cigars and cigarettes; crude oil; newspapers, journals and periodicals; and
records, tapes and other recorded media for sound or pictures (with certain
exclusions).Companies that does not have their own import license must work through licensed
traders, who typically charge a commission of between one and two percent of the value of the
invoice. Under Vietnamese law, the importer is the consignee. Therefore, it is important to
identify a reliable importer with the ability to clear merchandise through customs quickly and
efficiently. If a licensed third-party importer is used, the importer will handle customs clearance.

If a foreign invested firm imports products directly, it will have to make arrangements to handle
customs clearance at the port. This can be potentially burdensome.
Distribution Services: According to Vietnams WTO Commitments, 100 percent foreign-
owned companies may engage in distribution services (including wholesale or retail sales) of
most legally imported or domestically produced products as of J anuary 1, 2009. Distribution
services include commission agent sales, wholesaling, retailing and franchising. Foreign
companies engaging wholesalers in Vietnam should examine the investment certificate or
business registration certificate of each reseller or distributor to make sure that the reseller is
properly licensed to engage in wholesaling or retailing of the products sold to them. Some
products are excluded from Vietnams commitment to open distribution services.
The retail market in Vietnam is much smaller than other developing economies in Asia,
but it has shown strong fundamentals and buoyant expansion in comparison of its neighbors like
India and China. The value of retail sales in Vietnam has rapidly risen over the past few years. It
is expected that retail sales will reach nearly US$ 78 Billion in 2010. In recent years, Vietnams
retail landscape has been going through rapid transformation, providing more outlets for proper
display and marketing of products. While anecdotal reports suggest that shoppers perceive the
mini-marts as expensive and per customer sales are still fairly low, most experts agree that this
trend will continue to gather pace, as it has among Vietnams more developed neighbors. At the
moment, these kinds of outlets are said to account for a small percentage of total retail trade, and
most consumer purchases continue to take place at traditional street-side shops or official wet
and dry markets organized by district governments. And US$ 65 Billion in 2009 on account of
rising consumer expenditure and changing market dynamics. Foreign Invested Enterprises

(FIEs) are currently prohibited from distributing cigarettes and cigars, books, newspapers and
magazines, video recordings, precious metals and stones, pharmaceutical products and drugs,
explosives, processed oil and crude oil, rice, cane and beet sugar. Nevertheless, these new retail
outlets are expanding rapidly in major cities and offer promising opportunities for distributing a
wide-range of U.S. consumer goods.
Media of Vietnam are tightly regulated by the Vietnamese government. First and
foremost, the media are a tool for government information and propaganda. The government
views the media as "the voice of the party and of the masses," and sees its main function as being
"to propagate the party's lines and policies. Though market competition has caused the
Vietnamese media to embrace popular culture, newspapers, radio and television are still
compelled to reflect on the fundamentals of Marxism-Leninism and the ideals of Ho Chi Minh.
The first Vietnamese-language radio transmission was made on September 2, 1945 when Ho Chi
Minh read out the Declaration of Independence. Prior to 1945, Vietnamese people were banned
from owning radio receivers, and broadcasting was under control of the French colonial
government, which established the first radio station in Vietnam, Radio Saigon, in the late 1920s.
Vietnam's national radio station, now called the Voice of Vietnam, started broadcasting from
Hanoi the just a week after declaration of the Democratic Republic of Vietnam. During
the Vietnam War, Radio Hanoi operated as a propaganda tool of the Democratic Republic of
Viet Nam.
As Vietnam moves toward a free-market economy with its doi moi measures, the
government has relied on the print media to keep the public informed about its policies. The

measure has had the effect of almost doubling the numbers of newspapers and magazines since
The first Vietnamese-language newspaper was the French-sponsored Gia nh Bao,
established in Saigon in 1869. In the years that followed, both the nationalistic and the colonial
sides relied on newspapers as a propaganda tool. During the final period of French colonialism
many reporters were arrested and imprisoned and several newspaper offices closed by the
The rapid growth in Vietnams retail market in the recent past has made the country an
attractive destination for multinational retailers. Vietnam has continued its dominance in the top
10 emerging retail markets across the globe, as per Global Retail Development Index. However,
Vietnam has moved down five places to sixth position in 2009 index from the topmost slot in
2008, but despite this Vietnam remains attractive destination for retail investment due to its
strong GDP growth, changes in the countrys regulatory structure favoring foreign investors, and
increasing consumer demand for modern retail concepts.


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