Vietnam Economy

nom Economic Vietnam has during the last two decades developed into a dynamic and fast growing market – also in automobile industry. Economic reforms, membership of WTO since 2007 and an impressive number of foreign investments, the notable increase in GDP, in people’s demand for high quality product and the almost-zero of the domestic automobile industry have led Vietnam to become the potential market for Volkswagen. The global crisis led to a temporary slowdown of Vietnam’s fast economic growth, but growth is back on track with 6. % growth in 2010 and more than 7% per year expected in 2011-2015. Table 1: Vietnam’ GDP real growth rate (%) [pic] Source: Source: General Statistics Office of Vietnam The rate of economic growth has during the last decade amounted to 7-9% per year, amongst the highest recorded growth rates in the world. The GDP per capita is USD 1160 (2010), and an increasing number of Vietnam’s 87 million inhabitants demand consumer pr oducts of higher quality. Table 2: Vietnam’s GDP per capital (US$) [pic] Source: General Statistics Office of Vietnam However, the average income in Vietnam is still fairly low in comparison with the company price (about†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. cai nay lay so lieu ben product nhe, to k tim duoc). According to â€Å"Background note of Vietnam† recorded by U. S Department of State in http://www. state. gov, Vietnam’s per capita income in 2010 was just $1,168 one person per year. Whereas, imported cars in Vietnam have to suffer upto 3 kinds of duty, including: Import Duty, Extra Duty, and Value Added Tax. Regardless of how strict Vietnam taxation policy is, the accession agreement which was compulsory for Vietnam to become WTO’s member in 2007 obliged Vietnam to lower its import tariffs and to welcome foreign investments in most commercial sectors of the economy. Certain sectors are partly protected against foreign competition in an interim period, but from 2012 respectively 2014 all sectors of the economy must welcome foreign goods and services as well as investors on an equal footing with local companies and investors. Therefore, we totally hope that in the upcoming period, such a 200% tariff for exported cars will not exist. Vietnam automobile market is not that big but it sees a potential signal. According to General Statistics Office of Vietnam [ http://www. gso. gov. vn/default. aspx? tabid=393&idmid=3&ItemID=11605 to k biet trich nguon ntn cho dung voi Harvard form ca T_T], the demand for imported cars, especially types of fewer than 9 seats which makes of approximately 70% in total, keeps increasing remarkably, from 21279 units in 2005 to 51059 in 2008 and reach the number of about 80410 in the last year. Whereas the domestic automobile industry seems to not improve at all. Until now, the domestic company still can not produce even one car. Vietnam  now has 10 automobile JVs including one 100 % foreign-owned enterprise (GM Daewoo), one domestic manufacturer (Truong Hai). The manufacturers make vehicles of 17 world brands: Fiat, Sangyong, PMC, Mazda, Kia, Chevrolet, Daewoo, Mitsubishi, Mercedes Benz, Suzuki,  Toyota, Isuzu, Ford, Hino, Hyundai (trucks, bus), Chery and Honda. In this moment, Volkswagen is one of more then 10 brands having distribution channel in. These brands include BMW (Euro Auto), Audi, Porsche (PSC), Hyundai (Thanh Cong), Lifan (Bao Toan), Chrysler (IC Auto), Subaru (MIV), Dong Feng,  Ã‚  MAN (VMC) and Fiat – Alfa Romeo (Mekong Auto), who are all considerable competitors. It is a great opportunity for the company to dominate Vietnam market but also a challenge when our products are almost kind of high quality with high price.