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Thứ Hai, 29 tháng 2, 2016

Samsung Expands Investment in Vietnam

With the success of Samsung Electronics in Vietnam, many other members of the Group has also interested in expanding investment in Vietnam in such fields as energy, insurance.
As reported by the General Director of Samsung Vietnam, the business activities of Samsung Electronics have performed well. Until May 2015, the total workforce working in the factories of Samsung in Bac Ninh and Thai Nguyen are more than 100,000 people. Due to many new models and more phone lines with more orders, Samsung Vietnam has recruited many more manpower. Currently, the total workforce working for the Samsung factory in Bac Ninh and Thai Nguyen are more than 110,000 people.
Not only focusing on production development, Samsung is still very focused on research and development (R&D). Currently, Samsung Vietnam has one R&D center located in Hanoi with over 1,400 employees.
The Samsung investment panorama in Vietnam is very impressive. Samsung has invested in Bac Ninh and Thai Nguyen from 2009, up to now, the total investment is approximately 7 billion USD. As of July 2015, the total export value of Samsung in Vietnam reached 26 billion USD, contributing to the development of Vietnam. Samsung has created jobs for more than 100,000 people.
Recently, Bac Ninh has granted investment certificate of expansion project for Samsung Display Company Ltd Vietnam with total investment capital of 3 billion USD, investing in the factory that is specialized in research and development, manufacturing of new generation monitors with high resolution for mobile devices…

Chủ Nhật, 28 tháng 2, 2016

Foreign Corporations Want to Invest in The Vietnam Seaports

Sebrina Group Holdings Ltd (Singapore) expressed their desire to seek more opportunities for cooperation between the Group and the Ministry of Transport of Vietnam in the near future; they also showed their interest in the projects to build seaport in Vietnam…
At the meeting with Minister of Transport Dinh La Thang on September 3rd, Mr. Nasrat Muzayyin – CEO and Co-founder of Sebrina Group Holdings Ltd (Singapore) expressed his desire to seek more cooperation opportunities between the Group and the Ministry of Transport of Vietnam in the coming time.
Accordingly, Sebrina Holdings is a strong business in the energy sector. The Group wants to find out traffic projects related to energy in Vietnam. Simultaneously, the Group also expressed interest in the projects to build seaport in Vietnam.
Presently, Vietnam needs to develop breakthrough many sectors, in which transportation infrastructure is seen as one of the bottlenecks that need to develop rapidly in the future.
On that basis, the Minister appreciated the interest of foreign investors, including the Sebrina Group Holdings Ltd and pledged to create favorable conditions for investors to access to essential information about projects for researching and investment in developing the transportation infrastructure in Vietnam.

Thứ Năm, 25 tháng 2, 2016

Vietnam: Banking M&A Booming in 2015

The market for M&A transaction in Vietnam is expected to boom in 2015 with many M&A activities in banking industry.
According to experts, there will be new capital flowing into the M&A market of Vietnam with a total forecasting value up to 20 billion USD over the period from 2014 – 2018.
Particularly in 2014, according to an incomplete statistics of the M&A Forum team (MAF), the value of M&A in Vietnam reached 4.2 billion USD.
According to Prof. Dr. Christopher Kummer, Chairman of the Institute for Mergers, Acquisitions and Alliances (IMAA), Vietnam has made progress in the ranking of the global M&A activity when rising to the 20th position.
The main trend of the Vietnam M&A market during 2015 – 2016 and the following years has focused on a number of key industries such as retail, consumer goods, real estate, finance and banking.
Currently, investors from Japan, South Korea and Thailand are the main customers who acquire projects, enterprises of Vietnam.

M&A Trend in Vietnam

The foreign investors have been taking a number of corporate intelligence  research, background check and M&A due diligence in Vietnam before taking a closer look into the targets for M&A.  The investors from Thailand, Singapore focus mainly on the field of consumer goods and retail; investors from Japan, South Korea eye real estate and industrial real estate projects.
In fact, there have been cooperations between Vietnam companies with foreign investors as Hoang Quan Real Estate has received capital from GEM investment fund (US); Sao Mai An Giang group is also negotiating for capital grants from a major investment fund from US; Nam Long, Thanh Dong, An Gia, Khang Dien… cooperate with Japan; Sacomreal and Thanh Thanh Cong Group cooperate with Gamuda Land from Malaysia.

Vietnam Policy Open-up Creating Positive Impact

The changing in the policies recently had a tremendous impact on the investment and business activities of enterprises, particularly place strong impact on the M&A activity in the future.
For example, many important laws aimed at innovating and improving the economic institutions such as the Public Investment Law, the Investment Law (revised), Business Law (revised), the Law on management and use of state capital in production – business, Housing Law (revised), Law on Real Estate Business (revised), which allows to ease room for foreign investors in many sectors are contributing to improve the legal environment for business investment activities in general and M&A market in particular.

Vietnam Bank Restructuring

Besides, the process of restructuring the commercial banking system and divest non-core investments of the state-owned enterprises under the policy of the Government is also contributing to make the M&A market more diverse.
2015 is the year to thoroughly handle weak banks, gather small banks to form large-scale banks, meet the international standards.
It is clear that the M&A activities are just starting to heat up since 2007, when Vietnam joined the World Trade Organization (WTO). The value of M&A increased gradually until 2012, a record year with more than 4.1 billion USD of total value.
Entering 2014, with stronger action by the Government on the process of equitization of state-owned enterprises, reform some laws related to business and investment, improve administrative procedures and keep a stable macroeconomic environment, along with better growth rate have encourage domestic and foreign enterprises to acquire.
The year of 2014 was a year marking the revival of M&A transactions in Vietnam, after this operation dropped more than 50% in value in 2013. According to statistics, Vietnam has witnessed 313 M&A transactions in 2014, increase slightly compared with the previous year. This figure includes transaction between Vietnam companies with each other, foreign enterprises purchase domestic enterprises and Vietnam enterprises go to buy assets abroad.
According to the State Bank of Vietnam (SBV), in 2015, there will be approximately 6 M&A transactions. Hence, not only large banks but small banks are actively looking for M&A partners in order to survive.
The first M&A transaction will be the merger of Southern in Sacombank, then asking many other weak banks to merge with large banks. With the goal that in 2015 the banking industry will have the 2nd restructuring, consolidating of banks to form the large-scale bank with international standards.
Currently, the SBV has approved the merger of Sacombank and Southern Bank, Maritime Bank and Mekong Bank. Although the conversion rate between Southern Bank shares into shares of Sacombank or Mekong Bank to Maritime Bank is still unknown, but two banks have a large difference in size and profitability especially in recent years.
Other M&A transaction in banking industry: Vietcombank will merge with Saigonbank. Vietcombank is currently the largest shareholder of Saigonbank with stake holding of over 8.2%.
In addition, BIDV will also merge with MHB. VietinBank merges with a small bank, which had been identified as PGBank.
In recent days, information about Nam A Bank will merge with another bank with a larger scale is interested by the market. The policy and direction of SBV to accelerate the restructuring in banking industry is crucial, therefore in the future, M&A transactions in the financial – banking sector will be very busy.

Thứ Tư, 24 tháng 2, 2016

Three Reasons Japan Invests in Vietnam

In accordance with the statistics from the Ministry of Planning and Investment (MPI), accumulating to the end of May 2014, Japan is still the leading investor into Vietnam, with more than USD 35,57 billion registered for investment. Following Japan are Korea and Singapore, with the respective gross figures of USD 31,01 billion and USD 30,33 billion.

The gross FDI capital invested into Vietnam from Japan is not significant larger than investment from Singapore and Korea .  However, taking into consideration of the economic potential of Japan and Japanese companies which are perceived much higher than Singapore and Korea’s counterparts, it appears that the FDI from Japan has a lot potential.
The MPI expects the FDI capital from Japan might increase strongly in the next period. A few investment sectors which Japanese business shall keep on focusing in the next period are the pharmaceutical and chemical industry, steel and metal production, machine in general and other electronic devices, devices of transportation sector, wholesale and retail.
The reasons for the above mentioned expectation are:
First, after many natural catastrophes such as earthquakes, tsunamis, Japanese businesses has acknowledged that focusing too much in one investment location might has its risks. Therefore, to diversify the investment is to divide the risks, too. Many Japanese companies have been identifying the new destinations for investment.
Second, China has always been one of the most FDI-attractive nations of Japan.  But the increasing cost for labour and in contrast the decrease in incentive from Chinese Government for foreign investors, along with many tensions between Japan and China regarding border and territorial issues have been cooling down the interest of Japan investors. Pursuant to the annual survey report of the Commercial Promotion Agency of Japan, for production companies of Japan currently operating in Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam and India, with the relocation of investment destination, amongst those above mentioned nations, Vietnam has been rated best by most Japanese companies, with the percentage of 20,5%, 2,8 times higher than the nation in the following spot which is Thailand.
Third and finally, the commitment on strategic partnership and the implementation of incentives attracting investment, such as the establishment and development of the Industrial Zone for business supporting industry in Ba Ria – Vung Tau and HaiPhong, shall come fruity in the near future.

Thứ Ba, 23 tháng 2, 2016

Benefits of Setting Up Company in Ho Chi Minh City

Ho Chi Minh City is considered as Vietnam’s economic hub. During the long history of foundation and development, the city’s economy is growing constantly and motivating the development of the country.
The city is therefore considered as a potential investment environment for domestic investors as well as foreign investors. The investment through establishing companies and conducting business activities in Ho Chi Minh city certainly promises to achieve multiple benefits. These benefits come from the following reasons.
First, Ho Chi Minh City has strategic location advantage in Vietnam. Southeast Asia Region, Ho Chi Minh City is 1,700 km south of Hanoi, 297 km east of Phnom Penh, Cambodia, 881 km east of Bangkok, Thailand.
Food, glass, textiles, paper products, plastics, chemicals, building materials and machinery are produced here. Ho Chi Minh City accounts for 20% of total gross domestic product (GDP), 30% of industrial production and 40% of export products of Vietnam. The city also accounts for 33% of the national budget and 60% of foreign investment flows into the region. In the past few years, the economy have been grown at a rate greater than 10% (6% to 8% nationally).
Second, Ho Chi Minh City is home of  well – qualified, abundant and young human resources.
With a population of more than 8 million, accounting for more than 10% of the total Vietnamese population, Ho Chi Minh City itself has potential employment market to make any business investment. The work force in Ho Chi Minh City was estimated to reach 4.7 million people in 2012, making up more than 50% of the total population of the city. The percentage of trained labor increased from 40% in 2005 to 55% in 2010 and was forecast to reach 70% in 2015. The percentage of labor source holding postgraduate degree is also increasing year by year and most of them tend to stay in the city after holding degrees. Ho Chi Minh City is also home to more than 80 universities and colleges, vocational schools with over 400,000 students providing an abundant trained work force.
With the above – mentioned abundant labor force, any companies set up in Ho Chi Minh City can easily recruit suitable employees in a short time..
Third, the city has modern and high infrastructure system. Namely, when setting up company in Ho Chi Minh City, the owners will benefit from the modern and comprehensive infrastructure system.
Tan Son Nhat Airport is the largest airport in the country with the capacity to accommodate 20 million people a year. From Tan Son Nhat Airport, there are 50 routes to other countries all over the world such as China, Japan, Korea, Singapore, European countries, etc.
Saigon Port serves as a gateway to the Mekong River Delta, the South China Sea (83 km away from the sea) and the Asia continent. The port has a total area of 500,000 m2 with 5 terminals meeting the international standards, and it handles about 8.3 million tons of cargo annually. Throughout the history of foundation and development of Saigon, Saigon Port plays an important role in making Ho Chi Minh City a flourishing trading center. It accounts for a fifth of the nation’s Gross Domestic Product and almost a third of its industrial production.
Ho Chi Minh City is also home to industrial zones. According to the statistics of Cushman & Wakefield, the city has 18 industrial parks that are operating with a total area of 3635 ha. When investing in such industrial zones in Vietnam, enterprises can benefit from various incentive policies such as low rate tax or other incentive policies.
Telecommunication and information technology in the city is modern. The system of post and telecommunication in Ho Chi Minh meets international standard, providing fast, reliable and high quality services such as ADSL, rapid data transfer, wide broadband MAN. The Internet service in Ho Chi Minh city is also among the cheapest in the world.
Besides, the city is also considered the best working conditions. Enterprise will not be fear that it is not enough place for working. The city with the system of offices provide ideal working environment for all investors.

Thứ Năm, 18 tháng 2, 2016

Set-up Branch Office in Vietnam

The Branch of a foreign business entity in Vietnam (referred as “The Branch”).

Means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.
The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.
The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

Thứ Tư, 17 tháng 2, 2016

How Vietnam Telecommunications Develop in 2015

There have been changes within the Vietnam telecom industry with the restructuring of VNPT and Viettel, which made the competition becoming more intense.
The year 2014 has undergone with many changes within the telecommunications industry of Vietnam. The change in personnel and structure of the two corporations that are VNPT and Viettel made the competition becoming more intense. According to experts, the year 2015 will continue to witness a lot of breaks as well as new trends in the telecommunication industry, therefore the management agencies and enterprises must change to adapt to the actual needs.
The following are update intelligence from Vietnam corporate insights for the purpose of risk management for foreign investors interested in telecom business while expanding into Vietnam.
Telecommunications industry in 2014: Many prominent imprints
To implement the Resolution No. 01/NQ-CP of the Government dated January 2nd 2014, Vietnam Ministry of Information and Communications has submitted to the Government a series of Decrees, Decision of the Prime Minister, issued many Circulars related to state management in the field of telecommunications, as well as implementing various related projects, facilitating the development of infrastructure and telecommunications services; approving a series of other important projects such as number portability; implement the systems to ensure safety and security for the national domain name servers; deployment of projects concerning data collection of telecommunication enterprises to ensure the controlling of all mobile subscribers…
In addition, 2014 was the year that telecommunication businesses leave many important marks. Although the economy is still in the recovery process, along with competition in the market, the impact of OTT… but the large telecommunication businesses like Viettel, VNPT, MobiFone still achieve high sales, maintaining the domestic market and outreaching international market.
Viettel – the goal is to become a global enterprise
End of 2014, Viettel’s revenue reached 196,650 billion VND, increased by 20% compared with 2013, profit before tax reached 40,532 billion VND and contributing to the state budget over 15,434 billion VND.
Regarding telecommunication networks, 3G network is investing to expand and improve the quality with more than 29,032 3G BTS stations (2G with 34,603 stations). The ultra-wide band fixed network has been deployed across the country. The telecommunication infrastructure can ensure to supply all telecommunication, television and information technology services to customers.
Also in 2014, Viettel has also launched services in two countries Peru and Cameroon, bringing the total number of countries that Viettel invested to 9 countries.
With these successes, Viettel has showed the determination to achieve revenue of 230,000 billion VND in 2015. Their goal in the future is to become a global enterprise. Therefore, in addition to maintain its position in the country, Viettel has to strengthen their business abroad.
As of the end of 2014, Viettel reached 57.4 million subscribers (mobile accounts for 55.5 million subscribers). Viettel’s foreign market reached 17.5 million mobile subscribers and 815 thousand of fixed subscribers.
VNPT, MobiFone – change to develop
2014 was a volatile year of VNPT when the group decided to separate Mobilefone from the system to carry out restructuring. The objective set for the board is to put VNPT back to the 1st position after being dropped into the setback phase.
VNPT’s total revenue in 2014 was 101,055 billion VND, contributing 5,850 billion VND to the state budget. Total subscribers were around 30.5 million (mobile subscribers accounted for 26 million). In addition, the total number of broadband internet subscribers reached over 3 million subscribers; total IPTV subscriber was about 1 million subscribers.
Mobifone, which was separated from VNPT, has achieved certain success. Revenue was estimated at 36,605 billion VND, profit before tax was estimated at 7,300 billion VND. State budget contribution was estimated at 3,926 billion VND.
Total active subscribers on MobiFone so far reached 40.2 million subscribers, in which in 2014 the number increased by 1 million subscribers.
MobiFone has also developed additional of 4,566 2G + 3G BTS stations, bringing the total number of BTS 2G + 3G station up to 33,939 stations (2G: 19,647 stations; 3G: 14,292 stations).
The immediate goal of MobiFone leader is still promoting the inherent strengths and successfully implementing the privatization.
Highlight trends of the telecommunications industry in 2015
With the restructuring of enterprises and the market, the competition will increase. The separation of MobiFone into independent business will create more competition, helping the market grow better and bringing more benefits to consumers.
Besides, the trend of technology convergence of telecommunication services – radio and television – information technology have also leveraged enterprises to deploy business plans, devise solutions and services to ensure the assembly convergence and services integration on one platform.
With the development of personal devices, all service applications that previously could only be implemented to agencies, businesses, organizations and households, can now be supplied to each citizen and is used anywhere. Therefore, enterprises when deploying need to mass-oriented to people, takes customer as center to provide services.
Although the telecommunications market could be considered as saturated with the monopoly of the 3 large networks mentioned above, but its development needs remain enormous. As people’s living standard is significantly improved, the demand for quality services will also increase. That’s the potential, the main development direction that Vietnam telecommunications businesses should lead to.
And with many challenges
In addition to growth opportunities, telecommunications industry also has many challenges that need to be solved as policies are insufficient and incomplete; training of human resources is limited, especially the team of skilled engineers; still heavily dependent on foreign technology… The state authorities, enterprises also need to draw from experiences in terms of mechanisms and policies to encourage youth creativity, building new business model… contributing to the overall development of the country’s telecommunications industry.

Thứ Ba, 16 tháng 2, 2016

Foreign Corporations Want to Invest in The Vietnam Seaports

Sebrina Group Holdings Ltd (Singapore) expressed their desire to seek more opportunities for cooperation between the Group and the Ministry of Transport of Vietnam in the near future; they also showed their interest in the projects to build seaport in Vietnam…
At the meeting with Minister of Transport Dinh La Thang on September 3rd, Mr. Nasrat Muzayyin – CEO and Co-founder of Sebrina Group Holdings Ltd (Singapore) expressed his desire to seek more cooperation opportunities between the Group and the Ministry of Transport of Vietnam in the coming time.
Accordingly, Sebrina Holdings is a strong business in the energy sector. The Group wants to find out traffic projects related to energy in Vietnam. Simultaneously, the Group also expressed interest in the projects to build seaport in Vietnam.
Presently, Vietnam needs to develop breakthrough many sectors, in which transportation infrastructure is seen as one of the bottlenecks that need to develop rapidly in the future.
On that basis, the Minister appreciated the interest of foreign investors, including the Sebrina Group Holdings Ltd and pledged to create favorable conditions for investors to access to essential information about projects for researching and investment in developing the transportation infrastructure in Vietnam.

Thứ Hai, 15 tháng 2, 2016

Why Japanese Companies will Increase Investment into Vietnam

Japanese Companies will Increase Investment into VietnamWhen Japan sought to diversify the investment other than to China, Vietnam emerged as attractive destinations for international investors.

Within the last few years, companies doing business in China began diversifying its investment and reduce dependence on the China market. This is the result of increasing labor costs as well as the structural reforms taking place in China. In this context, Vietnam emerged as a potential destination for foreign companies which are looking for new investment opportunities.  Entering into Vietnam will open up open up a large domestic market at a geographic advantage location for Japanese companies.
In 2013, for the first time, China lost the top spot as a promising destination for Japanese investors. Japanese companies are now investing in Indonesia, India, Thailand and Vietnam. This does not mean that Japanese firms will withdraw from China, they are simply looking for new investment destinations.
Vietnam has increasingly become popular for Japanese companies making investment. The Japanese investment in Vietnam has increased rapidly, especially since the Treaty of the Economic Partnership Vietnam-Japan went into effect in 2009. The Japan’s largest investment are in transportation infrastructure transportation, electrical equipment manufacturing sector. Vietnam is one of the fourth largest motorcycle markets in the world, and therefore Japanese companies such as Honda or Yamaha are here to increase investment. The Japanese electronics company also raised the capital of investment, partly because Samsung has developed a mobile plant to produce a series of Galaxy smartphones. Panasonic is looking for business opportunities in the domestic electrical equipment and has seen Vietnam as a key market in the emerging countries. Teral, a leading Japanese industrial pumps and fans have just opened up its Vietnam office.  Canon has been investing in Vietnam for many years with success.  For the non-manufacturing sectors such as finance and insurance industry, capital investment has also increased significantly, for instance, Mizuho, Tokyo and Mitsubishi in banking, Dai-ichi Life in life insurance.
In addition, small and medium enterprises in Japan (SMEs) are looking for business opportunities in foreign countries due to increasing challenges they are facing in Japan. The domestic market has been shrinking due to aging population; larger companies that have contracts with the SME business are moving abroad, while competition with foreign companies in Japan has been increasing. After the global financial crisis of 2008, the Japanese companies have increased investment abroad to survive. Therefore, Vietnam should promote measures to adapt to small businesses from Japan.
In addition, both Vietnam and Japan are engaged in the process of negotiating Trans-Pacific Partnership (TPP). At the end, the TPP will help promote trade and investment, but it also leads to changes in the industrial structure and the domestic economy. It will be a challenge, especially for a developing country like Vietnam. In this context, Vietnam and Japan is an important partner of the other. Both countries will benefit from the closer economic relationship and cooperation.

Chủ Nhật, 14 tháng 2, 2016

M&A Due Diligence and Execution in Vietnam

metro_VCTXMerger and Acquisition (M&A) activities in Vietnam have been rapidly increasing over the the years in value and number of transactions when Vietnam’s opening policies to attract foreign investments loosen up.  The M&A due diligence and execution are therefore important steps to ensure a successful transaction.

For foreign investors wishing to take advantage with a certain level of risks in Vietnam where the cost of labour are cheap, mid-income populations are growing, and the need of capital are high, it is imporatant to find the right target companies to invest.  Challenges might arise when approaching the right local companies, locating the right decision makers within the local companies, encountering differences in languages and cultures.
It is imporant that the local consultants with the understanding of the business and legal environment in Vietnam where the local companies are incorporated could be involved at an initial stage to monitor and minimize the risks, improve the effectiveness of the M&A process in Vietnam.
The Vietnam consulting company could also provide corporate intelligence and insights of the Vietnam targeted companies to have an overall evaluation of the compliance of the Vietnam companies, possible risks involved and growth potential.  Financial forensic services might also be needed before other further steps.  Then, the following will need to be considered when undertaking the M&A in Vietnam.

Due diligence

M&A due diligence in Vietnam is a vital step because it determines whether the M&A will succeed or not. There are some aspects that must be carefully considered:
  • Financial reports
Review all the financial reports of the Vietnam targeted companies within 3 to 5 years to assess the current and future financial situation. These data needs to be audited by a reputable independent auditing company. Evaluating financial situation targets on many aspects such as the reasonable connection between the financial statements, operating and sales margin of the business in relation to the average in that industry.  These data allow valuation real value of the target business.
  • The cash flow
Checking the dates on invoices showing that whether targeted businesses have paid promptly or not. Term of payment may vary from industry to industry, but generally 30 to 60 days. If the money order is paid after the billing date period of 90 days or more, it means that the business owner may be struggling with cash flow. Finding out that if the clients’ inability to pay bills or not is very important.
  • The staff
Determining the importance of staff for the success of the business considering work habits of employees, working time of key employees; ability to remain working after a change of the owner occurs; the incentives necessary to keep key employees; ability to easily replace key employees; the relationship of key employees with the company’s customers.
  • The customers
This is the most important assets of the Vietnam targeted company. Make sure that clients are as the other tangible assets of the business. Evaluating customers on some primary aspects: the relationship with the current owner of the business, customer history with business relations and the contribution of each customer to the profits of the company; assessing that customer will leave or stay when the business having new owners; customer services and dispute of the company, the relationship of the former owner of the business with the community or the industry.
  • Business location
This is especially important if the targeted company is a retail company. Does the importance of business location play a crucial role for the success of the company? How is the location of the company you plan to acquire? Is there sufficient parking lot for customers? How does the company depend on sales in the region? How is the prospects of the business in this area? Does this place have been in the process of rapid change from new residential district office building or not? Has business location become more or less desirable because of contemplated changes in surrounding area or not?
  • Competitors
Considering this aspect in order to define the capacity of the targeted business in the industry, the following questions would help: who are its competitor and what are their strategies? Does the price war happen frequently? How has the competitive environment changed?
  • Business registration, permits and zoning
It’s necessary to make sure that business registration certificate and other legal documents can be easily given to the buyer. It would be better to acknowledge the procedures to transfer these documents and its fee with the help of local management consulting company in Vietnam. If the targeted company is a joint-stocks company, what is the procedure for the business registration? Can foreigners own the company 100% according to Vietnam laws?  Conditional investments in Vietnam need to be considered carefully by lawyers in Vietnam to avoid mishaps.
  • The company image
Company image can be a significant asset and that cannot be assessed in the financial report. There are many intangible factors to consider when evaluating a company: how to serve customers, how employees answer the phone and the level of support the community or the industry.

Negotiate the price

It is important to understand the purpose and motivation of both parties. The sellers’ motivation are formed and affected by value drivers. There are two main value drivers which are approach value and avoidance value. Approach value is our purpose such as prosperity and avoidance value is the negative effect that we need to eliminate. Normally, the buyers try to find out what are the reasons why the owner wish to sell the companies. This will help the buyers plan a reasonable strategy beforehand.
A research analyzes the general aspects that the buyers seeking for via conducting surveys companies’ owner who have sold or transformed their enterprises. The research results are focus on profit maximization (79%), minimization of tax payable (73%), protection of viability of the company (71%)…(Source: Acquisition Marketplace Review, 2007).
The motivation of the buyer in most cases is similar to the motivation of the seller, which is to maximize profits, expand markets, increase revenue, operating areas, areas of activity, minimize taxes…

Thứ Tư, 3 tháng 2, 2016

Bloomberg Considers Vietnam as “New Tiger” in Asia

Bloomberg Considers Vietnam as "New Tiger" in Asia

After several disappointing years, Bloomberg said that Vietnam’s economy is continuously emerging in Asia, with the advantage of a young workforce and impressive growth.

According to the news, the large corporations as Samsung, Intel have poured money into the factories in Vietnam leading Southeast Asian countries to emerge as new tiger in Asia. After renovation in the 1980s, Vietnam’s economy has grown rapidly, exceeding 7% before leveling off in recent years due to the increase in bad debt from the state sector.
According to PricewaterhouseCoopers LLP accounting firm, from now to 2050, Vietnam has become one of the largest growing economies in the world. Vietnam not only has the advantage of cheaper labor costs than China’s, but also become an ideal destination for Japanese corporations.
Mr. Vikram Nehru – senior research specialist on Southeast Asia of Carnegie Endowment commented: “Vietnam is possible to become the fastest growing economy in Asia. Just solve problems in state sector, the country can afford to develop strongly”.
Bloomberg also outlined a series of indicators showing that Vietnam’s economy is growing rapidly. In 2014, Vietnam has become one of  the largest export customers to the US market in ASEAN, surpassing competitors having a long tradition as Thailand, Malaysia.
Disbursement of foreign direct investment has also increased for 14 years, particularly in 2014 reached 12.35 billion US dollars, an increase of 7.4% compared to 2013 and higher than the $ 2.4 billion of 2000. Operation of Samsung in Vietnam is so strong that the government has allowed the group to have a separate air transportation port in Noi Bai International Airport.
Not only that, many other large companies are moving factories from China to Vietnam. Japan Kyocera Document Solutions Company which specialized in producing printer machine is making plan to increase 4 times of quantity, hence, increasing production up to 2 million units from now to May 3rd 2018. The company also said that the rest of this company will be transfered from China to Hai Phong and make plan to build a new factory here. This move also leads Vietnam to become the largest printer manufacturers for this business.
Frederic Neumann, HSBC Holdings Professionals recognizes Vietnam’s market is the market geting the most benefits when China was less competitive due to rising costs and the appreciation of the domestic currency. “Vietnam has emerged as the first alternative market for China and could benefit from this,” he said. Specifically, Bloomberg data also showed that the yuan rose 13% in the four years prior to 2014. According to the news agency, yuan rose strongest among 24 emerging economies.
This year, the VN-Index was up to 5.5% while the indices of the market such as Indonesia, Malaysia, Thailand only increased 4.1%, 2.4% and 2.2% respectively.
In addition, growth in GDP of Vietnam during 2014-2050 is expected to reach 5.3%. According to PwC, the growth ranks at the second position only after Nigeria. In contrast, China’s GDP growth is forecasted to drop below 4%.
According to Bloomberg, the new labor force is a strong support for Vietnam’s economy, compared to China. According to the United Nations, by 2012, 13% of China’s population has more than 60 years old, while only 9% of Vietnam at that age. By 2013, more than 40% of Vietnam’s population, equivalent to 90 million people, aged between 15 and 49.
In addition, cheap labor is also a big advantage for Vietnam. The average monthly wage in the country in 2013 was 197 USD, compared to Thailand (391 USD), China (613 USD). This difference will continues to widen. According to estimates by the Economist Intelligence Unit, from now to 2019, labor costs per hour of production in China will be higher than 177% compared to Vietnam when the figure was 147% in 2012.
“I still remember a few years ago, pair of shoes I bought in China manufactured in Vietnam,” John Hawksworth, expert of PwC said..
However, the bad debt and labor productivity are still the weakness of the economy that Bloomberg called “tiger-second”. While banks are still struggling to deal with subprime loans, the government itself is also confronted with the problem of state and enterprises with inffective operation. Not only that, the issues of infrastructure, corruption still exist. Vietnam ranks 119 out of 175 countries on the index chart of corruption in 2014. Besides, the pressure from the competition for the manufacturing contracts with the large corporations from neighboring countries such as the Philippines, Malaysia also create many difficulties to Vietnam.
“Knowing that a lot of potential but not sure that Vietnam took advantage of all to develop,” said John Hawksworth.
If looking at from other aspects, many experts believe that most of the operations shifted from China to Vietnam has low value. In contrast, China is aspiring to raise the value of their production chain.
According to Karel Eloot, director of Shanghai branch of McKinsey & Co, the labor productivity of Vietnam is very low and may be the largest obstacle to the economic development of this country.
Not only that, according to a expert of ING Groep NV, Tim Condon,Vietnam is also believe to become the star of the Mekong region (including Cambodia, Laos, Myanmar, Thailand, Vietnam and Yunnan province of China). Thailand used to be seen as a “tiger” before the Asian financial crisis of 1997-1998, but the last two years, exports have declined strongly. In contrast, Vietnam’s exports in 2014 increased up to 14%.
ANZ Bank forecasts Vietnam’s GDP from 2014 to 2015 will increase by 6.5% due to the increase in retail sales, industrial production and the recovery of the construction industry.

Thứ Ba, 2 tháng 2, 2016

Nielsen: Vietnam Is a Land of Potential Opportunities

According to Nielsen, Vietnam consumers is the motivation for economic development as they are willing to spend more and are also living in the lands of the potential opportunities. By 2020, Vietnam middle class will grow double, from 12 million people in 2014 increased to 33 million people in 2020.
Vietnam is among the top countries with the most optimistic consumers in the world, with more income and more spending. The percentage of increasing in per capita income rose in 2012 by 44% compared to 2010. The average growth rate of the monthly spending per person in 2012 increased by 32% compared to 2010. Therefore, Vietnam people have a strong desire for a better life, demanding about quality when 73% of people are willing to pay for higher quality.
Health is an important issue while there are 39% see health as the most concerning problem in life. Vietnam consumer’s monthly savings is to prepare for future problems, while 34% goes for the future of children, 12% is for health and 11% savings for house purchasing.
Consumers in Vietnam are also having more opportunities for shopping than ever. Modern trade channels are gaining significant role when 42% of consumers buy groceries at the supermarket more often. However, the utility factor is gradually becoming a way of life and developing quickly because of the accordance with the youth and officer with 23% of students and 36% of officer go shopping in the supermarket, convenient shop.
However, grocery store is still the dominant shopping channel in the market, while over 80% of sales of fast moving consumer goods coming from grocery stores, with 1,3 million stores across the country.
Technology offers more opportunities to help Vietnamese consumers connect. Smartphone is booming in Vietnam when nearly 1 in 2 Vietnamese people owning a smartphone, most of rural consumers watch TV daily. Online sales channel has also been in the market with 28% of Vietnamese consumers prefer online shopping.

Thứ Hai, 1 tháng 2, 2016

Big Manufacturer Waves Enter Vietnam

Big Manufacturer Waves  Enter Vietnam

Facing difficulties in manufacture and consumption, some big car manufacturers in Thailand and Indonesia are planning to find new market in ASEAN. Moreover, recently, LG Electronics- the world’s second largest television manufacturer also intends to move from Thailand to Vietnam.

According to Federal Thailand Industry –FTI’s figures, In 2014, 881,800 cars were sold in Thailand, decreasing 34% compared to 2013. That is the second year in two consecutive years the market is in recession. It was a strong effect to decrease the quantity of output produced in last year : 1,88 million cars (included quantity exported). In Indonesia, quantity sold also lightly decreased which caused reduction of the quantity produced from 1.4 million cars down to 1.3 million cars.
Except for the problem of production, Thailand investors are facing other difficulties, political depression has effected manufacture and trade,and highcosts of labor haverisen the price up. Besides, Thailand’s manufacturing capacity is full, if we want to increase it, we have to invest more. All difficulties above force cars manufacturers to seek for new producing places.
In ASEAN, there are two places which investors are considering to: Philippines and Vietnam. These are two populous countries have enormous potentiality. Hence, the investors still want to invest money in these two countries.
Many people think that this is a facile opportunity for Vietnamto intensively attract new investors, develop cars industry, accommodate domestic demand and export. In Vietnam,  monthly figures on consumption which enterprises declared indicated that the growth still has not had signs of slowing down.
According to the monthly report in Jan 2014, VAMA forecasted industry’s  consumption rate in 2014 would be about 120.000 cars and increase 9% compared to ones in 2013. However, the real number raised almost 158.000, increased 43%. The quantity sold in December achieved a new record when surpassing 20.000 cars and this is the 21thconsecutive month when the industry’s  quantity sold higher in comparison with the same period previous year .
Vietnam’s  advantage is an enormously potential cars market.In forecast, after 2020 when nation’s income per capita overcomes  3000 USD, the demands of cars will break out. In Vietnam, there are two million of car types, rate of cars per capita is still low, in 2030 the quantity sold would overcome 1 million cars per year. In addition, the low costs of labor in Vietnam helps reducing the costs of manufacture.
 LG chooses Vietnam to be the producing place instead of Thailand:
LG Electronics – the world’s second largest televisions manufacturer is planning to move manufactory from Thailand to Vietnam in this year because of efficient producing system, low costs and good logistics services.
In October 2013, LG was authorized to invest 1.5 billion USD to Vietnam for constructing factories in order to produce and assemble electrical goods.
In a phone  interview with Reuters’ reporters, Mr. NiponWongsaengarunsri – LG’s marketing manager in Thailand revealed that LG want to construct a manufacturing “fortification” where produce new lines of TV like the main factories in Korea. And Vietnam is their best choice.
 “We consider Vietnam as an ideal destination to invest. Low costs of labor is an important factor. However, decisive elements are quality and good logistics services” said Mr. Nipon.
Besides, Mr. Nipon also revealed that LG produces about 600.000 TV products per year in Thailand, cost about 8 billion baht (243 million USD). Among those products, there are about 100.000 for export.
Will Vietnam gain benefit?
Following the integration process,  at the end of 2015,Asean Economic Community (AEC) will be established. It will give Vietnam opportunities to expand import and export market, attract investment and skillful labor force in ASEAN area.
Besides, Trans Pacific Partnership (TPP) is on negotiation stage with final rounds, will prospectively give opportunities to Vietnam’s economy. Free Trade Agreements (FTA)  is and will be concluded which contribute to attract investment and stimulate export.
In that circumstance, Vietnam government continually gives special treatments to foreign enterprises investing in high technological fields, many big Manufacturer chose Vietnam to be manufacturing “fortification” or expanding investment.  For instance, Samsung invested 11 billion USD for factories in Bac Ninh, Thai Nguyen, Ho Chi Minh city; Intel also declared production line of Haswell chip for desktop in Vietnam;  expecting to accommodate 80% global demand within the next six months.
2014 is the year for transferringbig enterprises from China to Vietnam. Not only Samsung, Intel, Nokia… but also many enterprises in textile, shoes, are pouring billion USD to manufactories in Vietnam, even when they already have had large factories in China.
Considering Vietnam’s opportunities, many experts suppose that Vietnam should prepare thoroughly in order not to be disadvantageous in our own house, by enforcing science and technology, developing supportive industries and improving competitive ability. If we can do well these stages, Vietnam will receive chances from future transfers.
Theo InfoNet