Vietnam located at the eastern part

Vietnam located at the eastern part of the Indochinese Peninsula and the center of South East Asia and a tropical country of the northern hemisphere. The government is runs by the Communist Party of Vietnam. In 1995, the population size in Vietnam reached 74million, ranking second in South East Asia, seventh in Asia-Pacific Region and twelfth the world over. The population size was then increased to 95 million people in the year 2010. Vietnam count as a poor country if refer to its own country GDP per person. After "Dot Moi" came to this country, the national economy improving at a high rate thus improve the living standards and national income of local people. The country is one of the fastest growing economies in global which have shown a consistent growth rate in the recent years. While according to World Economic Outlook (2011) of the International Monetary Fund, the GDP of Vietnam was increased per capita and develops from lower- income country to middle-income country (Richard Rousseau, 2011). Coca-Cola enters Vietnam's market at 2004 and produces its own vitamin-packed energy drink along with some familiar brands such as Joy, Fanta, Sprite, and others for the local consumers. Coca-Cola builds three production plants in Hanoi, Da Nang, and Ho Chi Minh City.

Reasons to Enter Vietnam

At 2004, Coca-Cola made its first move out of Africa and enters Asia's markets which include Vietnam. These acquisitions were in line with the Group's growth strategy to expand into emerging markets, in order to underpin the organization's position as an Emerging Markets Specialist (Coca-Cola Sabco History). The first move of Coca-Cola into Vietnam is based on the new emerge and rapid growth of economy in Vietnam.

As the rapid population growth and improvement of economy in Vietnam, Coca-Cola takes this opportunity to enter their market. Vietnam's economy has been growing at between 4% - 8% after recovery from the Asian Financial Crisis of 1997.The enhancing of living and educational standards of Vietnamese help in providing employment opportunities to them. Coca-Cola enters Vietnam market to enhance the economic development and create some job opportunities for the local people. As the soda consumption has reduced in the U.S., Coca-Cola is one of the soft drink industries that increasingly looking to expand their business in countries where there consist of higher national income rate and huge population (Bloomberg Business week New, 2012). This news also shows the reason that Vietnam still able to encourage Coca-Cola to put more investment in Vietnam.

Moreover, Vietnam relies on the petroleum industry for its local energy consumption and for export; it will cause the economy of Vietnam more stable and attracted many foreign companies direct invest in Vietnam. This also managed to attract Coca-cola to enter Vietnam markets at 2004. The payment for employees in Vietnam is quite low, therefore, it attract foreign companies moving into Vietnam instead of traditional market such as China, India, and Thailand. These all reasons push Coca-Cola chooses Vietnam and made it first move into it to operate its plants there.

Analysis

Gains of entering into a foreign country

Political Stability

Entering into a foreign country such as Vietnam has its gains and shortcomings. One of the advantages to enter Vietnam is its political stability. Due to Mr. Philippe Delalande (2010), he mentions that political stability is one of the factors that have helped Vietnam pursue its economic development policy. In the others view from George E. Kobrossy (2013), General Director of Zamil Steel Vietnam (ZSV) also mention the advantages which help attract foreign investors to the country is Vietnam's political stability, administrative reform and its efforts in upgrading infrastructure facilities. Coca-Cola faced problems to enter some countries few decades ago due to the politic issues that happened in the country. Standage (n.d) said that Coca-Cola did not exist in the former Soviet Union (Russian) because they worry that the revenue would go transfer to communist government coffers. While Webster (n.d) mention that Coca-Cola not enter French society because Coca-Cola was a mark of capitalism and a difference between capitalism and communism during Cold War. Coca-Cola as a huge brand so closely related with the US found itself pester in politics, or singled out for criticism although they are not trying to get involved in politics, said Webster. Thus, through our analysis we realize Coca-Cola reenter Vietnam's market because of the political stability after Doi Moi (reformation) policy. Coca-Cola feels more assurance in expanding their business in a stable politic country.

Foreign Direct Investment

One of the gains of Coca-Cola is that Vietnamese government provides many investment incentives for foreign investors, the corporate income tax is low compared to other countries in South East Asia (standard rate is 28% and preferential rates from 10% to 20%). The Foreign Investment Agency reports that by 15 December 2011 Vietnam had attract more than 13,667 foreign investment projects, with a total capital of around RM612 billion (Foreign Investment Agency, 2011). Foreign-invested companies including Coca-Cola accounted for around 27% of the country's exports, 35% of the country's total industrial productivity, constituted 13% of GDP, and contributed around 25% of total tax incomes (Vietnam Investment Review, 2001). Thus, there are about US$300 million was inform by Coca-Cola to invest in Vietnam to further capture growing opportunities in one of the most developing consumer markets (Journey Staff, 2012). Under commitments made by Vietnam as part of its agreement to the World Trade Organization, Vietnam offered foreign enterprise which included Coca-Cola the general right to import products and sell them to licensed distributors. The process to obtain an investment certificate for foreign-owned company is much easier now.

Low labor cost

The country is gaining competitive advantage for labor-intensive production industry on the basis of low salary level (Meyer, 2005). In the research on labor costs, Japan labor cost in one month is $1,810, continue by $1,144 in Singapore, $82 in Indonesia, and then Vietnam rank the second lowest place which is US$49 a month and follow by the highest is Cambodia with $47.36 (EuroCham, 2010). Coca-Cola who has chosen to set-up regional offices in Vietnam help Vietnam proven the extensive labor pool is competitive in the market (GLC, 2007). Due to information we collected, we found that Coca-Cola Vietnam invest in Vietnam to help boost the local business sales and created 500 new jobs locally in Vietnam while the total labor force that gain this benefit is 99 percent of local Vietnamese (Staff, 2012). This high percentage use of labor force proves that Coca-Cola Vietnam afford to hire more local employees due to their low labor cost or low salary paid.

Low production Cost

Coca-Cola entering Vietnam because one of the gains is they can exempted from import duties to build fixed assets, such as bottling machinery, means of transport, and production materials that are not produced locally. Additional exemptions are available for raw materials, parts and materials imported for production of goods for export. Coca-Cola's revenue in central Vietnam had witnessed a double digit growth over the past few years; three factories of the company produce more than 608 million liters per year in Vietnam (Nordic Industry Development, 2012). Therefore, Coca-Cola beverages Vietnam invested over $3 million into its second Danang-based purified bottle water production chain, with a capacity of up to 6,000 of 500ml bottles per hour due to the low production cost they gain in Vietnam.

V) Variety Product Lines that meet Vietnamese's Beverages Need

Coca-Cola enters Vietnam because they can meet the needs for hydration, nutrition and energizing refreshment of their customer in Vietnam. Coca-Cola have variety brand of product in Vietnam such as Coca-cola, Coca-cola Light, Fanta, Joy, Minute Maid, Dasani, Real Leaf, Samurai, Schweppes and Sprite. Joy is bottled water drink that pure and has the largest share of 32% compare other brand that company produce. Coca-Cola has the second largest share of 23% continue by Sprite with the percentage of 18% and Fanta which has 17%. Other brands like Samurai obtain 5% from the market share while Minute Maid and Schweppes each occupied 2.5% (Soft drink-Vietnam, 2010). They offer high quality product that meet the need of their target market. For example, Samurai is enjoyed by Vietnamese male adults who need an energy boost. This vitamin-packed energy drink is fortified with six essential B vitamins and has an exciting and refreshing taste with a carbonated, sweet flavor that appeals to the Vietnamese palate (Coca Cola Sabco Homepage). Coca-Cola can fulfill the Vietnamese beverage's needs as well as gain more profit from them and form a win-win situation. Thus, this encourages Coca-Cola to produce more product lines that meet the needs and wants of Vietnamese.

Shortcomings of entering into a foreign country

Unable to generate own independent Stores

One of the shortcomings of Coca-Cola in Vietnam is foreign-based companies legally cannot generally own independent stores without production in the country. Importers would normally cooperate with local partners (Nguyen, 2004). This had caused Coca-Cola not able to own an independent store in Vietnam, and Coca-Cola has to start-up their bottling plants to doing business in Vietnam. Coca-Cola Beverages Vietnam, the country's leading soft drink manufacturer has never posted profits since its arrival in Vietnam in 1994. According to Ho Chi Minh City Department of Taxation, Coca-Cola's cumulative losses are US$180.6 million which is larger than its equity of US$141.6 million.

Kết quả (Việt) 1:

Việt Nam nằm ở phía đông của bán đảo Đông Dương và các trung tâm của đông nam á và một quốc gia nhiệt đới của Bắc bán cầu. Chính phủ này là chạy bởi Đảng Cộng sản Việt Nam. Năm 1995, dân số kích cỡ tại Việt Nam đạt 74million, xếp hạng thứ hai ở đông nam á, thứ bảy trong khu vực Châu á – Thái bình và thứ 12 trên thế giới qua. Kích thước dân số sau đó tăng lên đến 95 triệu người vào năm 2010. Việt Nam tính là một đất nước nghèo nếu tham khảo GDP quốc gia riêng của mình một người. Sau khi "Dot Moi" đã đến đất nước này, nền kinh tế cải thiện tốc độ cao do đó cải thiện đời sống và thu nhập quốc gia của người dân địa phương. Nước này là một trong những nền kinh tế phát triển nhanh nhất trong toàn cầu mà đã cho thấy một tỷ lệ phù hợp tăng trưởng trong những năm gần đây. Trong khi theo kinh tế nhìn ra thế giới (2011) của Quỹ tiền tệ quốc tế, GDP Việt Nam được tăng lên trên đầu người và phát triển từ quốc gia thu nhập thấp để thu nhập trung bình quốc gia (Richard Rousseau, năm 2011). Coca-Cola vào thị trường của Việt Nam tại năm 2004 và sản xuất riêng của mình thức uống năng lượng vitamin đóng gói cùng với một số thương hiệu quen thuộc như niềm vui, Fanta, Ma, và những người khác cho người tiêu dùng địa phương. Coca-Cola xây dựng ba nhà máy sản xuất tại Hà Nội, Đà Nẵng và TP. Hồ Chí Minh.Lý do để nhập Việt NamAt 2004, Coca-Cola made its first move out of Africa and enters Asia's markets which include Vietnam. These acquisitions were in line with the Group's growth strategy to expand into emerging markets, in order to underpin the organization's position as an Emerging Markets Specialist (Coca-Cola Sabco History). The first move of Coca-Cola into Vietnam is based on the new emerge and rapid growth of economy in Vietnam.As the rapid population growth and improvement of economy in Vietnam, Coca-Cola takes this opportunity to enter their market. Vietnam's economy has been growing at between 4% - 8% after recovery from the Asian Financial Crisis of 1997.The enhancing of living and educational standards of Vietnamese help in providing employment opportunities to them. Coca-Cola enters Vietnam market to enhance the economic development and create some job opportunities for the local people. As the soda consumption has reduced in the U.S., Coca-Cola is one of the soft drink industries that increasingly looking to expand their business in countries where there consist of higher national income rate and huge population (Bloomberg Business week New, 2012). This news also shows the reason that Vietnam still able to encourage Coca-Cola to put more investment in Vietnam.Moreover, Vietnam relies on the petroleum industry for its local energy consumption and for export; it will cause the economy of Vietnam more stable and attracted many foreign companies direct invest in Vietnam. This also managed to attract Coca-cola to enter Vietnam markets at 2004. The payment for employees in Vietnam is quite low, therefore, it attract foreign companies moving into Vietnam instead of traditional market such as China, India, and Thailand. These all reasons push Coca-Cola chooses Vietnam and made it first move into it to operate its plants there.AnalysisGains of entering into a foreign countryPolitical StabilityEntering into a foreign country such as Vietnam has its gains and shortcomings. One of the advantages to enter Vietnam is its political stability. Due to Mr. Philippe Delalande (2010), he mentions that political stability is one of the factors that have helped Vietnam pursue its economic development policy. In the others view from George E. Kobrossy (2013), General Director of Zamil Steel Vietnam (ZSV) also mention the advantages which help attract foreign investors to the country is Vietnam's political stability, administrative reform and its efforts in upgrading infrastructure facilities. Coca-Cola faced problems to enter some countries few decades ago due to the politic issues that happened in the country. Standage (n.d) said that Coca-Cola did not exist in the former Soviet Union (Russian) because they worry that the revenue would go transfer to communist government coffers. While Webster (n.d) mention that Coca-Cola not enter French society because Coca-Cola was a mark of capitalism and a difference between capitalism and communism during Cold War. Coca-Cola as a huge brand so closely related with the US found itself pester in politics, or singled out for criticism although they are not trying to get involved in politics, said Webster. Thus, through our analysis we realize Coca-Cola reenter Vietnam's market because of the political stability after Doi Moi (reformation) policy. Coca-Cola feels more assurance in expanding their business in a stable politic country.Foreign Direct InvestmentOne of the gains of Coca-Cola is that Vietnamese government provides many investment incentives for foreign investors, the corporate income tax is low compared to other countries in South East Asia (standard rate is 28% and preferential rates from 10% to 20%). The Foreign Investment Agency reports that by 15 December 2011 Vietnam had attract more than 13,667 foreign investment projects, with a total capital of around RM612 billion (Foreign Investment Agency, 2011). Foreign-invested companies including Coca-Cola accounted for around 27% of the country's exports, 35% of the country's total industrial productivity, constituted 13% of GDP, and contributed around 25% of total tax incomes (Vietnam Investment Review, 2001). Thus, there are about US$300 million was inform by Coca-Cola to invest in Vietnam to further capture growing opportunities in one of the most developing consumer markets (Journey Staff, 2012). Under commitments made by Vietnam as part of its agreement to the World Trade Organization, Vietnam offered foreign enterprise which included Coca-Cola the general right to import products and sell them to licensed distributors. The process to obtain an investment certificate for foreign-owned company is much easier now.Low labor costThe country is gaining competitive advantage for labor-intensive production industry on the basis of low salary level (Meyer, 2005). In the research on labor costs, Japan labor cost in one month is $1,810, continue by $1,144 in Singapore, $82 in Indonesia, and then Vietnam rank the second lowest place which is US$49 a month and follow by the highest is Cambodia with $47.36 (EuroCham, 2010). Coca-Cola who has chosen to set-up regional offices in Vietnam help Vietnam proven the extensive labor pool is competitive in the market (GLC, 2007). Due to information we collected, we found that Coca-Cola Vietnam invest in Vietnam to help boost the local business sales and created 500 new jobs locally in Vietnam while the total labor force that gain this benefit is 99 percent of local Vietnamese (Staff, 2012). This high percentage use of labor force proves that Coca-Cola Vietnam afford to hire more local employees due to their low labor cost or low salary paid.
Low production Cost

Coca-Cola entering Vietnam because one of the gains is they can exempted from import duties to build fixed assets, such as bottling machinery, means of transport, and production materials that are not produced locally. Additional exemptions are available for raw materials, parts and materials imported for production of goods for export. Coca-Cola's revenue in central Vietnam had witnessed a double digit growth over the past few years; three factories of the company produce more than 608 million liters per year in Vietnam (Nordic Industry Development, 2012). Therefore, Coca-Cola beverages Vietnam invested over $3 million into its second Danang-based purified bottle water production chain, with a capacity of up to 6,000 of 500ml bottles per hour due to the low production cost they gain in Vietnam.

V) Variety Product Lines that meet Vietnamese's Beverages Need

Coca-Cola enters Vietnam because they can meet the needs for hydration, nutrition and energizing refreshment of their customer in Vietnam. Coca-Cola have variety brand of product in Vietnam such as Coca-cola, Coca-cola Light, Fanta, Joy, Minute Maid, Dasani, Real Leaf, Samurai, Schweppes and Sprite. Joy is bottled water drink that pure and has the largest share of 32% compare other brand that company produce. Coca-Cola has the second largest share of 23% continue by Sprite with the percentage of 18% and Fanta which has 17%. Other brands like Samurai obtain 5% from the market share while Minute Maid and Schweppes each occupied 2.5% (Soft drink-Vietnam, 2010). They offer high quality product that meet the need of their target market. For example, Samurai is enjoyed by Vietnamese male adults who need an energy boost. This vitamin-packed energy drink is fortified with six essential B vitamins and has an exciting and refreshing taste with a carbonated, sweet flavor that appeals to the Vietnamese palate (Coca Cola Sabco Homepage). Coca-Cola can fulfill the Vietnamese beverage's needs as well as gain more profit from them and form a win-win situation. Thus, this encourages Coca-Cola to produce more product lines that meet the needs and wants of Vietnamese.

Shortcomings of entering into a foreign country

Unable to generate own independent Stores

One of the shortcomings of Coca-Cola in Vietnam is foreign-based companies legally cannot generally own independent stores without production in the country. Importers would normally cooperate with local partners (Nguyen, 2004). This had caused Coca-Cola not able to own an independent store in Vietnam, and Coca-Cola has to start-up their bottling plants to doing business in Vietnam. Coca-Cola Beverages Vietnam, the country's leading soft drink manufacturer has never posted profits since its arrival in Vietnam in 1994. According to Ho Chi Minh City Department of Taxation, Coca-Cola's cumulative losses are US$180.6 million which is larger than its equity of US$141.6 million.