Vietnam's Economic Transformation Case Study

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Communism to Capitalism: Vietnam's Economic Transformation

Assess the market opportunities in Vietnam for both consumer products companies and industrial-products companies. What is the nature of the opportunity?

With the establishment of normal trading relations (NTR) in the mid-1990s leading to decreased tariffs and quotas on United States' imports, many companies viewed Vietnam as a land of opportunity but the United States has lagged behind other countries with marketing to this country. The potential is there for profitability, but it may take at least twenty years before Vietnam's economy has matured enough to be able to be on level with Taiwan. The current population under 25 years of age is approximately 60%, but the per capita income for most of the population is very low at around $700 per year.

As the Vietnamese people adjust to living outside of Communist rule, they will adapt to the ways of a market economy. In order to improve, they will need to revamp their infrastructure and banking system to handle the new challenges presented to them. It is difficult for new business to develop within the country when the necessary ingredients are not there for business such as simple things as roads and buildings that most take for granted.

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As the economy grows and the infrastructure improves, so will the desire for the products offered by other countries thus increasing the value of having these companies have operations in the country. Foreign investors are drawn to the potential opportunities that exist in Vietnam for growth because of its undeveloped economy.

2. Nike and several other well-known American companies are sourcing some of their production in Vietnam, thereby taking advantage of a labor force that is paid the equivalent of $2 per day or less. Are goods labeled "Made in Vietnam" likely to find widespread acceptance among American consumers?

While labor in Vietnam is inexpensive, the idea of goods being imported and being widely accepted by American consumers is still a difficult concept for some to accept as some still harbor bad feelings toward Vietnam because of the war. Since 2001,….....

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