FDI Marketing -Cuong- E01 by kellena95


									The marketing approach to FDI attraction

                             Mai The Cuong, MBA
                                    (VDF & NEU)

      Presented at the Vietnam Development Forum
                       Room 401, Melia Hanoi Hotel
               Time: 9.00 – 11.00, August 19, 2004

Background of the study

The marketing approach to FDI attraction

Case study: Electronics industry
 Background of the study

Necessity of FDI to Vietnam

Necessity of FDI in electronics industry

Vietnam – Japan Joint Initiatives
 Studies on electronics and FDI marketing

JODC’s study (2003) on electronics/electrical industry in Vietnam

Ohno’s study (2004) on industrial policy of Vietnam

Mori’s study (2004) on optimum parts procurement strategy of FDI

MPI – JICA’s study on investment promotion strategy in Vietnam

NEU-JICA’s study (2003) on electronics industry in Vietnam

NRI’s study (2004) on ASEAN electric/electronics industry
 The marketing approach to FDI attraction

5 key strategic marketing variables

Suggested marketing approach to FDI attraction policy

Issues of Vietnam’s FDI attraction policy
 5 key strategic marketing variables

Product: policy? benefits of policy? business environment?

Positioning: Perception of our product by investors

Target Audience: The most profitable groups of our product

Scope of Distribution: The process and place where
investors can purchase our product

Scope of Communications: how and where we say our
positioning to target audience
 5 key strategic marketing variables

Foreign investors come to a host country not because of
good policy as perceived by the authority, but because of
the actual benefits from the policy.

The government should understand the need of FDI firms
and target policies to them.
Marketing approach to FDI attraction policy
Marketing approach to FDI attraction policy

                    First Step: Situation Analysis
                    FDI trends in the world, ASEAN and
                    East Asian countries
                    Value Chains, TNCs and International
                    Production Network
                    Who are the key players? What are their
                    characteristics? Why and how do they
                    respond to a host country’s FDI
                    attraction policy?
                    SWOT Analysis of Vietnam, Thailand,
                    China in attracting FDI
                    Key success factors in attracting FDI:
                    past, current and future
          Marketing approach to FDI attraction policy

Second Step: Positioning Options
Should Vietnam be the risk diversification
destination of China?
Should Vietnam be the cheapest
destination for FDI in the ASEAN?
Should Vietnam be the host country who
offers the most stable FDI attraction
policy in ASEAN?
Should Vietnam be the destination where
investors can achieve highest profit
margin in the world?
Other options: fastest delivery time,
cheapest wage, most skillful labor, etc.
        Marketing approach to FDI attraction policy

Third step: Strategic Policy Alternatives which match positioning decision
                Benefits of the policy
                Cost of doing business
                Communication programs
Marketing approach to FDI attraction policy

                   Fourth Step: Action Program
                   Implementing agenda
          Marketing approach to FDI attraction policy

Final  Step:       Measurement       and
Expenses incurred from FDI attraction
Nationality changes of investors
The number of newly invested projects
Registered capital, implemented capital
Adjustment should be made even before
we measure the program
FDI promotion policy in Vietnam (prior to 2003)

 List of projects calling for FDI (UNIDO project)

 Conference of FDI promotion in Hanoi

 FDI seminars in Japan, Korea, Taiwan, Europe

 Guidebook for FDI promotion (legal procedure, law, introduction
 of SCCI)

 Video tape for FDI promotion used in FDI promotion seminars and
 given to investors
FDI promotion policy in Vietnam (since 2003)

 Use presentation (ppt) and supporting tools to deliver message to
 investors at seminars

 Change the layout, appearance and content of printing materials
 including pamphlets, guidebooks

 Advertise Vietnam on international magazines

 Japanese government: (i) regular investment mission to Vietnam;
 (ii) assistance to Vietnamese side in organizing FDI seminars in
 Japan; (iii) Capacity building for FDI agency and three investment
 promotion centers; (iv) assistance to establishment of Vietnam’s
 investment office in Japan under JETRO program
   Current policy issues: the MKT approach

Unclear positioning statement

Ineffective promotion strategy and communication
    Various statements on positioning: too
    much and too little

Stable political environment; Market oriented economy with a
stable macroeconomic environment
Geographical location
Intensive young human resource with knowledge; Salary of
Vietnamese workers is competitive (60-70% of Thailand, 18% of
Singapore, 3-5% of Japan).
High population leads to a prospective market size
Legal reform; Commitments to international integration
Cost of doing business is reducing
Low corporate tax rate; Import tax exemption
Various forms of investment
Elimination of foreign exchange control
Moving toward one price scheme.
Expansion of sectors, projects for FDI
     Ineffective promotion strategy and
     communication programs

The master plan for attracting FDI is lacking.
List of projects calling for investment does not meet the need and
interest of investors.
Ineffective promotion activities in foreign countries (foreign affairs
representatives, trade representatives)
Communication materials are not sufficient.
Online information is available online but not updated.
                                 (Self assessment from Government)

No allocated budget for promotion activities on national level
Different incentives from different provincial authorities
     Case study: Electronics industry

Many investors in electronics have already been in Vietnam

Target fields for FDI attraction: information equipment (computer
peripherals), home electrical products (white goods), simple
assembly components, package assembly components (long-
term) and meterials-type components (long-term), SI (JODC,
2003, p36)

Issues from AFTA and WTO accession

Backward linkage is necessary for Vietnam in the long-term.
    The marketing approach to FDI in
    electronics industry

Benefits of policy

Positioning Map

Investors behaviors

Agglomeration of supporting industry

Communication programs
      Benefits of FDI policy

Two types of investors:
  Domestic/regional-demand driven investors
  International-oriented investors

  FDI policy should address the need of investors who
  prefer fair treatment in the domestic market and
  enhancement of international competitiveness.
              Competitive map for Positioning

                            Clear electronics M/P
     Thailand, Malaysia                                 China

  Weak SI                                                   Strong SI

                      Vietnam, Indonesia

                              Unclear electronics M/P

     Criteria: stability of policy, domestic market demand, human
     resource development, labor-intensive, infrastructure, SI
     development, transportation and distribution system
   Investors’ behaviors

Types of investors (please listen to Mori san’s

Expansion of investments: Vietnam –
Singapore, Canon
         Agglomeration of SI (also see Mori san’s)

                            FDI SI firms

Chinese firms          Current Assemblers         Domestic SMEs

        Keep current assemblers and invite new ones
        Cost and delivery
        Some FDI SI firms in EPZs
        Production Movement in South East Asia
  Communication programs


Necessity of electronics M/P

Current tariff issues
         For further discussion

Detail study on suggested steps

Positioning options

Behaviors of foreign investors by industry and by

Industrial objectives and firms’ strategies

Measurement of communication programs

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