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International Financial Management - A View on FDI
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BANH NGOC HA - 1001030109 ANH 1 – CLC TCNH – K49
ASSIGNMENT
1 | P a g e
International Financial Management
The first assignment about Foreign Investment in Vietnam
Canon Vietnam had been established on 11th April, 2001. It started operation from May
2002 to now. Canon Vietnam has the investment under the form - EPE 100% FDI with
investment capital 306 million USD and legal capital 94 million USD. Canon Vietnam now
has 3 factories which are Thang Long factory (Dong Anh, Hanoi) , Que Vo factory and Tien
Son factory (both in Tien Du, Bac Ninh Province). The headquarters is at Thang Long factory.
With 3 factories, Canon runs a divisional departmentalization which is illustrated as the
following chart:
Canon wants to focus on the Asian market which has most of the developing countries. In
general, Asian countries have been considered that they have the prominent development
of technology, the hardship and creativeness of employees who require low salaries as well
as the stable politics, which makes a good condition for Canon to improve and diversify its
products, gain the achievements as well as expand its impact on foreign markets.
Why did Canon choose Vietnam to open branches and invest? There are some main
reasons:
First, the convenience of geographical area is one of the reasons Canon choose to develop
in Vietnam. Vietnam has the near distance with Japan, 3 directions adjacent to other Asian
countries and a long coastline which is easy to penetrate.
Canon Vietnam
Managing Director
Thang Long Industial Park
Specialised in Ink Jet Printers
Que Vo Industrial Park
Specialised in New laser printer
Tien Son Industrial Park
Secialised in large ink jet printers
BANH NGOC HA - 1001030109 ANH 1 – CLC TCNH – K49
ASSIGNMENT
2 | P a g e
Second, Vietnam has a stable political environment. Vietnam is a peaceful country (ranking
39 out of 144 in 2009) which has a very stable political environment, low risk of military
conflicts. Therefore, political stability is one of the main factors that have helped Vietnam
pursue its economic development policy. Besides, the Government encourages developing
the technical industry and willing facilitating to this industry.
Third, Vietnam economy is in development stage, if Canon invests in Vietnam market, it
may easily spread and introduce its products to domestic customers to enhance its
reputation and raise profit. Vietnam has gained considerable economic development for
over the last 20 years. For example, since 1990, Vietnam’s economy has made amazing
progress with annual average growth of 7.5 percent. Even when many Southeast Asian
countries were damaged by the Asian economic crisis in 1997-1998, the country’s economy
still kept growing. In 1999 its economic growth rate reached 4.5 percent while other
Southeast Asian countries, such as Thailand and Indonesia fell into crisis. The growth rate
can be attributed to the consistent economic policy of integrating gradually into the global
economy in line with the situation in Vietnam.
Fourth, the nature of Vietnam people is industrious and quick-witted, which can contribute
to the productivity of Canon and spring up more new ideas to diversify products and
shorten time to produce one unit of products. On average around four in ten employees
are aged between 16 – 25, meaning that significant proportion of the Vietnamese
workforce can be classified as being “young”. Levels of professional and technical training
amongst staff tended to be polarized between low and high with more than half having
little or no training and more than quarter being University graduates. The average salary
of an employee in a recent survey is 2.4 million dong per month which is considerably lower
than in China at the moment.
Fifth, the technology of Vietnam is still being improved and needs to apply foreign
technology, so Canon may quickly penetrate to Vietnam Production line and make chance
to widespread the high quality products to Vietnam market. Young people expect the global
economic exchange. The more percentage of people quickly access to the high quality and
advanced technology that Canon brings to Vietnam, the higher level of demand to Canon
products.
Furthermore, on July 23th, 2012, Canon Asia Marketing Group and Canon Singapore Pte.
Ltd. announced the establishment of Canon Marketing Vietnam Company Limited (CMV) -
a new Canon marketing company in Ho Chi Minh City, Vietnam. This new company was
BANH NGOC HA - 1001030109 ANH 1 – CLC TCNH – K49
ASSIGNMENT
3 | P a g e
formed with the purpose of building systems of import, distribution, sales and service for
Canon products in Vietnam.
In recent years, Vietnam, after joining the World Trade Organization (WTO) in January
2007, has made important progress in the transition to the economy market and
integration into the international economy. In particular, through the open policy of
economy and government policies to expand domestic demand, Vietnam has achieved
economic growth of around 6% during the past few years, which has created an urgent
need for Canon to set up a strategic marketing system in this country. In order to meet the
market, Canon has officially established Canon Marketing Company Limited Vietnam in Ho
Chi Minh City, Vietnam.
Canon has established the representative offices in Ho Chi Minh City and Hanoi in 2002 and
2003. In addition, except for the existing products, through Canon Marketing Vietnam
Company Limited Ltd. established, Canon also focus on the expansion of the market in the
field of industrial printing products and camera and specialized camcorder in the field of
cinema.
Canon’s new marketing subsidiary, Canon Marketing Vietnam Company Limited (CMV) with
investment of $3 million from Canon Singapore, planned to start operations in August, 2012
with around 40 employees.
The new company aims to create an import, distribution, sales and services system for
Canon products in Vietnam. It will support Le Bao Minh - Canon’s authorized dealer in
Vietnam, and other dealers in areas of sales, marketing and services. “We regard the Asia
market as most important and Vietnam is definitely one of our most important markets as
it is quickly becoming one of leading economies in the region. This is due to its strong
growth, a young and hardworking workforce and the government’s commitment to
develop country further,” said by Hideki Ozawa, president of Canon Asia Marketing Group.