VIETNAM – MARKET OF THE MONTH
Why Vietnam?
Vietnam is one of the most dynamic markets in the world. The stereotypical image of women in ao dais biking along a dusty street is an antiquated one. Ho Chi Minh City, Hanoi and Danang are burgeoning cosmopolitan cites that are bustling with small businesses and tourists.
Vietnam offers a strong combination of rapid growth, social stability and an excellent demographic profile that is fueling industrial production and consumer demand. The country is undergoing a remarkable transition from a planned economy to a market economy, following a path similar to China.
Map of Vietnam
As an emerging market, Vietnam offers an increasing number of opportunities for U.S. exporters and investors. Vietnam’s economic growth rate has been among the highest in the world in recent years, expanding by approximately eight percent, while industrial production has been growing at 14 to 15 percent per year.
The Commercial Service can help U.S. firms take advantage of growing business opportunities in Vietnam. In June, the Commercial Service and Vietrade, Vietnam's trade promotion agency, signed a Memorandum of Cooperation to share best practices and increase trade cooperation between the two countries. Our trade specialists and commercial officers provide a variety of assistance and support services including market research, match making, in-country promotion, and advocacy.
Also in June, Commerce Assistant Secretary for Trade Promotion Israel Hernandez led a delegation of 18 U.S. businesses to Hanoi and Ho Chi Minh City to meet with pre-screened Vietnamese buyers, distributors, and agents. Delegates also met with the Vietnamese Prime Minister, Nguyen Tan Dzung. Overall, participants returned to the United States energized and eager to pursue their new business leads. One delegation member called the mission “a great experience,” having identified 11 potential suppliers for his Virginia-based firm, a manufacturer of plastics production equipment. A Wisconsin metalworking company executive found the program “well worth the time and the money.” An Alabama supplier of construction equipment concluded, “It is time for my company to be in the Vietnamese marketplace.”
Khang Allen of Gala Industries and Assistant
Secretary for Trade Promotion and Director General of the
U.S. & Foreign Commercial Service, Israel Hernandez
during the Commercial Service Trade Mission
to Hanoi and Ho Chi Minh City.
Opportunities for trade with Vietnam continue to expand. Poverty reduction, the continual rise in per capita income, the large amount of domestic savings and the flourishing number of small businesses are creating a strong domestic demand for imports and a high number of consumers.
Vietnam is well-endowed with natural resources, entrepreneurs and an advantageous geographic location – bordering China and close to regional commercial hubs in Bangkok and Singapore. Venture capital is now beginning to flow into Vietnam, including funds specializing in high-tech enterprises. In fact, many foreign investors now see Vietnam as a cost-effective hedge to China.
Deputy Commercial Senior Officer Brent Omdahl, Commercial Service
Hanoi; Assistant Secretary for Trade Promotion and Director General
of the U.S. & Foreign Commercial Service, Israel Hernandez; and Senior
Commercial Officer Donald Nay, Commercial Service Hanoi.
Vietnam became a member of the World Trade Organization (WTO) on January 11, 2007. Through 2015, the Vietnamese government will continue to implement economic, regulatory and administrative changes that will provide an increasingly favorable business environment for American companies.
The United States and Vietnam signed a Trade and Investment Framework Agreement (TIFA) on June 21, 2007 that created a platform to further expand and deepen bilateral trade and investment ties between the two countries. Under the TIFA, the United States and Vietnam will discuss implementation of the 2001 U.S.-Vietnam Bilateral Trade Agreement, Vietnam’s WTO commitments, and explore new initiatives to increase trade in industrial and agricultural products and services and encourage further investment between the two countries.
“The TIFA signing marks another important step forward for both countries in the steady expansion of our economic relations,” said Ambassador Karan Bhatia, who signed the TIFA on behalf of the United States. “I am pleased with the ambitious work program we’ve agreed to undertake under the TIFA, which will support Vietnam’s domestic economic reform agenda, create new opportunities for U.S. and Vietnamese businesses, and allow us to consider additional steps we may want to take to further strengthen our relationship.”
With a market of over 85 million people, Vietnam is the 14th most populous nation in the world and has experienced economic growth of more than seven percent per year for each of the last five years. Two-way goods trade between Vietnam and the United States totaled $9.7 billion in 2006, an increase of 23 percent over the previous year. The United States exported $1.1 billion worth of goods to Vietnam in 2007.
Ho Chi Minh City Hall
 | Location: Southeastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and South China Sea, alongside China, Laos, and Cambodia |
| Area: Total: 329,560 sq km (slightly larger than New Mexico), Land: 325,360 sq km, Water: 4,200 sq km |
| Climate: Tropical in the south; monsoonal in the north with a hot, rainy season (mid-May to mid-September) and a warm, dry season (mid-October to mid-March) |
| Population: 85,262,356 (July 2007 est.) 57 percent of the population is below the age of 30. |
| GDP Real Growth Rate: 8.48 percent (2007) |
| GDP by Sector: Agriculture (19.4 percent), Industry and Construction (42.3 percent), and Services (38.3 percent) |
| GDP per Capita: $835 (2007 est.) |
| Labor Force: 45.73 million (2007 est.) |
| Principal Exports: Crude oil, textiles and garments, footwear, fishery products, electronic products and components |
| Main Imports: machinery equipment and parts, refined petroleum, steel, textile industry materials, cloth |
Strong economic growth, ongoing reform and a large population of over 85 million people – more than half of which are under the age of thirty – combine to create a dynamic and rapidly evolving commercial environment in Vietnam.
Sales of equipment and technology associated with growth in Vietnam’s industrial sector and implementation of major infrastructure projects continue to be a major source of commercial activity for U.S. firms.
Aviation, telecommunications, information technology, oil and gas exploration, power generation and education will continue to offer the most promising opportunities for U.S. companies over the next few years as infrastructure needs continue to expand with Vietnam’s pursuit of economic development.
Key U.S. agricultural inputs to production, such as hardwood lumber, cotton, hides and skins and feed ingredients, also continue to play a key role in helping to fuel Vietnam’s export-led manufacturing strategy.
Israel Hernandez meeting with the Vice
Minister Le Nam Thang of the Ministry of
Information and Communications
(Click on the sector for more information)
The Commercial Service has identified a number of market opportunities for U.S. firms and continues to work with companies interested in entering the Vietnamese market and expanding market share. Some of the most lucrative sectors for U.S. export and investment include:
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Pagoda in Vietnam |
American companies interested in doing business in Vietnam may do so directly or indirectly through the appointment of an agent or distributor. U.S. companies new to Vietnam should conduct sufficient due diligence on potential local agents/distributors to ensure they possess the requisite permits, facilities, manpower and capital. Firms seeking a direct presence in Vietnam should establish a commercial operation utilizing one of the following options: 1) a representative office license, 2) a branch license, or 3) a foreign investment project license under Vietnam's revised Foreign Investment Law.
The Commercial Service has a number of programs and services available to assist the U.S. business community in establishing a presence in Vietnam. The Commercial Service also employs experienced commercial specialists with industry sector expertise that can tailor your business approach and advise and steer your company. To find out more about what the Commercial Service can do to help you with Vietnam, one of our leading trading partners, please visit our website.
More Information:
Business travelers to Vietnam seeking appointments with U.S. Embassy Hanoi officials should contact the commercial section in advance. Find a commercial specialist responsible for your sector.
The U.S. Commercial Service in Hanoi can be reached by telephone at: (84-4) 850-
5199, by fax at (84-4) 850-5064/5065 or email at Hanoi.Office.Box@mail.doc.gov.
The U.S. Commercial Service in Ho Chi Minh City can be reached by telephone at: (84-8) 825-0490, by fax at (84-8) 824-0491 or by email at Ho.Chi.Minh.City.Office.Box@mail.doc.gov.