BANH NGOC HA - 1001030109 ANH 1 CLC TCNH K49

ASSIGNMENT

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 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

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.

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BANH NGOC HA - 1001030109 ANH 1 CLC TCNH K49

ASSIGNMENT

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, Vietnams 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 countrys 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

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BANH NGOC HA - 1001030109 ANH 1 CLC TCNH K49

ASSIGNMENT

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. Canons 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 - Canons 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 governments commitment to develop country further, said by Hideki Ozawa, president of Canon Asia Marketing Group.

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