(Tiểu luận) report topic direct foreign investment historical methods of pepsico since it penetrated into the vietnamese market 3

VIETNAM GENERAL CONFEDERATION OF LABOUR TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION INTERNATIONAL FINANCIAL MANAGEMENT REPORT TOPIC DIRECT FOREIGN INVESTMENT Instructing Lecturer: ĐỖ THỊ MỸ HƯƠNG Group: - N01 Student’s name: Nguyễn Anh Kiệt - 719H0393 Trần Gia Bảo Trân - 719H0801 Huỳnh Quang Sang - 719H0500 Hồ Tấn Phát - 719H1102 Major: INTERNATIONAL BUSINESS Academic Year Code: K23 HO CHI MINH CITY, 04/2022 0 Tieu luan TABLE OF CONTENTS PART I: INTRODUCTION PART II: BODY Question 1: Historical methods of PEPSICO since it penetrated into the Vietnamese market 1.1 Historical methods of international business of PepsiCo 1.2 Advantages of international business of Suntory Pepsico .4 1.3 Disadvantages of international business of Suntory Pepsico Questions 2: The motives for initiating PEPSICO including revenue-related motives and cost-related motives .5 2.1 Revenue - Related Motives 2.2 Cost - Ralated Motives Questions 3: Analyze the impact of Covid 19 pandemic on this MNC’s value based on valuation model 3.1 Impact of Covid 19 on the economy of Viet Nam 3.2 Exposure to exchange rate: 3.3 Exposure to interest rate 15 3.4 Exposure to government’s policies 21 Question 4: In your opinion, is this firm a good or bad FDI? Give explanations and reasons for your answer 23 4.1 About Foreign Direct Investment 23 4.2 Opportunities for PepsiCo .23 4.3 Pepsi's challenges when investing directly in Vietnam 24 Question 5: The roles of direct foreign investment in Vietnam’s economic development over the past twenty years 24 PART III: CONCLUSION 28 PART IV: REFERENCE 29 PART V: MEMBER’S CONTRIBUTION .30 0 Tieu luan PART I: INTRODUCTION In terms of governments and businesses, foreign direct investment has been a critical component Corporations will easily buy new products and technology, as well as sell their existing products to international customers, by purchasing a controlling interest in foreign assets Governments will also build opportunities and boost economic activity by attracting foreign direct investment Foreign direct investment is extremely important to international investors and foreign direct investment in has played an essential role in the development of emerging markets At the same time, businesses investing abroad will notice higher growth rates and diversify their profits, benefiting investors To understand how MNCs engage in FDI, the motivations for initiating direct investment abroad include revenue-related and cost-related motives from the perspective of foreign investors will be discussed below in this report In addition, foreign direct investment also presents both advantages and disadvantages for not only the investor but also the host country At the micro level, investments carry some risks that need to be considered carefully On a macro level, it can cause problems for a country's domestic labor market and capital draw in the long run In this report, we choose PepsiCo, a company that has invested in Vietnam for nearly 20 years as a typical example because it is the largest American food and beverage company in the world, with products with present in more than 200 countries At the same time, it shows the existence and development of Pepsico corporation when reaching out to the world At the same time, an analysis of the benefits and limitations of foreign direct investment for the host country as well as whether the advantages outweigh the disadvantages for Vietnam will be presented in the next report below 0 Tieu luan PART II: BODY Question 1: Historical methods of PEPSICO since it penetrated into the Vietnamese market 1.1 Historical methods of international business of PepsiCo In the early 1990s, PepsiCo began to penetrate the Vietnamese market PepsiCo Group is one of the first foreign-owned beverage companies to set foot in Vietnam since 1991 in the form of a joint venture Accordingly, at the end of 1991, the International Beverage Company (IBC) was established, under a joint venture between the Saigon Tourism and Trading Company (SPCo) and Marcondray - Singapore with a capital contribution ratio of 50%-50% In 1994, a new member joined the company, Pepsico Global Investment Company and PepsiCo officially entered the Vietnamese market when a joint venture with IBC International Beverage Company with the birth of two companies The first products were Pepsi and Up from the early days when the US lifted the embargo against Vietnam in 1994 Current capital ratio is: SP Company Yes 40%, Macondray Company Inc 30% and Pepsi Cola International 30% In 1998, due to capital investment and business development requirements, the company's shares changed again: Pepsi Cola International 97% and SP.Co 3% according to Decision No 291/GPDC7 dated December 28, 1998 Capital investment is 110 million dollars, legal capital is 70 million dollars On April 28, 2003, Pepsico Global Investment acquired a 3% stake in Vietnam, International Beverage Company became a 100% foreign owned enterprise and changed its name to PEPSICO Vietnam International Beverage Company Male PepsiCo's products are now available nationwide with big and famous brands such as Pepsi, Poca, 7Up, Mirinda, Aquafina, Sting, Twister, Lipton Tea, Quaker Soya April 2013 - The strategic beverage alliance Suntory PepsiCo Vietnam was established between Suntory Holdings Limited and PepsiCo, Inc in which Suntory accounted for 51% and PepsiCo accounted for 49% with the launch of new products Olong Tea + Plus and Mountain Dew Historical international business method since Suntory Pepsico entered the Vietnamese market from the initial joint venture method into the current 100% foreign owned enterprise 0 Tieu luan 1.2 Advantages of international business of Suntory Pepsico - The Suntory-Pepsico joint venture in Vietnam is applied to both take advantage of experience, production technology and take advantage of sales experience and wide system in the market - The international joint venture allows Pepsico to enter the Vietnamese market more quickly and at a lower cost and quickly penetrate the distribution channel of the domestic market, increasing the likelihood of the success of the joint venture partners already have relationships with key suppliers and customers, and are fluent in the language and customs procedures - A joint venture helps Pepsico to limit risks rather than owning the whole thing, because each partner only bears the risk for its own capital contribution - The joint venture between SP.Co and Marcondray-Singapore - Pepsi Cola International helps to improve the competitiveness of domestic enterprises in the beverage industry 1.3 Disadvantages of international business of Suntory Pepsico - There is a conflict, ownership dispute between the participating parties due to disagreement on investments or profit sharing - There is a situation where large companies acquire small companies due to their inexperience and small scale - The possibility of great risk if the joint venture company has a deadlock - Language, thinking and cultural barriers between the parties' cooperation - Encountered many legal problems when joint ventures related to culture projects - The firm Pepsico will not reap any rewards from the investment until the subsidiary is built and a customer base established Questions 2: The motives for initiating PEPSICO including revenue-related motives and cost-related motives 2.1 Revenue - Related Motives  Attract new sources of demand: 0 Tieu luan When a company reaches the limit of growth in the home country, such as stiff competition, or develops enough to reach near-perfection in the domestic market category Therefore, in general, businesses can look to foreign markets to make full use of their inherent potential as well as find potential needs from other countries (especially in countries with low barriers to entry like economic, political, to help MNCs penetrate and expand easily) EX: PepsiCo's products are enjoyed by consumers in more than 200 countries and regions around the world and consumed by a huge amount more than a billion times a day Thanks to market expansion strategies by region and user segment, PepsiCo generated $70 billion in net sales in 2020, including convenience food and supplement categories including Lays , Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker and SodaStream PepsiCo's product portfolio includes a wide range of exciting foods and beverages, including many iconic brands that generate more than $1 billion annually in estimated annual retail sales  Enter profitable markets: Some businesses create opportunities for themselves by entering certain markets where those industries are currently highly developed However, a particularly common negative problem with this strategy is that companies that have been successful in this new market, set out policies to prevent new competitors from entering, they have used measures to reduce the price of products when other new entrants have just begun to enter the market EX: Currently, Pepsi has more than 22 brands in its portfolio Besides carbonated drinks, Pepsi will provide healthy snacks and low-calorie drinks To boost up and to the perch brand, unlike Coca Cola - a brand that focuses on valuable media, Pepsi wants to target the young generation, who are rich in energy and enthusiastic "flaming fire" PEPSICO will focus on customers from 13 to 35 years old, from all walks of life from middle to upper class, from modern people to people with minimalist lifestyles Besides, the price of products from the brand is also very diverse, suitable for all choices of users  Diversify internationally: Because the economies of countries may not transform at the same time, the corporation may take advantage of the consistent net cash flow that comes from selling items across countries The corporation can lessen the volatility of net cash flow and hence the possibility of a 0 Tieu luan liquidity shortage by spreading worldwide sales and manufacturing Furthermore, if shareholders and creditors view the MNC's risk to be reduced, the firm may have a cheaper cost of capital with more steady cash flows EX: The impact of the Covid-19 outbreak has caused PEPSICO's goods trade to be delayed and short in Vietnam, but the outbreak is also a time to show that Vietnam needs to restructure the market, open up, diversify market diversification, especially the market such as Africa, the Netherlands, America, Japan, to avoid the risk of depending on certain markets 2.2 Cost - Ralated Motives  Fully benefit from economies of scale and use foreign factors of production: Establish a subsidiary in new markets where goods can be produced inexpensively and can be sold domestically or be exported and efficiency has lower costs of labor, land, capital or technology  Use foreign raw: Establish a subsidiary in a market where raw materials are cheap and accessible Sell the products in that market and elsewhere  Use foreign technology: Participate in a joint venture or acquire an existing overseas plant to learn about foreign production processes, so as to improve its own operations  React to exchange rate movements: Establish a subsidiary in a new market where the local currency is weak but is expected to strengthen overtime EX: In 1994, at the time of the US embargo against Vietnam, PepsiCo entered the Vietnamese market when it entered into a joint venture with the IBC International Beverage Company with the launch of the first two products, Pepsi and 7Up from the United States the first day when the embargo against Vietnam was lifted in 1994 And in 2003, the company was renamed PepsiCo Vietnam International Beverage Company Many beverage products are not released such as: Sting, Twister, Lipton Ice Tea, Aquawna In the following years, through the merger and acquisition of factories, the company expanded its production and business to officially become one of the largest beverage companies in Vietnam An example of PEPSICO company expanding production and business in both the field and source of raw materials as well as the user market According to evaluation articles, after 35 years of progressive corporate renewal, Vietnam's economy has developed strongly Vietnam is an in national family with the fastest economic 0 Tieu luan growth in the world over the past 30 years Vietnam's average GDP growth rate reached 7% per year in the period 2009-2019 In the commercial year, Vietnam is in some of the countries in the world with a positive GDP growth There are also factors that show that Vietnam's economy is attractive to global businesses thanks to its cheap labor force, stable exchange rate and low inflation In 2010, PEPSICO showed Vietnam as an important country in its market expansion strategy by Pepsico announcing to continue investing in Vietnam 250 million USD for the next three years and opening a new factory in Vietnam Can Tho At the same time, years later, PEPSICO bought, sold and imported the San Miguel factory in Dong Nai _ The largest PepsiCo factory in Southeast Asia was inaugurated in Bac Ninh Questions 3: Analyze the impact of Covid 19 pandemic on this MNC’s value based on valuation model 3.1 Impact of Covid 19 on the economy of Viet Nam From an economic point of view, Covid-19 can be considered a pandemic that has farreaching effects on world economies Evidence demonstrates that the effects of the pandemic have spread to different spillovers such as travel, tourism, supply chains, stock market volatility and oil price volatility Of course, the beverage industry is equally affected by difficulties in importing and exporting goods and materials Likewise, this pandemic has created an overall panic among consumers and companies that have distorted the way consumption patterns are established and created market anomalies COVID-19 has also posed an unprecedented challenge to MNCs like PEPSICO as the virus spreads rapidly and causes an economic slowdown As the covid pandemic rages, it may take weeks or months for currency markets to focus on controlling the spread of the virus, and some countries may lose ground Also, there's more going on in the world of money than the evolution of the pandemic Policy changes are still important but will also pose political risks to countries and MNCs over the 2020 pandemic, so monitoring the relative progress of the virus is important to understand currency movements The Covid-19 epidemic has complicated developments, disrupting socio-economic activities of countries around the world; The US-China trade conflict continues In the country, natural disasters and epidemics have a significant impact on the activities of the economy and 0 Tieu luan people's lives; unemployment and underemployment rates are high However, with drastic and effective solutions in realizing the dual goal of "both disease prevention and socio-economic development", Vietnam's economy still achieved positive results with maintaining growth Although GDP growth in 2020 is the lowest in the 2011-2020 period, before the negative impacts of the Covid-19 epidemic, it is a success for our country with the highest growth rate in the group of countries in the world Along with China and Myanmar, Vietnam is one of three countries in Asia with growth this year; At the same time, the scale of our country's economy reached more than 343 billion USD, surpassing Singapore (337.5 billion USD) and Malaysia (336.3 billion USD), making Vietnam become the leading country in the world The country has the 4th largest economy in Southeast Asia (after Indonesia 1,088.8 billion USD; Thailand 509.2 billion USD and the Philippines 367.4 billion USD) billion USD) 3.2 Exposure to exchange rate:  Vietnam in 2019 before the Covid epidemic occurred: In the second quarter of 2019, the foreign exchange market experienced strong fluctuations Specifically, the USD/VND exchange rate increased by 0.84% in just weeks from the end of April, peaking at 23,360 VND/USD (bank rate) However, in June, VND had a strong recovery when the USD/VND exchange rate continuously decreased, the total decrease of the whole month was 0.43% Accordingly, the bank rate decreased by 100 VND/USD, to 23,260 VND/USD for buying and 23,380 VND/USD for selling The free exchange rate decreased by 115 VND/USD on the buying side and 110 VND/USD on the selling side, respectively at 23,300/23,320 VND/USD The central exchange rate was adjusted up and down alternately, ending June at 23,066 VND/USD - an increase of only VND/USD compared to the end of May For the whole months, the USD/VND exchange rate increased by 0.41 %, while the central rate increased by 1.06% from the end of 2018 until the end of June 2019 Compared with some countries in the region such as the Philippines, Malaysia, Singapore , Vietnam is in the group of countries with a stable local currency Many favorable factors for a stable trend in the third quarter of 2019 according to BIDV's research, stated that "Interbank VND/USD interest rate differential is expected to remain stable at a positive level, term week fluctuated around 0.7 - 1.2% Market sentiment is expected to remain steady, easing concerns as international pressures are expected to ease On the other hand, 0 Tieu luan Vietnam's macroeconomic context is still stable such as stable growth, low inflation, and foreign currency inflows are still maintained, which are the core factors to help the domestic foreign exchange market no longer suffer The foreign exchange market in the third quarter of 2019 still has many favorable factors to maintain a stable trend from the beginning.” In summary, the exchange rate situation of Vietnam after 2019 is lower than in 2018 specifically, in the fourth quarter of 2018 it increased by 1.8%, in the first quarter of 2019 increased by 1%, in the second quarter of 2019 it increased by only 0.3% However, with the USD/VND exchange rate being stable and not excessively increasing by 2.5-3%; This is considered a supportive increase for interest rates, credit growth and the goal of controlling inflation At the same time, the State Bank of Vietnam controls interest rates and exchange rates in line with the macro balance, market movements and monetary policy objectives, synchronously combining monetary policy tools and intervention measures foreign exchange market when necessary to stabilize the foreign exchange market One of the focus of monetary policy management from now until the end of 2019 of the State Bank is to continue to stabilize the exchange rate through controlling VND liquidity  Exchange rate in 2020: Although there was a period of steep climb in the first few months of 2020, the USD/VND exchange rate has since fallen deeply so far The value of the US dollar slipped due to double shocks from the loosening monetary policies of the Central Banks of countries around the world, the negative outlook on US economic growth in 2020 10 0 Tieu luan overnight interest rate and 26% for one-week forward rate 20 0 Tieu luan  In 2021: In 2021, the covid 19 epidemic broke out again and became a dangerous global pandemic in early June, forcing businesses to close social distance for a long time This leads to delayed production, import or export of goods, etc., causing business costs to increase Many companies have suffered heavy losses, even bankruptcy and closed presentations The state has taken some adjustment measures in banks’ lending rates to help businesses stabilize and survive this pandemic Also, in 2021, according to the report "VIETNAM ECONOMIC REPORT" of the Konrad Adenauer institute, banks’ lending interest rates fluctuated in different quarters Interbank rates suddenly increased sharply in early February 2021, with overnight rates reaching a peak of 2.86% on February and one-week rates reaching a height of 3.66% on February However, this is only a seasonal phenomenon due to the high demand for cash among the people during the Tet holiday Indeed, interbank rates quickly stabilized after the Lunar New Year, fluctuating between 0.25-0.30% for the overnight rate and 0.35-0.50% for the one-week rate After maintaining low-interest rates in the middle of Quarter 1, interbank interest rates suddenly increased sharply at the end of April 2021, with overnight interest rates reaching a peak of 1.54% on May 31 and interest rates going to a height 1.54% on May 31 a week reached a peak of 1.67% on May 28 However, this is only a seasonal phenomenon due to the lack of local liquidity in some small banks, while the liquidity of the whole system is still relatively abundant 21 0 Tieu luan On the other hand, due to the impact of the fourth epidemic, credit demand is expected to decrease At the same time, the liquidity of the whole system is still relatively abundant On the other hand, due to the impact of the fourth epidemic, credit demand is expected to decrease In the interbank market of 2021, interest rates recorded a sharp decrease in Quarter 3, with overnight and 1-week interest rates down 38 basis points and 46 basis points, respectively, compared to Quarter This reflects an abundant liquidity position from the beginning of Quarter With a low growth rate (up 1.42%) and an inflation rate of only 1.82% in the first nine months of 2021, the State Bank has an incentive to continue maintaining monetary easing to stimulate the economy recover again Therefore, it is likely that interbank interest rates will not increase in Quarter In the first nine months of 2021, the State Bank will continue to operate interest rates according to the macro balance, inflation, market movements, and targets The monetary policy creates conditions to reduce the cost of capital for people, businesses, and the economy The State Bank of Vietnam, together with credit institutions, has exempted or reduced interest rates by nearly VND 2.5 million billion for about 1.7 million customers Since the appearance of the COVID-19 epidemic until now, the State Bank has adjusted three times the operating interest rates, a total reduction of 1.5-2.0% per year; reduced the ceiling interest rate by 0.6-1.0% per year for deposits with terms of less than six months; reduce the ceiling of short-term lending interest rates for priority sectors with a total reduction of 1.5% per year (currently at 4.5% per year); ready to support liquidity for credit institutions, creating favorable conditions for credit institutions to access capital from the State Bank at a lower cost In the first months of 2021, the State Bank of Vietnam kept the operating interest rates unchanged, creating favorable conditions for credit institutions to access capital from the State Bank at a low cost For Suntory Pepsico Vietnam, thanks to the Government's policy of stabilizing interbank interest rates with low levels, it has created many opportunities for businesses to stabilize capital sources and maintain businesses in combination with management strategies Adapting to the covid 19 epidemic after the outbreak in 2020, the company has experience in preparing for and overcoming the pandemic outbreak in 2021 with ease This has helped increase the value as well as the net revenue of the subsidiary in Vietnam and the parent company abroad; especially, the payment of Pepsico in the US in 2021 has increased to USD 7,618, an increase of more than USD 7,618 and 0.498 in millions except per share amounts compared to 2020 22 0 Tieu luan 3.4 Exposure to government’s policies 1) Inflaction: Inflation has become a growing concern for central banks around the world A strongerthan-expected recovery in economic activity in the first months of 2021, reflects the stimulus measures governments have deployed to mitigate the impact of the pandemic and greater mobility and containment measures lower block However, inflation and inflation expectations in the region are also increasing All of this is happening as countries are threatened by new variants of COVID-19, such as Delta, and new waves of infections could delay recovery and economic growth The potential risks are great Many countries in the region are currently facing two risks of economic slowdown and high inflation, leading to a large impact on the poor Not only during the current pandemic, but for many years now, central banks have used the replay app, explicitly or implicitly When the growth expectations themselves are higher than the growth targets, this often leads to an interest rate upgrade That reduces the development mechanism, especially the poor The big question for today is whether the developments data reflect temporary or permanent pressure on prices and whether development expectations have an impact Most importantly for policymakers, it raises the question of what to At the same time, it is required to resist development also because it will help maintain people's health and because it will empower MNCs to make sound investment decisions at home and abroad, ultimately also help with economic recovery Conversely, if development expectations are left unchecked, the central bank does not work, negative activity will be worthwhile both in the short-term working on increasing development and in the medium term adding to the costs generated due to early response and lanyard certification According to studies, the management of continuum of development can affect different economic levels of an unrestricted population differently as lower development is related to poverty and class reduction growing middle class Growth and release are compatible with unemployment and negative with inequality Several models are proposed to show that a 1% increase in development would increase the proportion of lower income households by about 7% and decrease the proportion of high-income households by about 1% 2) Investment: 23 0 Tieu luan The COVID-19 crisis threatens to create major obstacles to financing sustainable development Resources mobilized domestically will be affected due to the decline in economic activity External private capital inflows are expected to fall by $700 billion from 2019 levels Fiscal space is likely to shrink further as domestic spending increases and the exchange rate moves against the USD In the short term, official development finance should be utilized to limit the decline of other sources of finance No amount of funding will be enough to close the COVID-19 financing gap Over the medium term, actors in development finance and beyond need to work closely to "build back better" for a more equitable, sustainable, and resilient world As well as funding many public goods and services, building back better will require action from all financial sources with the common goal of supporting national sustainable development strategies In addition to development financing, there is a need to restore trade and, in the case of small island developing states, promote a sustainable ocean economy COVID-19 poses a major impediment to the work of financing developers The projections of the private externals are supported by prior certification Portfolio investments and various investments are not likely to recover quickly, COVID-19 pandemic still looms large in most modes of development, possibly leading to a wave originating in secondary portfolios and investment inflows continued to decline, the portfolio of projects and other investment flows decreased by 80% and 123% respectively compared to 2019 Projects indicate that even in the scenario relation, Global FDI will decrease at least 30%, with flows to the developing economy likely to fall even more sharply The World Bank's forecast of a 35% reduction in FDI inflows into developing economies supports this figure In the wake of the Covid pandemic, global FDI fell with a one-year lag and had a more detrimental effect on developed economies than on developing economies, and the impact on FDI would be immediate because The most prominent sector in FDI inflows into developing economies will be most affected in the first few months from the onset of the pandemic, given the magnitude of the impact 3) Tax: Governments implement a range of tax policy and regulatory measures that can support government responses to maintain the liquidity of domestic households and businesses and MNCs Protection systems enacted to limit the effectiveness of some tax measures on a large 24 0 Tieu luan scale and thus call for targeted policy responses and propose a range of targeted tax measures: may be extended to SMEs and foreign businesses and the most affected areas or industries such as the tourism, travel and hospitality industries Such relief measures could include income tax credits, tax rate cuts and exemptions, term extensions and deferrals, expansion of loss-passage rules, or restrictions on advance tax payments A temporary tax exemption can help protect existing formal employment, as well as a tax exemption for mobile money and cash transfers that can provide maximum financial support for individuals Question 4: In your opinion, is this firm a good or bad FDI? Give explanations and reasons for your answer 4.1 About Foreign Direct Investment Foreign direct investment is critical for developing and emerging market countries Their companies need multinational funding and expertise to expand their international sales Their countries need private investment in infrastructure, energy, and water to increase jobs and wages  Pros of Foreign Direct Investment: - Diversifies investor portfolios - Provides technology to developing countries - Provides financing to developing countries - Promotes stable, long-term lending  Cons of Foreign Direct Investment: - Not suitable for strategically important industries - Investors have less moral attachment - Unethical access to local markets 4.2 Opportunities for PepsiCo - Over the years, investors can get an impression of a new Vietnam in terms of business environment This place is currently an attractive investment location and a promising land for foreign companies to invest in Vietnam, including PepsiCo 25 0 Tieu luan - The transparent and objective legal environment of Vietnam has a positive impact on Pepsi's business activities, helping the company's operations to be carried out smoothly and easily Pepsi enjoys a lot of incentives in terms of corporate income tax, import and export taxes are clearly guaranteed, helping the company to facilitate the process of customs clearance for goods - Located in a region where some countries are still vulnerable to political and economic instability, Vietnam has benefited from a stable government and social structure, making it an ideal location for companies to operate by foreign capital investment - Vietnam has made great strides in its commitment to regional and international economic integration Vietnam's commitments in the WTO help increase market access for exports of goods and services This is also an advantage when Pepsi invests directly in Vietnam 4.3 Pepsi's challenges when investing directly in Vietnam Besides the above advantages, direct investment in Vietnam also has some disadvantages as follows: - Limited infrastructure is one of the main reasons that slow down investment projects, especially the weakness of transportation infrastructure, which makes Pepsi very concerned because it will cause many difficulties in doing business and reduce their expected return when investing in Vietnam - Vietnam's waste and emission treatment support industry has not been developed yet and cannot meet the production needs of Pepsi Question 5: The roles of direct foreign investment in Vietnam’s economic development over the past twenty years In the past 20 years of economic rejuvenation in Vietnam, FDI has played the most visible and significant role in boosting investment capital for growth From USD 2.451 billion in 2001 to USD 8,100 billion in 2007, FDI (disbursed) rose by around USD 40 billion from 1988 to the present From 13.1 percent in 1990 to 32.3 percent in 1995, FDI's contribution to total social investment capital changed substantially Due to the influence of the regional financial crisis, this share gradually dropped from 1996 to 2000 (in 2000, it accounted for 20%), and in the five years 2001-2005, it accounted for around 16 percent of total social investment capital; 2006-2007, it 26 0 Tieu luan accounted for about 16 percent When compared to other sources of investment capital, this one has the distinct benefit of being accompanied by technology transfer, export promotion, and the development of current managerial experience One of the main and breakthrough channels for improving Vietnam's technical capabilities is through FDI projects Technology transfer through FDI projects is always accompanied by operational and management personnel training and learning by doing, resulting in the formation of a team of qualified technical staff and workers The degree, as well as the skill, is pretty high According to the poll, 44 percent of FDI companies retrain their personnel to varying degrees (for about 30 percent of the recruited employees) After being hired, laborers are dispatched to overseas parent businesses for training in various key phases of advanced or special technology chains2 Until now, the majority of Vietnam's innovative technology and high-tech personnel have been focused in the FDI industry The FDI sector makes a significant and unmistakable contribution to job generation As of 2007, the FDI sector had employed over 1.2 million direct workers, the majority of whom had received training both at home and abroad Although the quantity of employment created is still minimal when compared to small and medium businesses, the "quality" of the workforce in the FDI sector is far higher Many FDI officials and workers have been and continue to be the "nuclei" for developing Vietnam's highly qualified and competent workforce Furthermore, the amount of jobs created by the FDI sector's spillover effect can be a considerable figure On the other hand, during the past 20 years, FDI has contributed significantly to State budget revenue FDI businesses paid 1.49 billion USD to the state budget in the 1996-2000 period, excluding crude oil earnings; this is 4.5 times what they contributed years previously Budget revenue in FDI firms reached more than 3.6 billion USD in the five years 2001-2005, an average increase of 24% per year The FDI-invested economic sector contributed over billion USD to the state budget in 2006 and 2007, more than double the 1996-2000 period and accounting for 83 percent of the 2001-2005 period Over the past years, Vietnam has continuously achieved positive development steps, always standing in the group of countries with fast development speed, increasing its position in the international arena; People's living standards are improved, and international competitiveness has improved 27 0 Tieu luan In recent years, the FDI sector has always grown at a faster rate than the country's overall GDP growth rate In the years 2011-2015, the GDP growth rate was around 5.9% per year, while in the years 2016-2019, it was around 6.75 percent per year Meanwhile, the FDI industry grew at an annual rate of about 8.4% in 2010 and roughly 10.6% in 2019 The GDP per capita of Vietnam is now lower than that of the other ASEAN countries In 2019, Vietnam's GDP per capita was around 2,750 USD, which is roughly 4% higher than Singapore's, 22.5 percent higher than Malaysia's, and 35.3 percent higher than Thailand's Over the course of more than 30 years of soliciting FDI, Vietnam has received an average of more than billion dollars per year, or roughly 2.2 million dollars per person Between 1988 and 2019, realized FDI accounted for around 47% of registered capital The majority of FDI capital originates from nations with medium technology but no high technology, accounting for a considerable part of total FDI capital This statistic highlights the issue: Vietnam needs a solution to attract FDI investors from wealthy countries, as it possesses cutting-edge technology, financial potential, and a vast market The efficiency of the FDI sector in the period 2011-2019 is as follows: In the period 2011-2019, the FDI sector contributed about 25.7% to Vietnam's economic growth, accounting for about 13% of GDP in 2010 and 19.6% of GDP in 2019 In the early 1990s, PepsiCo began to penetrate the Vietnamese market Right after signing the contract to penetrate the Vietnamese market, with the low price, plus the world's leading quality reputation, Pepsi immediately crushed its competitors in Vietnam and dominated the beverage market Vietnam PepsiCo Vietnam, after surpassing many other markets around the world with very proud performance indicators over the past years such as increased volume averagely 21.5% per year, market share increased by nearly 6% in the three years 2001-2004 for carbonated soft drinks and became the leading beverage company in terms of market share in Vietnam with total profit increasing rapidly over plan From 110 million USD (1998-1999) - the 28 0 Tieu luan time of restructuring with 100% capital belonging to PepsiCo, the company has acquired, merged as well as built many million-dollar factories in Can Tho, Bac Ninh, Quang Nam In the past 10 years, SPVB is estimated to have invested more than 500 million USD in Vietnam PepsiCo Vietnam's goal is to focus on the strongest products at the moment, not on the products that the business expects to develop in the future In the three years 2009 -2011, Pepsi Vietnam's growth rate reached over 20%, tripling the average growth rate of the domestic beverage industry In particular, thanks to the improvement of production and management processes, Pepsi Vietnam has reduced the cost per tank by nearly 45% In 2011, PepsiCo announced a plan to invest 250 million USD in the Vietnamese market With this money, PepsiCo will invest in a variety of projects, including opening more new factories, improving the production capacity of factories, increasing equipment at the point of sale, and strengthening the factories existing brands, and expanding product portfolio In 2010 - 2011 Pepsi also invested in building a food factory in Binh Duong and a beverage factory in Can Tho On January 5, 2010, PepsiCo Company started construction of a beverage and food factory in the Vietnam Singapore urban - industry and service area in Bac Ninh city This is PepsiCo's fifth and largest factory in Vietnam and one of the two largest in Southeast Asia According to PesiCo, the beverage and food factory in Vietnam Singapore's urban - industrial and service area in Bac Ninh city is a step to concretize a plan to invest 250 million USD in Vietnam in years from 2011 and bringing the total investment capital of the Company to 500 million USD since 1994 when PesiCo's products were first launched in Vietnam For consecutive years from 2013 to now, Suntory PepsiCo Can Tho branch has continuously received the certificate of merit for the achievement of good observance of tax policies and laws Broadly speaking, Suntory PepsiCo's company branches and factories across the country have been repeatedly commended for their serious spirit of tax payment responsibility from the Prime Minister, the General Department of Taxation, the City People's Committee and other agencies province Specifically, Quang Nam branch since its establishment in 2004 has been awarded 13 times of merit by the Prime Minister, the Ministry of Finance and the People's Committee of Quang Nam province In 2016, the company's branches in Quang Nam and Bac Ninh continued to receive certificates of merit for the good implementation of tax policies and laws At the end of 2014, Suntory PepsiCo was in the group of 20 companies in Ho Chi Minh City that received a certificate of merit from the People's 29 0 Tieu luan Committee of Ho Chi Minh City for the achievement of tax payment exceeding the target estimate In 2016, Suntory PepsiCo's contribution to Can Tho tax budget increased by more than 30% compared to 2015 and Suntory PepsiCo is proud to be one of the two typical companies honored by the Can Tho Tax Department to speak at the ceremony positive of August 10, 2017 SPVB was in the Top 100 largest corporate income taxpayers in Vietnam in 2016, 2017, 2018; Top multinational FMCG companies with the best working environment in Vietnam in 2017, 2018; Top reputable enterprises in the beverage industry in Vietnam in 2017, 2018, 2019 From the initial products when it first entered Vietnam in 1994, SPVB now has 13 famous brands such as Pepsi, Oolong Tea TEA+ Plus, Aquafina, Sting, Lipton Iced Tea The scale of the alliance is increasingly open with factories, representative offices, 2,800 official employees and thousands of indirect employees across the country 30 0 Tieu luan PART III: CONCLUSION Pepsico invests abroad directly with the aim of attracting new sources of demand and markets as well as entering markets with outstanding profitability Not only that, when direct capital investment abroad, it is also possible to access cheap raw materials and an abundant labor force there It can be said that MNCs will rely on many factors to come to an investment decision and choose a certain investment method for each market It is most obvious when looking at the revenue-related or cost-related motives of both PEPSICO and the country in which it is invested to enter the market, which factors determine the choice of method Furthermore, PEPSICO's investment in countries has important implications for developing economies and emerging markets, where companies need funding and expertise to expand their international business their economy FDI also helps develop infrastructure, and is an important driver of economic stimulation, thereby increasing income and employment opportunities To understand the importance of FDI, the benefits and disadvantages of foreign direct investment for the host country have been discussed in this report From 2016 to 2019, Suntory PepsiCo Vietnam was always in the Top 100 enterprises paying the most corporate income tax to the state budget It is worth mentioning that with the outstanding business development, the amount of corporate income tax paid by the company in 2019 has doubled compared to 2016 Suntory PepsiCo is currently ranked 57th out of 1000 contributing businesses the most corporate income tax in 2019 And 2020 is the year Vietnamese people experience many losses and impacts due to epidemics and floods Responding to the Government's call: "leaving no one behind", Suntory PepsiCo has made many positive contributions, as well as continued long-term support activities for many aspects of society Joining hands with the whole country in the fight against Covid-19, the company has empowered people in difficult circumstances and affected by the epidemic through meals under the "Million meals" program, and at the same time awarded donate medical equipment and supplies for epidemic prevention to frontline hospitals across the country The "Million Meals" program has brought nearly 540 thousand meals equivalent to billion VND to more than 37,000 homeless people, unemployed workers, poor patients, students stuck in dormitories According to the above activities of PEPSICO, the Party and State of Vietnam need to expand foreign economic activities and develop international exchanges to create potentials for international investors to help improve production and business caused by COVID-19, as well as increased awareness about the capacity of the Vietnamese market 31 0 Tieu luan PART IV: REFERENCE Advatages, disadvantages of foreign direct investment company and influence on the national situation https://www.thebalance.com/foreign-direct-investment-fdi-pros-cons-and importance-3306283 Analysis table of shareholder information and dividend situation about PEPSICO https://www.pepsico.com/investors/shareholder-information/overview Annual reports & proxy information https://www.pepsico.com/investors/financialinformation/annual-reports-and-proxy-information Covid-19’s Influence on Exchange Rates https://www.cmegroup.com/education/featuredreports/covid-19s-influence-on-exchange-rates.html Food beverage industry https://static1.vietstock.vn/edocs/Files/2021/06/01/nganh-thucpham-do-uong-trien-vong-tich-cuc_20210601115444.pdf Investment and development stages of PEPSICO Vietnam https://vi.wikipedia.org/wiki/Suntory_PepsiCo_Vi%E1%BB%87t_Nam International business strategy and organizational structure of PEPSICO in Vietnam market https://text.123docz.net/document/8098411-phan-tich-chien-luoc-kinh-doanh-quoc-te-vamo-hinh-cau-truc-to-chuc-cua-cong-ty-pepsico-tai-thi-truong-viet-nam.htm Inflation and Its Impact on the Poor in the Era of COVID-19 https://blogs.iadb.org/ideasmatter/en/inflation-and-its-impact-on-the-poor-in-the-era-of-covid-19/ Processing of formation and development of PEPSICO through each historical period https://www.suntorypepsico.vn/ 10 PepsiCo’s dividend increase highlights successful response to COVID-19 in 2020 – analysis https://www.just-drinks.com/features/pepsicos-dividend-increase-highlights-successfulresponse-to-covid-19-in-2020-analysis/ 11 Rate one year looking back https://vietstock.vn/2020/12/ty-gia-mot-nam-nhin-lai-757815658.htm 32 0 Tieu luan 12 Suntory PepsiCo Vietnam's two decades of conquering the Vietnamese market https://vnexpress.net/hai-thap-ky-chinh-phuc-thi-truong-viet-cua-suntory-pepsico-viet-nam3512846.html 13 Stable USD/VND exchange rate: Convenient for production and business https://hanoimoi.com.vn/ban-in/Tai-chinh/941798/ty-gia-usdvnd-on-dinh-thuan-loi-cho-sanxuat-kinh-doanh 14 Twenty-five years of Suntory PepsiCo's investment in Vietnam's beverage market https://vnexpress.net/25-nam-suntory-pepsico-tai-thi-truong-do-uong-viet-nam4035657.html 15 The record of tax payment achievements of Suntory Pepsico in Vietnam https://vneconomy.vn/suntory-pepsico-duoc-ghi-nhan-trong-thanh-tich-dong-thue-tai-tphcmva-dong-nai.htm 16 The role of foreign direct investment and solutions to Vietnam's economic development https://tapchitaichinh.vn/su-kien-noi-bat/vai-tro-cua-von-dau-tu-truc-tiep-nuoc-ngoai-vagiai-phap-phat-trien-kinh-te-viet-nam-333238.html 17 The impact of the coronavirus (COVID-19) crisis on development finance https://read.oecdilibrary.org/view/?ref=134_134569-xn1go1i113&title=The-impact-of-the-coronavirus(COVID-19)-crisis-on-development-finance 18 Vietnam economy 2020: a year of charge of growth https://www.gso.gov.vn/du-lieu-va-solieu-thong-ke/2021/01/kinh-te-viet-nam-2020-mot-nam-tang-truong-day-ban-linh/ PART V: MEMBER’S CONTRIBUTION Number in Class 22 36 32 30 Name Student ID Nguyễn Anh Kiệt Trần Gia Bảo Trân Huỳnh Quang Sang Hồ Tấn Phát Total 719H0393 719H0801 719H0500 719H1102 Contributio n 25% 25% 25% 25% 100% Signature 33 0 Tieu luan 34 0 Tieu luan ... 1: Historical methods of PEPSICO since it penetrated into the Vietnamese market 1.1 Historical methods of international business of PepsiCo In the early 1990s, PepsiCo began to penetrate the Vietnamese. ..TABLE OF CONTENTS PART I: INTRODUCTION PART II: BODY Question 1: Historical methods of PEPSICO since it penetrated into the Vietnamese market 1.1 Historical methods of. .. CONCLUSION Pepsico invests abroad directly with the aim of attracting new sources of demand and markets as well as entering markets with outstanding profitability Not only that, when direct capital investment