Guided by Lecturer Nguyen Thu Huong Researched by Group 9 Full name Nguyen Thi Quynh Anh Le Thi Ngoc Anh Nguyen Thi Ha Tran Thai Hoc Nguyen Phuong Linh Do Thi Hong Nhung Ta Thi Quynh Trang Pham Thi An[.]
Guided by Lecturer Nguyen Thu Huong Researched by Group Full name Student ID Nguyen Thi Quynh Anh 21A4050032 Le Thi Ngoc Anh 21A4050049 Nguyen Thi Ha 21A4050122 Tran Thai Hoc 21A4050172 Nguyen Phuong Linh 21A4050242 Do Thi Hong Nhung 21A4050326 Ta Thi Quynh Trang 21A4050446 Pham Thi Anh Tuyet 21A4050470 Research purpose In the context that the world is facing increasingly serious air pollution, the trend and demand for electric vehicles are increasing rapidly In the not too distant future, electric cars will become a means of "dominating" roads around the world The smart electric vehicle industry is a new trend, the market is expanding and increasing every year, the competition is not too fierce, it is an opportunity for Startups in this field We did an analysis and research to evaluate the opportunity to export VinFast's electric cars to the potential US market This study provides an analysis of the business environment of the enterprise (PESTLE) and learns about the risks that VinFast may face when exporting cars to the US to help businesses come up with a development strategy to penetrate the market in the most efficient way Research subject TTO - A research firm first predicts cars will dominate the auto market in the next 10 years by prioritizing low cost, energy efficiency, and a protective environment over transmission cars Vietnam updates the trend of world automobile technology and gradually develops the dream of the automobile in the future VinFast Vietnam kicked off strongly when it launched the first electric car "Made in Vietnam " to the market and quickly attracted the attention of customers This is really a big step forward for Vietnam's auto industry in particular and Vietnam's science and technology in general - Product: Electric cars - Company: VinFast - Potential market: The US market VINFAST BACKGROUND VinFast (or VinFast LLC; abbreviated as VF), full name VinFast Manufacturing and Trading Company Limited, is a Vietnamese manufacturer of automobiles and electric motorcycles established in 2017, with The head office is located in Hai Phong city VinFast is a member of Vingroup The name of the company stands for "Việt Nam – Phong cách – An toàn – Sáng tạo – Tiên phong" (the letter Ph changes to F) VinFast has an impressive slogan of "Intense spirit of Vietnam" This slogan was born based on the aspiration that Vingroup set, which is to create a Vietnamese international brand The company showcased its first design prototypes specifically for the Vietnamese market at the 2018 Paris Motor Show in France, including a sport utility vehicle (SUV) and a sedan These models were expected to launch in September 2019 but were actually delivered on July 28 of the same year After cars, VinFast has begun to manufacture and sell electric motorcycles and will continue to sell electric cars VinFast cooperates in technology, engineering, strategic consulting support, human resource training with the largest global manufacturers of automobiles, spare parts, and heavy industrial equipment, from Europe to Asia and America VinFast has become the #1 car seller in all of their competing segments within just 21 months of launching in Vietnam and they will launch our smart Evs -Eelectric Vehicles- globally in 2021 Their thoughtful design focuses on seamless customer experience, highest safety standards, superior craftmanship, and intelligent Infotainment with lifestyle personalization The future goal of VinFast is to gradually increase the localization rate of components, towards technological and technical autonomy, besides, the company continues to invest in development , expanding the domestic market share at the same time going to international markets Awards and Regotiation - “A Star is Born" by AutoBest in 2018 - “New Manufacturer Safety Commitment” by ASEAN NCAP Grand Prix Awards in 2020 - Achieved highest NCAP ratings for each segment VINFAST BACKGROUND Produc lines Cars: - Fadil - Lux A2.0 - Lux SA2.0 - President - VFe34 eScooters - Ludo - Impes - Feliz - Klara S - Theon As mentioned above, VinFast has recently produced a line of electric cars that meet European, American and Asian standards Moreover, VinFast's goal is to build a Vietnamese car brand of international stature So with such a good line of cars VinFast should export to new markets to bring Vietnamese electric cars to the world And the potential market of this research is the US market So, why should VinFast export to the US market? The US is the most dynamic and vibrant car market in the world AAA research shows that more and more Americans are interested in electric cars and other electrified vehicles, especially among young people $174 billion is the money the Biden administration is using to make electric cars more accessible and to encourage people to use them, as part of a program to fight climate change While it may not be the key to driving America to the era of zero-emission vehicles, it is seen as a major investment to spur faster growth in demand for electric vehicles in this country Political environment a Polit ical stability The United States has hundreds of active political parties However, in the history of the United States, only Democrats and Republicans have alternated in power and governing is through fiercely competitive elections, the rest of the parties can only participate in life socio-political life to a limited extent Although political parties have always competed with each other for control of the state apparatus, they still shared a common commitment and fundamental values of society: that of the republic respect the Constitution and its principles The Constitution and laws in the United States force all political parties, including the ruling party and interest groups, to comply with the law, to implement the law, to compete, to compete for influence, and to support voters within the framework of the law the prescribed framework of the law, of the agreed "rules of the game" All violations will be handled according to the provisions of law The law provides a legal basis for political parties to fight for and control state power b Relationship with Vietnam U.S.-Vietnam people-to-people ties have flourished Twenty-five years after the establishment of bilateral relations in 1995, the United States and Vietnam have trusted partners with a friendship grounded in mutual respect U.S.-Vietnam relations have become increasingly cooperative and comprehensive, evolving into a flourishing partnership that spans political, economic, security, and people-to-people ties The United States supports a strong, prosperous, and independent Vietnam that contributes to international security; engages in mutually beneficial trade relations; and respects human rights and the rule of law Economic environment a Overview of the US economic The United States is the world’s greatest economic power, measured in terms of gross domestic product (GDP) *GDP Real GDP decreased 3.5 percent in 2020 (from the 2019 annual level to the 2020 annual level), compared with an increase of 2.2 percent in 2019 Gross Domestic Product of United States grew 1.6% in the first quarter of 2021 compared to the previous quarter This rate is -tenths of one percent higher than the figure of 1.1% published in the forth quarter of 2020 * Rate of inflation and unemployment - Inflation The annual inflation rate in the US soared to 4.2% in April of 2021 from 2.6% in March and well above market forecasts of 3.6% It is the highest reading since September of 2008, amid a surge in demand as the economy reopens, soaring commodity prices, supply constraints There is also a base effect weighing as the coronavirus pandemic dented economic activity bringing the inflation rate to 0.3% in April 2020 (The graph shows the inflation rate in the US to 2021) -Unemployment Unemployment is one of the most critical economic issues facing the country as it balances reopening with safety a year into the pandemic In April 2020, after governments shut down the economy, the unemployment rate reached 14.7%, the highest since the Great Depression The current U.S unemployment rate is 6.1% for April 2021, the Bureau of Labor Statistics (BLS) said in its monthly report, released May 7, 2021 Overall, the number of unemployed is at 9.8 million.1 The ongoing job losses show the tremendous impact of the COVID-19 pandemic on the employment situation (The graph shows the unemployment rate in the US to 2021) b Trade international The United States is the largest importer of goods and the largest exporter in the world In 2019 United States imported $2.38T, making it the number trade destination in the world In 2020, the total value of U.S trade goods amounted to 3.77 trillion U.S dollars The main import and export items are: Machinery including computers Electrical machinery, equipment Vehicles Mexico and China also feature at the top of the list of importers of U.S goods 3 Social environment a Language There is no official language of the United States, according to the U.S government While almost every language in the world is spoken in the United States, the most frequently spoken non-English languages are Spanish, Chinese, French and German Ninety percent of the U.S population speaks and understands at least some English, and most official business is conducted in English b Religion Nearly every known religion is practiced in the United States, which was founded on the basis of religious freedom About 71% of Americans identify themselves as Christians, according to information gathered by the Pew Research Center, a nonpartisan research group, in 2017 The research also found that about 23% had no religious affiliation at all and around 6% of the population is made up non-Christian religions Therefore, social factors are not a barrier to entering the US market and cultural differences not affect negotiations between the US and Vietnam Technology The United States remains the world leader in science, technology, and innovation With 11/20 of the world's largest technology corporations being American, such as Apple, Amazon, Microsoft, Alphabet and Facebook, Those are the "guides" in the 4.0 revolution The automotive industry in the United States began in the 1890s In 2017, the US invested 484 billion USD in research and development (R&D), accounting for about 25% of global R&D The speed of development of cars is getting more and more intelligent In 2021, automotive technology in the US will improve many new functions and safety benefits for users: o o o o o o Adaptive Cruise Control (ACC) Automatic Emergency Braking (AEB) Lane Departure Warning/Lane Keep Blind Spot Detection Rear view Camera Remote control parking The US is instrumental in research and funding in many fields So, it comes as no surprise that US companies also popularise electric vehicles They lead the transition from fossil fuel as a source of transportation fuel to a sustainable and environmentally friendly source, electric energy VinFast is a leader in the automobile manufacturing industry in Vietnam However, compared to the US, one of the three leading countries in automobile production technology in the world,VinFast automobile production technology is still weaker Legal environment a.Law system *Fairness in the legal system - This is considered one of the strong points of the US compared to other countries - Doing business in the US, investors will be free to transfer capital, profits, physical and financial infrastructure Unlike other countries, the US doesn't have “minimum investment required” or other rules + The procedure for registration and establishment of a business company in the US is simple + Flexible labor contract -The US attaches great importance to small and medium enterprises There are two licensing systems in the US These are Federal license and approval, State License and approval These two systems exist in parallel and govern the business activities of enterprises However, setting up a business company in the US is relatively easy and quick -> With such a legal system, VinFast intends to establish a showroom system or produce electric car factories in the future in the US, which will have many opportunities to benefit from an open and transparent investment environment transparent as well as non-discriminatory b Tax The US levies an import tariff on all imported vehicles, based on their value at the time of purchase This is charged at 0-2.4% for motorcycles, 2.5% for cars, and 25% for trucks and lorries Although Vietnam has enjoyed the MFN tax rate, some Vietnamese goods imported into the US are still subject to higher tax rates than goods of the same type imported from some other countries and regions Because the US has a free trade agreement or a unilateral preferential trade agreement with these countries and regions -> The only solution currently to overcome this difficulty is to improve production management to reduce product costs This is quite difficult for VinFast with high tax rates Environmental New research from the American Lung Association finds that more than four in 10 people – a whopping 135 million in the US – live in counties with unhealthy levels of particle or ozone pollution Emissions of air pollutants continue to play an important role in a number of air quality issues In 2020, about 70 million tons of pollution were emitted into the atmosphere in the United States Air pollution in the US has caused widespread concerns In 2020, the Public Policy Institute of California (PPIC) Survey on Californians and the Environment showed that 45% of citizens in the US consider air pollution to be a “big problem”, and 47% believe that the air quality of US is worse than it was 10 years ago Vehicles are the main source of air pollution in the United States Operational risk In addition, the risk of loss intentionally caused by an employee error is also one of the cause of operational risk, such as in the area of employment disputes Because VinFast exports expanded electric cars to the US Employees may include both Vietnamese and other countries people so it is easy to lead to conflicts at work due to cultural differences, working styles, affecting the quality of working and having a greater probability of operational risk VinFast should have appropriate salary and making strict regulations on the operation of the business to handle this risk Legal risk Viet Nam has a socialist legal system based on the civil law system while the U.S legal system is relatively complex with division into different levels, which comes from distinguishing federal law from those in states.The United States requires many regulations and has extremely strict emissions and safety standards.Each country will have its own range of consumer protection laws and institutions.Therefore VinFast has many difficulties in adjusting business laws VinFast needs to be advised on legal issues and technical requirements to both local authorities (Policy Advocacy) and firms to handle this risk Exchange rate risk Current rate: E(USD/VND)= 23.056 The U.S is one of the world's largest automotive powers.The U.S is the second country in terms of production output with an average of 20.7 vehicles shipped per minute The United States has strong bargaining power to settle currency VinFast should use derivatives of banks such as forward exchange contracts, future contracts, swap contracts, option contracts to reduce the effect of unexpected changes in foreign exchange rates to reduce this risk Financial risk After Bloomberg and Reuters reported that Vingroup is considering an initial public offering (IPO) of VinFast at the New York Stock Exchange (NYSE), Vingroup's VIC shares have skyrocketed to 6.6 %, reaching 140,700 VND/share In addition, the company must be profitable, earning at least 10 million USD in the last years Compared with a revenue and profit of VinFast in VietNam in 2019 In VietNam, VinFast Vin also faced a lot of financial difficulties End of the year 2019, VinFast had debt = 71.414 billion VND and equity = 19.459 billion VND, the debt-toequity ratio was at 3.67 With this data, the amount of corporate debt is estimated at more than 71,414 billion VND So total of capital of VinFast is = 90.873 billion VND See the ratio, the debt is too big and it causes difficulties for Vinfast Specifically, last year VinFast had a net loss of VND 5,702 billion in after-tax profit, leading to a negative profit after tax/equity (ROE) ratio of over 29% Addition, in 2019, Bloomberg once published an interview in which billionaire Pham Nhat Vuong shared that Vingroup is expected to spend about VND 18,000 billion per year to cover losses for VinFast Part of the reason comes from the cheaper car selling price than the cost Moreover, to develop the Vietnamese auto brand, Vingroup put all its efforts and accepted a loss of about 300 million dong for each car sold With this information the risk in US market is great with given the current financial situation to be able to meet the conditions of the NYSE 5 Counterparty risk According to a report by bankruptcy data site BankruptcyData.com, 46 companies with assets of at least $1 billion have filed for Chapter 11 bankruptcy by mid-August This surpasses the 38 billion-dollar companies that filed for bankruptcy during the financial crisis in 2009 and is higher than the 18 companies that filed for bankruptcy during the same period last year The Financial Times reported that 157 companies that owed at least $50 million filed for bankruptcy in the US in 2020 Thus, to be able to reduce risks, VinFast must have an overall view of the situation of businesses in the US, and must carefully study the businesses they cooperate with They should choose the business with the least chance of bankruptcy Cresit risk The share of credit cards and various debit cards in the US in the fourth quarter of 2017 also increased by 6% compared to the same period in 2017 Besides, car buy signal growth in the US in the fourth quarter of 2017 reached 3.8% to $ 1,114 billion From 2011 to now, the growth rate of car loans in the US has always been around 69% Compared to pre-2008, car credit in the US has increased by about 35% Transport risk In case that VinFast exports CBU cars directly to the US, they will have to transport them by ship With a distance of 13,224 km, the transportation also takes a lot of time, as well as may incur some risks such as: natural disaster risk, accident risk, human risk, sinking risk, etc It can be said that transporting complete units from Vietnam will have many uncertainties, and cannot transport large quantities in one train, may not meet the needs of consumers With this problem, VinFast may consider exporting auto parts and assembling them at factories in the US with American machine technology to reduce risks as well as costs and transportation time Method of entries Advantages Disadvantages Direct export - VinFast has more control over the whole export process and every step in the transaction: process and every step in the transaction Takes more time, energy and money than VinFast may be able to afford, so this can lead to serious losses’ company - Potentially higher profits since intermediaries are eliminated - Obtain informations about trade in US market, needs and requirements of customers to sastify them effectively and have a closer relationship with US customers Indirect export doesn't need to assume all risks lose control about promotion, associated with exporting and shipment, and distribution as selling the produc well as other costs incurred Those activities will be carried -> For Vinfast- a company with out by an intermediary so the many restrictions on experience control is transferred to the and entering the US market, intermediary organization indirect export is an option quite suitable VinFast can quickly safely penetrate the US market through intermediaries such as export management companies, export trading houses, confirming houses, or buying agents Joint venture - Reduce entry risks to the US - Needs to be carefully market by using the local considered to avoid causing partner conflicts: management styles, business cultures, and - Easily access to US market and distribution networks operational styles differences - The local partner has a greater understanding of the legal framework and characteristics of the business environment as well as the business culture of the US market - > Leading to operational risks and counterparty risks of ownership or benefit among the partners - Can access new knowledge and expertise, including specialized staff and access to greater resources, for example, technology and finance Licensing Franchising and Reduce costs and risks to access potential markets, tariffs, quickly expand the market and increase brand recognition - Less control over this product, depend on partners, and it can affect the reputation of the brand in the market - To become licensees or franchisees, the company must have a valuable brand, that VinFast doesn't have in the international market and the US market -> Currently, when the trade between the two economies of the US and Vietnam has improved, bringing Vietnamese brands to the world market is not as difficult as before, but still a lot of risks and inadequacies Especially for cars, the US market is a strongly competitive car market, with long-standing and famous car manufacturers around the world Therefore, the joint venture is the best choice for this new electric car line of VinFast in the US market At the same time, VinFast has established an R&D department in the US, so entering this market is no longer difficult for VinFast This is a solid foundation for VinFast to reach its global vision and become a popular hightech electric vehicle company in the world, as well as develop a green transport ecosystem and reduce emissions This research article has shown that it is entirely possible for VinFast to want its electric car products to be available in the US market With the current situation of environmental pollution, especially air pollution, VinFast's electric cars may be a popular product line To minimize risks, costs, and maximize profits, VInFast should choose a joint venture method with American businesses However, it is also necessary to choose businesses for joint ventures carefully, otherwise VinFast will beat its own feet with stones 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The US is the... The current U.S unemployment rate is 6.1% for April 2021, the Bureau of Labor Statistics (BLS) said in its monthly report, released May 7, 2021 Overall, the number of unemployed is at 9.8 million.1... potential markets, tariffs, quickly expand the market and increase brand recognition - Less control over this product, depend on partners, and it can affect the reputation of the brand in the market