final exam course international business management vifast

4 Question 1: Based on classical or modern trade theories, students are required to indicate whether to support or oppose Vietnamese government’s support for local car industry.... Quest

MISTRY OF FINANCE UNIVERSITY OF FINANCE —- MARKETING

TRƯỜNG ĐẠI HỌC TÀI CHÍNH - MARKETING

FINAL EXAM Course: INTERNATIONAL BUSINESS MANAGEMENT

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Lecturer: Ph.D Tran The Nam Course ID: 2411910018901 Class: IP_22DMAO1

TABLE OF CONTENTS

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REFERENCES

TABLE OF TABLES

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TABLE OF FIGURES Figure I: South Korea GDP Amnual Growth Rate (mm %) 2 2 2 2n se 12 Figure 2: South Korea aging populafiow - c 2c 12221122112 11121115 52111112128 x key 13 Figure 3: Korea’s public charging stat10n 5c 2 211211111112 1122 511551112115 211 r2 14 FIlgure 4: Social Implications of electric veh1eles 1n Korea - - - +: + S+cs++sx+sss2 15 Figure 5: South Korea’s passenger car sales from 2019 to 2027E, by segment 19 Figure 6: Top 10 vehicle brands based on sales in South Korea in June 2023 23

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Question 1: Based on classical or modern trade theories, students are required to indicate whether to support or oppose Vietnamese government’s support for local car industry Based on modern trade theories, we can provide several arguments to support the Vietnamese government's support for the local car industry:

Comparative Advantage: According to the theory of comparative advantage, countries should specialize in producing goods or services in which they have a comparative advantage By supporting the local car industry, the Vietnamese government can capitalize on the country's available resources, skilled labor, and potential for technological advancements in the automotive sector, thus fostering a competitive advantage in car manufacturing

Economic Diversification: Supporting the local car industry can contribute to economic diversification, which is beneficial for long-term economic development

By expanding into the automotive sector, Vietnam can reduce its reliance on traditional industries and create a more balanced and resilient economy This diversification can enhance economic stability and create new employment opportunities

Technology Transfer and Knowledge Spillovers: The government's support for the local car industry can facilitate technology transfer and knowledge spillovers Collaborations with foreign automakers or investments in research and development can help transfer advanced technologies, engineering expertise, and managerial know-how to the local industry This can boost technological capabilities, promote innovation, and create a favorable environment for the development of a knowledge- based economy

Export Promotion: Developing a competitive domestic car industry can support export promotion efforts By producing cars domestically, Vietnam can tap into international markets and generate export revenues This can help improve the trade balance, increase foreign exchange earnings, and enhance the country's overall export competitiveness

Job Creation and Skills Development: Supporting the local car industry can lead to job creation and skills development The automotive sector is labor-intensive and requires a diverse range of skills, from manufacturing and engineering to sales and after-sales services By investing in the local car industry, the government can

create employment opportunities and foster skill development, contributing to human capital formation and poverty reduction

However, it is important to consider the potential challenges and risks associated with government support for the car industry, such as the need for effective governance, avoiding excessive protectionism, and ensuring a level playing field for all market participants Additionally, careful evaluation and monitoring of the industry's development and impact on the overall economy are crucial to ensure sustainable growth and competitiveness

Question 2: VINFAST is VIETNAMESE successful company The company wants to expand its business in ASIAN countries Students are required to analyze the potential of an

ASIANCOUNTRY with PESTLE model and then, build the international business strategy

in three years (2025-2027) that VINFAST should apply to conquer successfully

1

2

EXECUTIVE SUMMARY

Vinfast, a well-known electric vehicle (EV) manufacturer in Vietnam, is making

a calculated move into the Korean market with the goal of becoming well-known, capturing a sizeable portion of the market, and adjusting to local tastes in three years (2025-2027) Vinfast takes a licensing strategy after seemg how fiercely competitive the Korean EV industry is To take use of local resources and experience, Vinfast partners with a respectable Korean firm With this partnership, Vinfast can expand its market share and rapidly build its brand In order to make sure that its products appeal to the target market and are accepted by consumers, Vinfast will also collaborate closely with the partner to modify its cars to suit Korean customer tastes and legal requirements

INTRODUCTION

2.1 Brief overview of Vinfast Company

Vingroup is one of the biggest private economic groups in Asia, and VinFast is

a member company of Vingroup The top car manufacturer in Vietnam is VinFast VinFast Manufacturing and Trading Company Limited (VinFast LLC), a division of Vingroup under the direction of Mr Pham Nhat Vuong, is the owner of this brand

Picture 1: Owner of Vinfast company — Mr Pham Nhat Vuong

Vingroup, the biggest private firm in Vietnam, is supporting VinFast, a start-up

in the automotive industry Thus, we are free to design automobiles in a bold and creative way Producing top-notch cars with Vietnamese features was our initial goal

2.2 Brief overview of South Korea

South Korea's EV market is booming, driven by government support, rising consumer demand, technological advancements, a well-developed charging infrastructure, and intense competition The government's generous subsidies, tax breaks, and charging infrastructure development incentivize both consumers and manufacturers Rising environmental awareness and increasing fuel costs have driven Korean consumers towards EVs, while the growing desire for eco-friendly transportation options and the economic benefits of EVs are propelling market demand Korean companies are at the forefront of EV technology development, producing high-quality and innovative vehicles

that are competitive in the global market Korea boasts a well-developed charging infrastructure, with over 170,000 public charging stations nationwide, alleviating range anxiety and fostering greater confidence in EV adoption Major global and domestic automakers are vying for a share of the Korean EV market, leading to a diverse range of models and competitive pricmg, driving innovation and affordability The Korean EV market is expected to continue its growth trajectory, with projections indicating a potential 50% market share by 2030 This growth will be fueled by continued government support, rising consumer demand, technological advancements, and a robust charging infrastructure Leading EV manufacturers in Korea include Hyundai, Kia, Genesis, and Tesla, offering a diverse range of models to cater to the evolving needs of Korean consumers Overall, Korea's EV market presents a dynamic and promising landscape, poised for continued growth and innovation

3 PESTLE ANALYSIS

3.1 Political Environment

The political philosophy of South Korea is best described as a capitalist democracy Significant economic progress has been facilitated by this system, which is defined by a multi-party system, a mixed-market economy with a majority of private capitalism, the separation of powers, and the ability of individuals to participate in politics

South Korea is now going through a period of relative political stability The liberal Democratic Party (DP) received 47.83% of the vote in the 2022 presidential election, while the conservative People Power Party (PPP) received 48.56% This close margin demonstrates the stark political division that exists throughout the nation Still, the administration has moved to quell worker unrest and other challenges

The outlook of the South Korean administration about global commerce and industry is optimistic This nation is party to many free trade agreements (FTAs) with various countries and regions, including Vietnam, Japan, and the European

Union.These collaborations have brought in a substantial amount of foreign direct investment (FDI), which is expected to exceed $20.8 billion by the end of 2020 in South Korea

From Comprehensive Partners in 2001 to Strategic Partners in 2009 to Comprehensive Strategic Partners in 2022, the political relationship between South Korea and Vietnam has developed gradually The two countries have pledged to enhance their economic cooperation by implementing the Vietnam-Korea Free Trade Agreement (VKFTA) and electronic origin data interchange systems effectively They hope to achieve a bilateral trade turnover of USD 100 billion and USD 150 billion by

2030, respectively

Picture 3: Vietnam and South Korea Comprehensive Partner

3.2 Economic Environment

3.2.1 Economic Growth and Income Growth

The forecast for 2024 indicates a projected annual economic growth of 2.2%, surpassing the previous year's outlook of 1.4% This growth is attributed to the recovery of global trade and the semiconductor industries However, the expansion

of private consumption is expected to face limitations due to persistent high inflation and increases in interest rates Additionally, the construction investment sector is anticipated to encounter difficulties

Regarding employment, the economy is estimated to generate approximately 230,000 new jobs in 2024 This growth is primarily driven by the normalization of in-person service jobs, which experienced a significant surge in the previous year Furthermore, the employment rate is expected to continue its upward trajectory

8.00 % 6.00 % 4.00 %

Jan 2021 Jul 2021 Jan 2022 Jul 2022 Jan 2023 Jul 2023 Jan 2024

Figure 1: South Korea GDP Annual Growth Rate (in %)

The annual consumer price increase is expected to significantly decelerate to around 2.6% compared to last year's 3.6%, primarily due to stable international commodity prices; however, it is forecasted to sustain around 3% throughout the first half of the year Korea is also in the group of high-income developed countries in the world with an average GDP per capita in 2023 reaching about 34.65 USD/person With this income level, Korean consumers have a relatively high ability to pay for cars and EVs, which is an opportunity for VinFast To add, the global automotive industry is expected to register a CAGR of 4.5 percent and grow in terms of 205 million additional units by 2028 For the automotive industry, the trends with respect

to industry growth are favorable

3.2.2 Partnerships of strategic cooperation Vietnam — Korea

Korea continues to maintain its position as Korea is Vietnam’s third largest trading partner; Vietnam is Korea’s largest trading partner in ASEAN

According to the Korea International Trade Association (KITA) data shows that trade turnover between Korea and Vietnam in 2023 will reach 79.43 billion USD, of

which exports to Vietnam will decrease by 12.3% compared to 2022 to 53.49 billion USD

3.3 Social Environment

The social fabric of South Korea is a complex tapestry made up of individuality and collectivism, modernization and tradition, and a rapidly aging population But major shifts brought about by Western influences have resulted in a culture that is increasingly individualistic and consumer-focused, especially among younger generations

The Aging Population: Due to its increasingly aging population, South Korea has a demographic dilemma By 2030, there will be 25.7% of the population 65 and older, compared to the median age of 44.4 in 2023

Korea's Statistics

* under |5 years old

¢ from |5 - 64 years olf

¢ over 64 years old

Figure 2: South Korea aging population Perceptions of Electric cars: Electric cars (EVs) are typically seen favorably by South Koreans According to a Korea Automobile Manufacturers Association poll conducted

in 2023, 72% of participants said they would be interested in buying an electric vehicle (EV), with cheaper running costs and environmental concerns serving as primary drivers

For some customers, though, there are still obstacles to overcome, mcluding worries about battery life, charging infrastructure, and cost

Demand for Electric Vehicles: At the moment, there is a sizable demand for EVs in South Korea With more than 170,000 public charging stations across the country, the Korean government has made large expenditures in developing the infrastructure for

charging in 2023 This allays range anxiety, which is a big worry for prospective EV purchasers

EV Infrastructure:

South Korea Leads the Charge

Number of public charging stations per

1,000 plug-in electric passenger cars in 2022"

Figure 4: Social implications of electric vehicles in Korea

3.4Legal Environment

3.4.1 Legal System

Korea's legal framework aligns with the continental European tradition, known

as the Civil Law system, where written laws hold primary authority Specifically, only laws passed by the National Assembly or authorized bodies are deemed legally binding However, the Korean legal system is notably influenced by American law in its substance, resulting in a hybrid legal system blending aspects of both traditions (Cổng Thông Tìn Điện Tử - Tòa Án Nhân Dân Tối Cao, n.d.)

Certainty: Because civil laws are clearly | ® Complexity of codes: Civil law codes can defined and interpreted by the legislature,

there is a high level of legal certainty

associated with them When making legal

choices, this consistency may give people

and companies stability and trust

Clarity: The codified system of civil law

offers precise rules for dealing with

contracts, property rights, and family law

issues People can better grasp their rights

be quite detailed and intricate, making it difficult for those who aren't lawyers to comprehend and appropriately apply the

law Because of this intricacy, seeking

advice from legal experts may become necessary

Inflexibility: It might be difficult to quickly

handle newly developing legal challenges

or social developments due to the long and and responsibilities in different legal bureaucratic process of revising civil law circumstances because of this clarity tules Civil law regimes prioritize Consistency: Civil law systems aim to apply legislative law making above judicial

and interpret the law consistently Legal

decisions in comparable instances can be

made more consistently by adhering to

codified laws and court precedent

interpretation, which may restrict judges’

ability to shape legal doctrine and adapt to social demands

3.4.2 Legal Precedent

There is considerable debate surrounding the concept of precedent, yet in practice, the judgments of the Supreme Court wield significant influence as precedents, carrying binding authority In Korean legal practice, precedent is synonymous with judgments issued by the Supreme Court Even if a lower court's judgment is published in the "Official Gazette of Judgments of the Courts of First Instance and Appeal,” it does not attain the status of precedent unless it onginates from the Supreme Court However, a notable constraint exists: certain judgments rendered by lower courts, which may have garnered widespread agreement and lacked appeals or protests, cannot serve as precedents simply because they were not issued by a higher court

In contrast, Vietnam's legal system, governed by the Law on Organization of the People's Courts and Resolution No 03, exhibits a different approach stemming from the trial practices of the Courts of First Instance A decision that aligns with the law,

local customs, traditions, and prevailing social norms, and is uncontested and endorsed by the majority in the locality, is eligible for recognition as a precedent It must undergo a process of dissemination to be selected and proposed as a precedent, enabling other localities to apply it in similar cases within their jurisdictions 3.4.3 Acknowledge each other law

Enabling International Driver's License Recognition: Vietnam and Korea have recently exchanged an agreement for mutual recognition of international driving licenses According to this agreement, each party will acknowledge the international driving permit issued by the other party for specified classes, valid for up to one year from the date of entry into the other party's territory, provided that the licenses are still valid and presented alongside the respective national driving license Additionally, the agreement outlines responsibilities and obligations of drivers, as well as the rights and duties of competent authorities in handling violations, along with cooperation mechanisms between the two countries' competent authorities in implementing the agreement (Cong Nhdn Lan Nhau Giấy Phép Lái Xe Quốc Tế

Gitta Viét Nam va Han Quốc, n.d.)

Deputy Prime Minister Tran Luu Quang has issued Decision No 163/QD-TTg

on February 6, 2024, approving the implementation plan for the agreement between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Korea on mutual recognition of international driving licenses The purpose of this plan is to effectively implement the agreement in accordance with Vietnam's constitutional principles and laws, enhance coordination mechanisms, and clearly define the responsibilities of relevant ministries and departments

3.4.4 Free Trade Agreement

ASEAN and Korea signed the Free Trade Agreement on Comprehensive Economic Cooperation in 2005 Based on the Free Trade Agreement, the two sides continued to sign four other Agreements on Trade in Goods (effective from June 2007) Agreement on Trade in Services (effective from May 2009), Agreement on

Investment (effective from June 2009) to form the ASEAN - Korea Free Trade Area (ITWTO VCCI - Việt Nam - Hàn Quoc (VKFTA), n.d.)

Vietnam - Korea Free Trade Agreement (VKFTA) was signed on May 5, 2015 and officially took effect from December 20, 2015 Compared to the ASEAN - Korea FTA (AKFTA), in the VKFTA, Vietnam and Korea give more incentives to each other in the fields of goods, services and investment However, VKFTA does not replace AKFTA, but both FTAs are in effect and businesses can choose which FTA

is more beneficial to use (TTWTO VCCI - Việt Nam - Hàn Quốc (VKF14) n.d.)

In addition to the ASEAN-Korea and Vietnam-Korea Free Trade Agreements that have brought great benefits to Vietnam in recent years, the Regional Comprehensive Economic Partnership (RCEP) was recently signed on November 15,

2020 between Asia-Pacific countries that opens up new opportunities for Vietnam and its partners The RCEP Agreement officially took effect from January 1, 2022 with Vietnam and took effect with Korea on February 1, 2022 The agreement aims

to reduce tariffs and establish common rules in areas within the RCEP geographical area, creating significant trade facilitation for member countries The signing of the agreement has great significance in promoting Vietnamese exports to the Korean market in general, as well as the dairy industry in particular (77W7TO VCCI - (Tin Tức) Hàn Quốc Thúc Đầy Thương Mại Với ASEAN qua FTA va RCEP, n.4.) KVFTA offers significant benefits for the car industry by fostering trade, investment, technology transfer, and collaboration between Korea and Vietnam, ultimately driving growth and competitiveness in the automotive sector

3.4.5 Tax incentive & Korea export market

Regarding Korea's commitment to reduce import taxes for Vietnam, Korea has completed the elimination of import taxes as committed in the AKFTA Agreement since 2010 Accordingly, up to now, 90.9% of Vietnamese goods when exported to Korea will enjoy a tax rate of 0% if there is a certificate of ongin Korean product groups do not commit or only cut import taxes at the end of the roadmap (2021)