FDI_in_Vietnam

Foreign Direct Investment in Vietnam A Case Study of Unilever 2013 THESIS WORK Dinh Thi Thu Thuy 2013 2013 Foreign Direct Investment in Vietnam A Case Study of Unilever Corvinus University of Budapest Faculty of Business Administration International Business Program Foreign Direct Investment in Vietnam A Case Study of Unilever Dinh Thi Thu Thuy BA in International Business 2013 Thesis supervisor: Czakó Erzsébet 2013 Foreign Direct Investment in Vietnam A Case Study of Unilever Statement about the Originality of the Thesis Work Name: DINH THI THU THUY E-mail address: thu_thuy_270289@yahoo.com NEPTUN code: I1I9XF Title of the Thesis Work: Foreign Direct Investment in Vietnam A Case Study of Unilever Thesis Work consultant/ supervisor’s name: Czakó Erzsébet I, DINH THI THU THUY, in full knowledge of my liability, hereby declare that all the texts, figures and tables in this Thesis Work are based solely on my own individual work and is not based on work published in another document or by another contributor Where I have drawn on the work, ideas and results of others, this has been appropriately acknowledged in the thesis in the form of citation and references as set out in the Guidance for Preparing Thesis Work and/or the Falculty of Business Administration’s Addendum to the Study and Exam regulations I declare, furthermore, that the thesis has not been presented to any other institution before I wish to defend my Thesis Work in the thesis defence period of the spring semester of the 2012/2013 academic year Budapest, 25th April, 2013 Dinh Thi Thu Thuy 2013 Foreign Direct Investment in Vietnam A Case Study of Unilever Statement about the Publicity of the Thesis Work Name: DINH THI THU THUY Bachelor program, name of the program: International Business I hereby make the following decision about the publicity of the electronic version (pdf document, reading, saving and printing allowed, processing not allowed) of my Thesis Work I allow (please underline your choice): FULL PUBLICITY The Thesis Work can be downloaded from the library’s website from Thesis Works/ TDK data base (http://szd.lib.uni-corvinus.hu/), from everywhere on the internet in the form of a pdf document LIMITED PUBLICITY The Thesis Work can be downloaded from the Library’s website from Thesis Works / TDK database (http://szd.lib.uni-corvinus.hu/), exclusively from the area of the Corvinus University of Budapest in the form of a pdf document NOT PUBLIC The Thesis Work cannot be included in the register of the Central Library of Corvinus University of Budapest in any form (neither bibliographic description nor partial or full text) Budapest, 25th April, 2013 Dinh Thi Thu Thuy Foreign Direct Investment in Vietnam A Case Study of Unilever 2013 Table of Contents I Introduction .1 Why did I choose this topic? Specific tasks and structure of the thesis II Methodological background III Theoretical background of foreign direct investment FDI definition Types of FDI OLI framework .7 Gravity Model The global FDI trend Foreign direct investment in emerging countries 10 6.1 Emerging countries 11 6.2 FDI inflows shifts to developing and transaction countries .12 6.3 Summary 14 IV Foreign direct investment in Vietnam 15 The scale of FDI projects 16 Structure of FDI .18 2.1 Home countries of FDI inward stock 18 2.2 Distribution by sector .19 2.3 Geographical distribution .20 Conclusion .22 Foreign Direct Investment in Vietnam A Case Study of Unilever 2013 V The case of Unilever Vietnam 23 Reason to select Unilever for the case 23 The Unilever Group 24 2.1 Historical Overview 24 2.2 Brands .25 2.3 Human resource development 25 2.4 Strategy concerning emerging market 26 2.5 Comments 26 Unilever Vietnam 27 3.1 Entry mode 27 3.2 Location 29 3.3 Strategies in Vietnam .30 3.4 Lessons learnt so far .35 VI Conclusion .37 Appendices 39 Share of developing and transition countries in global FDI inward stocks .39 Questionaires 40 References .41 Foreign Direct Investment in Vietnam A Case Study of Unilever List of abbreviations CIEM Central Institute for Economic Management FDI Foreign Direct Investment GSO General Statistics Office HCM Ho Chi Minh City M&As Mergers and Acquisitions MNE Multinational Enterprise MSCI Morgan Stanley Capital International Unilever The Unilever Group UNV Unilever Vietnam UNCTAD United Nations Conference on Trade and Development WIR World Investment Report 2013 Foreign Direct Investment in Vietnam A Case Study of Unilever 2013 List of Figures Figure 1: Global FDI flows 2002-2011, and projection for 2012-2014 (US$ millions) Figure 2: Global FDI inflows and international M&As 2000-2010 Figure 3: M&A and Greenfield FDI projects 2007-2011 (US$ millions) 10 Figure 4: Share of developing and transition countries in global FDI inflows .13 Figure 5: FDI inward stocks in Vietnam 1990-2011 16 Figure 6: Top ten foreign investors in Vietnam 18 Figure 7: FDI inward stock by sector in 2012 19 Figure 8: FDI inward stock by region 2012 20 Figure 9: Turnover of Unilever 2004-2012 24 Figure 10: Brand preference in consumer goods market .31 Figure 11: Factors affecting the decision of purchasing Unilever’s products 32 Figure 12: Degree of Unilever’s support to its distribution network .34 Figure 13: Revenue change of Unilever’s partners after collaboration (%) 34 Figure 14: Share of developing and transition countries in global FDI inward stocks 39 List of Tables Table 1: Unilever’s entry mode in Vietnam 28 Table 2: Annual turnover of Unilever in Vietnam (US$ millions) 35 Table 3: The comparison between UNV and Unilever 35 Foreign Direct Investment in Vietnam A Case Study of Unilever I 2013 Introduction Why did I choose this topic? Development, risk, reform, instability and expectation, those are probably the most common words in economic stories of the United States, European and Asian countries nowadays Therefore, during this day and age, the question is whether or not there is a golden address for investors, who prefer the high risk- high reward approach in their investment decisions Different economists might have different answers to this question Coming from Vietnam- a developing country in Southeast Asia, I believe that my country is still a doubting and challenging destination among those answers For many foreign investors, Vietnam is not widely recognized People often perceive Vietnam as a little China that fought against the United States in the war years ago That personal thinking fascinates me to carry out a study of the foreign direct investment (FDI) in Vietnam, in order to figure out at which level of attractiveness Vietnam is in the global FDI framework and the FDI context of countries with an equivalent economic development level More importantly, another reason why I am interested in the FDI in Vietnam is the current attention of the world on emerging countries In fact, Vietnam is often classified by many international organizations as an emerging country Recent studies underline scholars’ efforts to approach the business environment and find out how investors access emerging markets However, a common formula cannot fit all countries It is important to have a separate process to analyze the investment environment in each country Focusing only on the FDI in Vietnam, my research paper is expected to analyze the characteristics of home countries of FDI in Vietnam, the sectors and regional locations in which Vietnam has the potential to attract FDI, and the interpretations behind that potential Finally, after my university studies, especially the International Entrepreneurship course, I am ambitious to answer at least part of the question of how investors should invest in the Vietnamese market That purpose will be pursued through the analysis of a particular FDI strategy of an outstanding multinational enterprise (MNE) among many FDI models that have been successfully applied in Vietnam right now Foreign Direct Investment in Vietnam A Case Study of Unilever 2013 Specific tasks and structure of the thesis With the aim to achieve the stated purposes, the paper will come across certain tasks as mentioned in the following bullet points This approach is expected to provide a close view on the FDI in Vietnam step by step, from a broad literature by international economists to a narrow literature by Vietnamese experts  A theoretical background of FDI  An overview of global FDI trend and FDI movement into emerging countries  Characteristics of FDI in Vietnam  The case study of Unilever Vietnam as a particular example for FDI strategies in Vietnam As a result, the thesis contains eight chapters, three of which are the main chapters in the body of the paper In particular:  Introduction  Methodological background These two chapters are the summary of the author’s motivations and ambitions in writing about FDI in Vietnam, a clarification of how the paper is structured, and the credibility of the paper’s findings with an explanation of the paper’s methodologies  Theoretical review of foreign direct investment  Foreign direct investment in Vietnam  The case study of Unilever Vietnam By combining the theoretical framework and the analysis of practical trends, the above three chapters are the body of the thesis and are dedicated to corresponding with the stated tasks, providing a clear picture of the FDI and MNEs’ operation in Vietnam  Conclusion The conclusion summarizes main findings about FDI in Vietnam in an international context, followed by recommendations for MNEs which intend to access Vietnam Finally, some limitations of the paper will be covered at the end of the paper  Appendices and References