Pestle Analysis of Vietnam

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Moreover, refer to Economic Restructuring plan in 2013 to 2020, public investment, banks and state-owned enterprises are the priority to restructure. Through the plan, government aims to reduce around half numbers of state-owned enterprises in order to partial privatization.

Environment:

Until September 2016, there were 324 industrial zones in Vietnam and around 220 of them are in operation. These industrial zones and 16 economic zones have attract around USD$ 150 billion of foreign investment. Through the past ten years, the rate of manufacturing and production were increasing in a stable situation. The occupancy rate of the industrial zones in operation is over 70% at this moment. These industrial zones were through Vietnam. Especially Ho Chi Minh City, many years ago, it established Ho Chi Minh City Export Processing and Industrial Zones Authority. It already administered with more than 15 industrial zones and export processing zones. There were over 900 enterprises and around 170,000 workers. HEPZA estimated that it would rise to 20 industrial zones and export processing zones in 2020. Not only providing land, HEPZA also concern about the improvement of infrastructure such as improving warehouse, stabilize the hydroelectric power and telecommunications, especially the road connections to national highways. For an international business, a completed road connections can benefit them for raw material and goods transportation. In other way, Vietnam invested the power plants in order to improve the availability of upgraded power grids. That will decrease the problem of power outages. In the past ten years, electrical power was the one significant factor for foreign investors because power outages can disturb the work schedule. It can be a serious factor how the country be attractive.

Also, many highways was improved in recent years which connect to airport and seaport. Above the improvement which can attract more investment into industrial zones. For clothing manufacturer, they need to transport the raw materials and a completed environment for manufacturing. If the power outage always happens, the production will be affect. That will make the economic environment be unattractive.

Office Rent:

For a manufacturer, they should set up an office in order to know more the situation and economic environment in local. For Sheen master Industrial, they want to set up an office, which conclude around five people including an accountant in Vietnam. We choose VISIUP (2017) for reference website, which find out the appropriate place for opening office. We choose some examples for comparison. Their surface area was around 65m2 to 120m2 and the rent was around USD$ 1000 (HKD$ 7781) to USD$ 1200 (HKD$ 9337) per month. Although not all of them are near to city center, they are also located in Ho Chi Minh City. There are numerous businesses for manufacturing such as garment business and hanger business. It will be a good opportunity and convenience for Sheen Master Industrial to build relationship with others.

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Warehouse Rent:

According to Sheen Master Industrial, they want to set up a warehouse in Vietnam for storing materials. We looked for some website about estate agency in Vietnam such as “VISIUP” (2017). There were numerous results about the warehouse including rent, size and location. Sheen Master Industrial is a small or medium size enterprise (SME), we think a medium sized warehouse will be suitable for them. Through the research of warehouse, we selected some examples with reasonable prices and size. Their surface area was around 1000m2 to 5600m2 and the rent was around USD$ 1400 (HKD$ 10891) to USD$ 3700 (HKD$ 28783) per month. Even not all of them are close to city center; they are also located in Ho Chi Minh City.

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Cost of Hydroelectric power:

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According to economic team of Ho Chi Minh City (Taipei Economic and Cultural Office HCM, 2015), the price of electricity bill in business application are around 1185 VND (around HKD$ 0.6927) to 3991 VDN (around HKD$ 2.3329) per kW h. The price will base on the time and kilovolt what the business use. For instance, when the business use over 22 kilovolts electric power, the government will receive 2125 VDN (around HKD$1.2421), 1185 VDN (around HKD$0.6927) and 3699 VDN (around HKD$2.1622) for normal period, off peak hours’ period and peak hours’ period. Using 6 kilovolt to 22-kilovolt business is the second type; the price is 2287 VDN (around HKD$1.3368), 1347 VDN (around HKD$0.7874) and 3829 VDN (around HKD$2.2382) for normal period, off peak hours’ period and peak hours’ period. Using less than 6-kilovolt business is the last type, the price cost 2320 VDN (around HKD$1.3561), 1412 VDN (around HKD$0.8254) and 3991 VDN (around HKD$2.3329) for normal period, non-peak hours period and peak hours’ period.

Then, the water fee for business cost around 16900 VDN (around HKD$0.9879) per cubic meter.

For Sheen Master Industrial, they may open from morning to evening; the cost of hydroelectric power will not be expensive.

Cost of accountant:

Sheen Master Industrial wanted to employ an accountant. We selected some career website as reference. For instance, there are many recruitment advertisements in CAREERJET; we estimate that the average of accountant salary is around 5200 HKD to 7000 HKD. (CAREERJET.com, 2017). In recent year, education become general in Vietnam. People always can be educated. Between 2010 and 2015, Vietnam government increased the minimum wage and the average annual growth rate was 18%. Moreover, the National Wage Council announced that the minimum wage would increase around 7.3% in 2017. Especially Ho Chi Minh City, this policy will raise the new monthly wage to around USD$ 166 (around HKD$ 1292). The government estimated that the minimum wage will raise to around USD$ 213 (around HKD$ 1658). As a result, if Sheen Master Industrial wanted to employ an accountant, they have to pay a reasonable salary and the salary may increase per year.