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International Financial Management

The first assignment about Foreign Investment in Vietnam

Canon Vietnam had been established on 11th April, 2001. It started operation from May

2002 to now. Canon Vietnam has the investment under the form - EPE 100% FDI with

investment capital 306 million USD and legal capital 94 million USD. Canon Vietnam now

has 3 factories which are Thang Long factory (Dong Anh, Hanoi) , Que Vo factory and Tien

Son factory (both in Tien Du, Bac Ninh Province). The headquarters is at Thang Long factory.

With 3 factories, Canon runs a divisional departmentalization which is illustrated as the

following chart:

Canon wants to focus on the Asian market which has most of the developing countries. In

general, Asian countries have been considered that they have the prominent development

of technology, the hardship and creativeness of employees who require low salaries as well

as the stable politics, which makes a good condition for Canon to improve and diversify its

products, gain the achievements as well as expand its impact on foreign markets.

Why did Canon choose Vietnam to open branches and invest? There are some main

reasons:

First, the convenience of geographical area is one of the reasons Canon choose to develop

in Vietnam. Vietnam has the near distance with Japan, 3 directions adjacent to other Asian

countries and a long coastline which is easy to penetrate.

Canon Vietnam

Managing Director

Thang Long Industial Park

Specialised in Ink Jet Printers

Que Vo Industrial Park

Specialised in New laser printer

Tien Son Industrial Park

Secialised in large ink jet printers

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Second, Vietnam has a stable political environment. Vietnam is a peaceful country (ranking

39 out of 144 in 2009) which has a very stable political environment, low risk of military

conflicts. Therefore, political stability is one of the main factors that have helped Vietnam

pursue its economic development policy. Besides, the Government encourages developing

the technical industry and willing facilitating to this industry.

Third, Vietnam economy is in development stage, if Canon invests in Vietnam market, it

may easily spread and introduce its products to domestic customers to enhance its

reputation and raise profit. Vietnam has gained considerable economic development for

over the last 20 years. For example, since 1990, Vietnam’s economy has made amazing

progress with annual average growth of 7.5 percent. Even when many Southeast Asian

countries were damaged by the Asian economic crisis in 1997-1998, the country’s economy

still kept growing. In 1999 its economic growth rate reached 4.5 percent while other

Southeast Asian countries, such as Thailand and Indonesia fell into crisis. The growth rate

can be attributed to the consistent economic policy of integrating gradually into the global

economy in line with the situation in Vietnam.

Fourth, the nature of Vietnam people is industrious and quick-witted, which can contribute

to the productivity of Canon and spring up more new ideas to diversify products and

shorten time to produce one unit of products. On average around four in ten employees

are aged between 16 – 25, meaning that significant proportion of the Vietnamese

workforce can be classified as being “young”. Levels of professional and technical training

amongst staff tended to be polarized between low and high with more than half having

little or no training and more than quarter being University graduates. The average salary

of an employee in a recent survey is 2.4 million dong per month which is considerably lower

than in China at the moment.

Fifth, the technology of Vietnam is still being improved and needs to apply foreign

technology, so Canon may quickly penetrate to Vietnam Production line and make chance

to widespread the high quality products to Vietnam market. Young people expect the global

economic exchange. The more percentage of people quickly access to the high quality and

advanced technology that Canon brings to Vietnam, the higher level of demand to Canon

products.

Furthermore, on July 23th, 2012, Canon Asia Marketing Group and Canon Singapore Pte.

Ltd. announced the establishment of Canon Marketing Vietnam Company Limited (CMV) -

a new Canon marketing company in Ho Chi Minh City, Vietnam. This new company was

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formed with the purpose of building systems of import, distribution, sales and service for

Canon products in Vietnam.

In recent years, Vietnam, after joining the World Trade Organization (WTO) in January

2007, has made important progress in the transition to the economy market and

integration into the international economy. In particular, through the open policy of

economy and government policies to expand domestic demand, Vietnam has achieved

economic growth of around 6% during the past few years, which has created an urgent

need for Canon to set up a strategic marketing system in this country. In order to meet the

market, Canon has officially established Canon Marketing Company Limited Vietnam in Ho

Chi Minh City, Vietnam.

Canon has established the representative offices in Ho Chi Minh City and Hanoi in 2002 and

2003. In addition, except for the existing products, through Canon Marketing Vietnam

Company Limited Ltd. established, Canon also focus on the expansion of the market in the

field of industrial printing products and camera and specialized camcorder in the field of

cinema.

Canon’s new marketing subsidiary, Canon Marketing Vietnam Company Limited (CMV) with

investment of $3 million from Canon Singapore, planned to start operations in August, 2012

with around 40 employees.

The new company aims to create an import, distribution, sales and services system for

Canon products in Vietnam. It will support Le Bao Minh - Canon’s authorized dealer in

Vietnam, and other dealers in areas of sales, marketing and services. “We regard the Asia

market as most important and Vietnam is definitely one of our most important markets as

it is quickly becoming one of leading economies in the region. This is due to its strong

growth, a young and hardworking workforce and the government’s commitment to

develop country further,” said by Hideki Ozawa, president of Canon Asia Marketing Group.