The impact of globalization on Vietnamese companies
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Published: Mon, 5 Dec 2016
Currently our company is trading in medical equipment for the world famous company. Therefore, we have been conducting global business. Why global business? Because, as global business includes transactions take place outside the country, with different forms depending on the objectives and benefits of each individual, company or organization. When conducting global business, our companies (or other companies in Vietnam) a lot of benefits such as economic growth and technological innovation. Globalization is an inevitable and objective, in accordance with rules developed economy. However, in addition, globalization also has its limitations and challenges for companies in Vietnam such as: Starting low on economy, infrastructure and qualified people management, labor qualifications activities, economic divergence between regions, the area makes the process of globalization is limited.
Challenge of culture, national identity, traditional values, economic, social, social evils….
Currently, the U.S. is just in the early stages of the process of international integration. But with deeper integration process, the company will have to cope with these complicated. Therefore, Vietnam needs to thinking explicitly manage the economy plays – all trying to produce what you need – was outdated, to switch to modern management methods and efficiency of an economy open market only produce what they produce most efficiently. However, it should be emphasized is that the opportunities that globalization offers for different countries, different ethnic groups is not always the same. Reviews can loosely, the developed countries more economically; more affluent will be sharing many more opportunities to poor countries. That also means that globalization will bring poor countries, many challenges developing countries than in rich countries.
Question II: Answer:
World is facing the recession, declining energy demand in major markets like U.S. and Europe. Besides energy, the demand for essential products also declined as the economy is falling into hardship. Economic downturn of the world has impacted companies in Vietnam. Exports declined to make the export products of Vietnam will be less, but so will affect GDP (down).
The cooperation and development between Vietnam and foreign partners – which is influenced by the crisis – will be interrupted or stalled by the partners in financial difficulty. This impact of investment are projects or in long-term development of Vietnam.
Smokeless industry is also inevitably affected. Water degradation, are in crisis, people will limit consumption and limit travel. Besides, the economic contracts signed with foreign partners can be stalled and this contract will not be signed. This is really causing losses to both business and bad impact on the development of Vietnam in the long run.
In Vietnam there are many multi-national companies such as Toyota, Samsung … This is the company that the taxes they contribute significantly to GDP (or the government’s budget revenues). But these companies have subsidiaries in other countries, or parent companies in crisis countries have their branches in Vietnam of its children will also be affected by bad direction so the ability to pay taxes also do not declined as effective as before. Stock markets in the U.S. and Asia have come down Vietnam’s stock price tumbled severely.
World oil prices fell sharply in recent times so that government revenue through the export of crude oil is also reduced by.
The budget decrease is very much impact on the economy because the government will have less money to spend or invest in developing public services. This has indirectly has direct impact on people’s lives.
In crisis and economic recession, besides difficulties as well as new opportunities for businesses of Vietnam is on the global business market. The import businesses will bring many benefits, because these goods from outside will be lower than the previous price (dollar or other currencies decline). Gasoline prices lead to lower commodity prices will tend to decrease, thereby stimulating consumption. More consumers will stimulate economic growth. Learn from the experiences of other countries, to companies that steps to avoid falling into the car wound down by the water crisis or falling into a recession now.
Question III: Answer:
As we know, trade barriers are non-tariff measures. That is the nature of the tools of administrative and economic levers of government involvement or the regulations on technical standards that affect the export and import activities.
The impact of tariffs on imported goods is simply increasing the price of imported goods and thus reduces the competitiveness of goods for domestic products. Government stops export subsidies and other measures applied to increase exports, export financing also removed. The level of protection for domestic products has been reduced to increase the level of competition for domestic enterprises.
The support of the authorities is very limited and does not meet the actual needs of the company. The support measures, indirect subsidies from the government, the agencies for little or no business efficiency. Therefore, the government’s policy is to leverage domestic firms increased their competitiveness and development.
In general, the tariff policy of the government in the current conditions have affected loosen restrictions on trade, gradually phasing out tariffs on the basis of multilateral agreements and bilateral. This seems to have become a trend in tax policy now aims to liberalize trade among countries in the region and protect the regional market before the competition of goods from outside. In the case of trade liberalization, trade benefits to its members not to debate is because each country that will take full advantage of the resources it has strength, eliminating the effect of production not fruit, and people will be consumer products cheaper with better quality.
Tariffs can be classified in many different ways, by the method of taxation, tariffs are divided into special tax provisions, tax rates and tax value mix. According to tax purposes, the tariff is divided into financial and tax tariff protection. As tax rates, tariff is divided into a maximum tax, minimum tax rates and tax incentives. Considering the perspective of national taxation, the tax would bring tax revenue for the taxation. But standing on the sense of the whole economy, the tariff reduced the general welfare because it reduces the effective exploitation of resources of the world economy. It changes the balance of trade, regulating the export and import of a country. Import tax has an important role in protecting the domestic market, especially protection of nascent industries.
Question IV: Answer:
Vietnam, from a command economy has shifted to a market economy. Command economy is an economic system by government appointed business, shall determine the quantity and price. These are the period of production does not meet production targets or fail to meet production demands. When demand increases, along with the complexity of new products, government decision-making increasingly more difficult, require more difficult decisions that lead to wrong conduct to regulate the economy.
This phenomenon does not occur in a market economy, as in market economies do not exist for the decision of the government, individuals and companies can produce and trade goods which they can manufacture or business is not dependent on government as long as they believe that they will profit. Thus, when moving from command economy to market economy enterprises Vietnam will have many more business opportunities, integration capabilities and higher competitive.
To increase productivity, workers and companies must develop new products to market, or production of goods and services efficiently than competitors with lower costs or better quality more. International trade can contribute an important part in increasing productivity and promoting prosperity. When nations exchange goods and services they produce cost effective, people in all countries involved in this process will benefit more.
The most common argument to justify the policies have limited free trade – often in the form of taxation on imports or restrictions on the import volume – that protecting jobs in some industries is good for a country as workers and business owners in these industries will have higher income and higher profits, and spending most of that money in the country. This argument is partially correct but that’s just part of the story. Protection of some manufacturers and workers also means that prices for goods and services they produce will be higher. This is detrimental to consumers and other producers are using such products as factors of production inputs and for the company when sales dropped because some of their customers must pay more for products to be protected.
Question V: Answer:
Exchange rate is one of the issues are of particular interest in an economy, especially in the economies of developing countries, are gradually integrating into the world economy and participate in assigned work international. By international trade an activity of these countries grows and requires the computation of price comparison, the currency with the partner countries.
The change of exchange rate fluctuations affects the investment and international trade. When rates change, companies should develop flexible products to be easily customized for the market has higher demand. Increase productivity, improve product and crude costs through the activities of foreign companies in order to offset increased costs from exchange rate is necessary.
In addition, when rates change, the company will have to optimize resources and supply chain networks to limit the rate between the weak. Meanwhile, the company will seek to supply the optimal limit for low-cost, developing many different types to limit exchange rate risk.
Â Finally, to limit exchange rate risk and enhance corporate finance, promote domestic resources, increasing revenue, developing additional marketing channels to divert the money market into a more powerful and stable more.
In the context of a global economic recession, the financial institutions should budget cuts, maintenance of public employee wage, cutting interest rates, capital restructuring, increased liquidity to banks and other company. Immediate goal is to maintain a stable macroeconomic, inflation.
Question VI: Answer:
In the course of operations, central banks can act as very important: to regulate the volume of currency in circulation; set up and restructure the economy stable purchasing power of money national commander for the entire banking system.
Monetary policy is the point system, the policies and measures of the State of Vietnam to influence and regulate activities on currency – the credit, banking and foreign exchange, create stability currency circulation to promote national economic development. Monetary policy can be determined by one of two directions, such as tightening monetary policy or monetary policy expansion. Monetary policy to pursue the following objectives: controlling inflation, price stability, stable purchasing power of money, economic growth, and create jobs. Monetary policy consists of three basic policies: credit policy, foreign exchange policies, and policies for the state budget. To implement monetary policy, and performing their roles, the central bank has used a variety of tools such as reserve requirement ratio, interest rates; open market operations … Each tool has its own mechanism and found different advantages and disadvantages.
Vietnam is in the process of integration and development, so banks heed previously came from state-owned bank after equalization, so they still offer available to its customerâ€™s psychological needs than their customers. However, current trends can be seen that there were major turning point in the competition between the banks and they were forced to follow the new trend is to get customers and their brand focused. Financial sector – banks in Vietnam are able to say boom to gradually develop in-depth, systematic and more comprehensive. In parallel with improved governance structure, products and services are branding professional, modern is necessarily required.
Currency exchange rate fluctuations are very important, profound effect on the company’s business. The exchange rate stable, the amount spent will be more stable exchange rate fluctuations on the same product. With the exchange rate comparisons to help businesses save money, time and increase profits, minimize potential risks brought by foreign exchange.
To manage exchange rate risk, financial contracts that businesses often use the term contracts (forwards), options, swap and credit contracts application. The operational techniques can be used to select the currency bill, netting strategy and lead / lag.
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