INTERNATIONAL TRADE STRATEGY AND TECHNIQUES - FINAL CASE STUDY

INTERNATIONAL TRADE STRATEGY AND TECHNIQUES - FINAL - Case Study Example The new company concentrates on the manufacturing and marketing of polymers at 20,000 tons/year. The total investment for the ventures is 12 million Euros. The sections of financing are 4 million EUR by equity financing, Export credit obtained from COFACE up to 6 million EUR and other debt financing of about 2 million EUR. The favorable and the risk factors which would be faced by owing to its joint venture with Vietchem are elaborated in the report. Question 1 Vietnam Vietnam is a developing economy which is planned with a market well connected to the other parts of the world. The economy of Vietnam has shifted their concentration from centralized planned economy to socialist market economy that employs both indicative and directive planning. After the shift, the economy has rapidly grown. The Vietnamese population has been estimated to be 87 million. This estimation includes 3 million who lives in Hanoi and in Hochiminville; the estimated number has been 9 millions. About 11 millio n of the population are working in the industry or engaged in industry related works. The unemployment rate has been 2.3%. The GDP value amounts to $300 billion with a growth rate of 5.9%. The FDI inflows have amounted to $7.4 billion. The average tariff rate of trade has been 5.7% that includes some of the non-tariff barriers which had limited the gains of trade (The Heritage Foundation, â€Å"Vietnam†). Though there have been serious efforts from the FDI but it has been hindered by the government regulations by imposing various restrictions. With the evolving capital markets of Vietnam, the financial sector has also expanded (â€Å"China struggles with the way forward on reform†). Vietnamese Market Although the Vietnamese market has shown a rapid growth, it is still extremely price sensitive. Thus if the JV has to take place, Synthenia has to face this issue. Vietnamese market is a monopoly market with only a single producer of polymers i.e. Polyviet Company Limited. The company is based in Japan and sells 80% of its end products in the Vietnamese market. The company produces polymers and their main customers are the seekers of textile glues and formulators of buildings. Thus, the JV is looking for a reliable polymer supplier with a very good Research and Development department so that the products are adequately tested (â€Å"Investing in Vietnam – A risk worth taking?†). The favorable and unfavorable factors that Synthenia will probably run into while doing business in Vietnam are elaborated in the next section. Favorable factors for investment in Vietnam For establishing an investment plan in Vietnam the chemical giant group, Synthenia will have many advantages few of which are elaborated below. Synthenia has spread its existence in the Asian market. The Asian agents and the distributors have helped the company to develop their business in Asia. So with its expansion in Vietnam, it will provide a wider Asian market for the comp any. The country had a growth rate of 4.9% in 2009 which has increased to 5.9% in 2012 and has stabilized at that point. Thus