Industrial strategy

VDF Research Information

FDI ATTRACTION
Last update: January 2005

General information of FDI attraction

Objectives	Provisional Activities	Documents
From the marketing point of view, foreign investors come to a host country not because of good policy as perceived by the authority, but because of the actual benefits from the policy. The government should understand the need of FDI firms and target policies to them. We would like to be the hub of FDI marketing information. By closely cooperating with policy makers, enterprises and academic people, we would like to contribute to the attraction of FDI into Vietnam.	Workshop on the marketing approach to FDI attraction (Aug04) FDI attraction policy mission in Hanoi and Japan (Aug-Nov04) Workshop on behaviors of FDI players: motorbike industry case (Sep04) Workshop on FDI promotion (Feb05) Workshop on the measurement of FDI attraction (Mar05)	Aug.04: Marketing approach to FDI attraction (PDF238KB) Aug.04: Optimum parts procurement strategy of MNCs in electronics (PDF234KB)) Dec.03: VN's Industrialization (PDF223KB)) Aug.03: Info Module on Industrialization (PDF238KB)) NEU-JICA books (two volumes, 2003)

Project outline: The marketing approach to FDI attraction

We have listened to and exchanged views on the industrialization process of Vietnam and the role of FDI with MOI, MPI, MPT, etc. Over the last few years, Vietnam has organized forums between businesses and officials, hosted PR activities in foreign countries. However, the number of projects, registered capital and implemented capital are not increasing much. Vietnam has full potential to attract critical mass of FDI to accelerate its industrialization.

From the marketing approach, Vietnam's FDI attraction has two main problems:

Unclear positioning statement
Ineffective promotion strategy and communication programs

The marketing approach to FDI attraction should proceed as follows.

First Step: Situation Analysis

FDI trends in the world

FDI in ASEAN and East Asian

Value Chains, TNCs and International Production Network

Who are the key players? What are their characteristics? Why and how do they respond to a host country's FDI attraction policy?

SWOT Analysis of Vietnam, Thailand, China in attracting FDI

Key success factors in attracting FDI: past, current and future

Second Step: Positioning Options

Should Vietnam be the risk diversification destination of China?
Should Vietnam be the cheapest destination for FDI in the ASEAN?
Should Vietnam be the host country who offers the most stable FDI attraction policy in ASEAN?
Should Vietnam be the destination where investors can achieve highest profit margin in the world?

Vietnam should choose one of the above options to follow. However, the options are only examples. In fact, we have other options like fastest delivery time, cheapest wage, most skillful labor, etc. Furthermore, we can combine two or three options into one. For example, Vietnam can be the risk diversification destination of China and be host country who offers the most stable FDI attraction policy in ASEAN.

Third step: Strategic Policy Alternatives

Investment environment
Positioning
Target investors
Communication programs
Registering process and after-investment services

A strategic policy alternative must be an integrated program of 5 above elements which match positioning decision. For example, FDI attraction may target investors who are interested in Vietnam as a risk diversification destination of China. The benefit is diversification. We may want to create added value by offering investment insurance programs or introducing programs which minimize investment risk from China. Investors are happy to pay expense for such added value. Communication programs must deliver a clear message of risk diversification and to be said to targeted investors at the place they want to hear it.

Ministries, provinces and central government need to coordinate in attracting FDI.

Fourth Step: Action Program

We need to figure out sub-objectives, tactics, implementing agenda after we decide positioning issue and strategic policy.

Final Step: Measurement and Adjustment

A set of criteria such as expenses incurred from FDI attraction program, nationality changes of investors, the number of newly invested projects, registered capital, implemented capital, etc should be used to measure the success of the program. Adjustment should be made even before we measure the program.

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