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Entering the Asian market: Where and how?
Introduction
On 6 April 2009, Mr Max Catanese, CEO of Almax, was walking nervously in his room in a hotel in Shanghai. He had arrived in China to personally meet Government representatives and potential business partners. The creation of new manufacturing facilities in Far East seemed to come to reality. “Our strategy was not that of producing in Asia and to export back in the European and American markets but rather we wanted to grow in the local market, thus serving local players or local facilities of international clients” (Max Catanese).
However, in A very humid afternoon in China, he had just received a detailed report on the Vietnam econ- omy from a well recognized consultancy company. Also, the document included some alternative sites in Vietnam where facilities could be easily built in partnership with local entities. Max had noticed the rapid growth of macro indicators and the lower labor cost than in China. According to public data, wages of Chinese workers had increased 15% from 2000 to 2009 and will continue to rise in the near future.i^ Fur-thermore, the Yuan was under evaluated relative to the US dollar.
Did the initial idea to offshore production in China need to be reconsidered? Was Vietnam a more conven- ient alternative? How to enter? WOS or a JV?
After Max has reorganized all the available information on the two options, it was the time to put on the table pros and cons and finally choose a course of action. He knew he had to be very careful in preparing the business plan he was going to submit to banks for financing the venture. Due to their complexity, Asian markets seemed to be areas where only big global players could succeed. “I knew that my decision should be driven by market opportunities rather cost savings”. In that direction, Max assigned to the mar-keting office the task to investigate the expansion plans (i.e. opening and location of new stores) of major clients.
Company background
Almax was a leader in the production of high quality mannequins employing 150 employees with a turno-ver of €13.9 million in 2008 (Exhibit 1). The headquarters was located in Mariano Comense (Como, Italy), forty minutes driving from Milan.
Almax was owned and managed by Saverio Catanese (President), Max Catanese (CEO) and Alfonso Catanese (Art Director). The CEO, Max, received a bachelor degree in business administration from “Uni-versità Commerciale L. Bocconi” in 2001. After completing the Master CEMS in International Manage-ment at HEC Paris, he joined PricewaterhouseCoopers as an Auditor and then KPMG as consultant in Transaction Services. He worked in the offices of Luxembourg, Paris and Madrid. He joined Almax in 2008 and gained the status of Harvard Alumni in 2009.
Almax headquarters and its production facility covered an area of 15,000 sqm whereas 8,000 sqm were used for the factory, offices and a show-room. Besides the showroom in Mariano Comense, Almax opened one showroom in Paris in March 2009. Exhibit 2 shows the organizational chart of Almax.
Since its foundation in the 70s by Saverio Catanese, Almax (acronym from the two Saverio’s sons Alfonso and Massimiliano) used a unique technology based on the use of polystyrene. Almax’s mannequins were shatter-proof, completely recyclable, a feature that Almax shared with only other two international rivals. Usually, its competitors mainly manufactured fiberglass mannequins which were vulnerable to shocks –
therefore lasting for shorter period of times. The company’s technological skills were undoubtedly a core factor in its success.
Almax offered a great variety of mannequins and displays forms, including male, female, child busts, shoe- glove-watch-eyeglass holders, jewelry accessories and other holders. The company had designed and pro- duced a wide variety of original models of mannequins (about 800) representing various ethnic and physi- cal features, with more than 1,500 realistic, stylized and semi-abstract heads. The wide range of original models as well as the possibility of customizing its offer allowed Almax to meet the specific needs of its customers.
The mannequins
The mannequin business had its origin in Europe, particularly in France.ii^ In the 14th century, the French court started to create small dolls, made of wood or wax and called them “poupées de mode”.iii^ It was common to tailor continuously costly dresses for these “poupées” and to exchange the various creations among each other. In the 17th century, tall wood figures became popular because the nobility dressed them with the latest accessories, jewellery and wigs. Their task was mainly to make French textiles and clothing internationally famous. The triumphal procession of the mannequins though was only made in the mid of the 19th century, with the creation of the large department stores and its huge shop windows where man-nequins got placed. At the beginning they only had an upper body without any legs, but in the 1920th, mannequins got a human-like body. Famous actresses, musicians and artists were used as models for the mannequins’ look. Starting with a few mannequin variants and focusing on a strong facial expression in the past, mannequins were then available in many variants and different colours: full body, upper body, head-less, legs, stylized, abstract and realistic. Also the material varied from fibreglass to wood and poly-styrene. Depending on the target customer, the size of the mannequins differed too. For a fashion company producing overweight fashion for example, the mannequins were bigger sized. Also the type of mannequin depended on its target group of the fashion company: traditional clothes will be rather presented on tradi-tional and realistic mannequins, whereas young and fashionable brands did rather use fancy and abstract mannequins in eye-catching colours and forms. However, all this depended much on the taste of the Visual Merchandiser of each fashion company.
Mannequins were advertising mediums for fashion brands. In fact, highly visible mannequins and out-standing fashion shop windows could attract customers. Unlike presenting the clothes only on a hanger, the customer could imagine being the mannequin and wearing the presented clothes. Mannequins were a common medium in order to present the seasonal changing clothing inside of the shop or in the shop win-dow.
The Almax's clients
Almax operated in the Business to Business channel interfacing with clients such as Hugo Boss, Gucci, Prada, H&M, Guess, Ermenegildo Zegna, Versace, Benetton, Miroglio, Diesel and MaxMara. In the 1990’s clients bought mannequins mainly through local distributors. However, the relevance of distributors decreased over time in number (Exhibit 1) and in value (Exhibit 3) because clients preferred to go directly to the source.
In 2008, top ten clients accounted for 80% of Sales. Fast retailers (such as Benetton, H&M and Zara) were the most important clients in value (40%) and volume (55%), followed by prêt-à-porter brands (such as Diesel, Hugo Boss and Miss Sixty).
With some of the clients Almax had relations for more than twenty years. Long lasting relationships were motivated by the company focus on high quality and attention to details.
The production line was structured so as to guarantee error-free products. From the extrusion process to molding to final packaging, Almax had a continuous control on quality. The mannequins were smoothed several times before they received the first painting, a process which ensured maximum precision. A care-ful testing and quality controls guaranteed the delivery of a highly-technological and artistic product.
- Few showrooms but contact persons in countries (i.e. Bonaveri). In such case, expenses were fewer sacrificing the direct physical presence in the target country.
Production process
The design of the models started from a group of sculptors either directly employed by the company or collaborating as external parties. These sculptors often worked together with the visual merchandisers of the company’s main clients in order to respond to the fast changing trends in the fashion retail industry. The sculpture created was then photographed by a special3D camera; a sophisticated software read the forms and details of the mannequin with absolute precision and that was used by the milling machine to create the aluminum mould. The first step of the manufacturing process was the molding of the raw mate-rial (polystyrene), which occurs by extrusion and blowing. After molding, each part of the mannequin was subjected to a careful work of assembling, plastering, smoothing and finishing aimed at ensuring the best quality standards of the finished products. Quality controls were frequent throughout the production chain and every product was carefully checked before final packaging occurred.
Almax only used water-based paint for its mannequins and display forms in accordance to its “green” sta-tus. The painting department was equipped to make any kind of finishing, from the standard glossy and semi-glossy effects to more sophisticated special effects such as the marble, carbon fiber, wood and root effects.
Site Selection: The Assessment of Alternatives
Prior to his Chinese trip, Max Catanese had contacted Pier Luigi Giraudi of JP Asia, a consulting firm based in Shanghai. Pier received a bachelor’s degree in business administration from “Università Com-merciale L. Bocconi” in 2001, where he met Max Catanese, and attended the MBA from “China Europe International Business School” from 2005 to 2007. After short experiences in Goldman Sachs and Morgan Stanley, he became a consultant for Bain & Co., where he worked for almost four years. At completion of the MBA program, he founded JP Asia Consulting. Pier started gathering data on the most proper location to create the new production facility. Data were about GDP, GDP per capita, inflation, population, host country’s infrastructure (Exhibit 6-7-8-9-10), trade policies, FDI policies, labour laws of the host country, existence of a supplying network, availability of sufficient electrical power, availability of natural gas, di-mension of the space to rent, infrastructure, transportation costs to overseas destinations etc. Also the pres-ence of skilled labour in the country (e.g.: number of universities for technical people) was an important information to collect because a local engineer might have been necessary for the factory supervision if Almax could not have sent its from Italy on a constant basis in the initial phase.
Contrary to the fully labour intensive Asian production, Almax required the intensive use of machinery powered by gas and electricity for the first phase of production (extrusion and blow- moulding). At the be-ginning Almax had mainly to look for a location with availability of both electricity and gas. Natural gas availability was a critical point in China and Vietnam, as due to the rapid economic growth there was a ris-ing demand for any type of energy resources, thus also for gas. The gap between domestic consumption and production resulted in the fact that China was becoming more dependent on gas imports in order to satisfy its requirements. Although China’s natural gas reserves were large, they were poorly accessible due to the lack of investment, infrastructure and technology. This meant that prices for delivery of gas could increase heavily until Chinese were not yet able to exploit their natural resources on their own.
Seated on his chair in his room in Shanghai Max was trying to put the pieces of the mosaic together in or- der to come up with a clearer picture. Following the considerations provided by Pier, he narrowed down his analysis to a selection of data.
China: Political, Legal, Economic Issues
Hu Jintao was the president of the People’s Republic of China (PRC) since 2003. Jintao belonged to the Chinese Communist Party (CCP), the largest party in the PRC. Although there were eight other small par- ties within the PRC, they did not have much power, as they were controlled by the CCP. In actuality, there was no political opposition, as the government had identified other existing parties as “subversive organi- sations”.
Even if it was much more market-oriented than it was under Mao Zedong 30 years ago, China’s political system still significantly influenced the economy.vii^ The Mao’s successors promoted privatisation and de- centralisation, but even today China is not yet a fully market-oriented economy.
Another political issue in China is inequalities both in terms of geography and industries. Some areas in China have been more exposed to market competition and have developed quicker than others.viii^ The Eastern coastal areas are much more market oriented, more developed and less regulated than the inner country-side of China. Commodities (e.g. petrol and gas) have to overcome high market barriers as these industries are nationalised and protected by the Chinese state. For some industries, such as the car industry, it is not even possible to enter the Chinese market without a national counterpart. In this case, it is compul- sory for the foreign company to form a Joint-Venture with a Chinese company.
Due to the fact that the Chinese government still plays an essential role and strongly influences the daily business, it is helpful for any kind of business to have good relations with the government.
China is a member of various international organisations, such as APEC (Asia-Pacific Economic Coopera- tion), the UN (United Nations) and ISO (International standard organisation). However, the most important membership is that with the World Trade Organisation, to which China ascended in 2001. Since its ascen- sion, China has taken many measures to comply with the commitments of the WTO. It has for example lowered its tariffs, minimised non-tariff barriers, improved transparency and expanded market access to companies from abroad. However, although China made these positive concessions, there are still several issues, especially concerning the non-tariff trade barriers that still remain to be resolved.
The People’s Republic of China was the world’s third largest economy both in nominal and PPP terms af- ter the United States. It was the world’s fastest-growing major economy, the largest exporter and the se- cond largest importer of goods in the world.ix^ Referring to IMF statistics, the People’s Republic of China registered an average real GDP growth of 9.5% for the past three decades (1980 – 2009), constantly out- growing the average of the other emerging economies at 6.7%.x^ It had a growing population of over 1. billion people and a positive current account balance of US$ 269.9 billion (4.7% of GDP). China’s exports of goods and service reached US$ 1.3 trillion while its imports stand at US$ 1.1 trillion. The country regis- tered an inflow of FDI of US$ 78 billion in 2009 and held an increasingly stronger position in outward FDI with US$ 44 billion in 2009 (up from close to zero in 2000). According to the China Monthly Eco- nomic Indicators reports,xi^ in terms of growth by sectors, the largest increase has been registered in the secondary industry. As far as internal consumption is concerned, China has experienced a remarkable in- crease in the last decade. In particular, rapid growth was registered in the sales of gold, silver and jewelries (+ 46%), furniture (+ 37.2%), automobiles (+ 34.8%), and household appliances (+ 27.7%).
According to a study conducted in 2009 by Istat and ICE,xii^ the amount of gross FDI from Italy to China in the period 2000 – 2009 has augmented by 84%, passing from around €74 million in 2000 to more than €135 million in 2009 with a peak of €432.5 million in 2007.
The often cited Goldman Sachs 2003 report on BRICs economies estimated the Chinese economy to be around 2003 US$ 45,000 billion in 2050.xiii^ Six years later, Goldman Sachs issued a new revised version of that estimate, placing China at 2007 US$ 70,000 billion in 2050.xiv^ Numerous other studies had been con- ducted on the future of China and the consequent shift in the balance of power in the global landscape. Although official statistics and estimates might be questioned for their preciseness, the numbers provided Max Catanese with a clear picture of the rising Chinese economy and its global relevance. Any company wishing to be a successful global player in the next decades could not afford to ignore the rise of the Peo- ple’s Republic of China.
Whereas in China there were almost no environmental regulations in the past, at the end of 2000 the gov- ernment was starting to protect the environment with the aid of new laws. Consequently customers became more conscious about the environment and began to demand “green products”.
China had a labour force of 807.3 million people (Cia Worldfactbook). However, the majority of these people were unskilled and worked in low-end industries such as constructions, manufacturing and assem- bling. Additionally, labour in China is very cheap. In 2008, the U.S. Bureau of Labor Statistics, Division of International Labor Comparisons, reported the hourly compensation costs of manufacturing employees in China as 4.2% of the US compensation. In the EuroArea, it was about 140% (of the US compensation).
The working conditions and labour rights in China were still bad compared to other countries. Thus, they were under international observation. In order to improve the situation, labour laws were established in
- This law regulated several standards such as minimum wages, maximum working hours, resolution of disputes and handling of child labour. It required a maximum of a six day work week, specified mini- mum wages depending on area and states that the maximum number of standard working hours should not exceed 40, while overtime shall be paid for. However, despite the existence of this official labour law, the reality was often quite different.
The segment of rich Chinese was increasing. According to a list compiled by Hurun Report, a research and publishing company based in Shanghai, there were 101 of known billionaires in China. Meanwhile, the average rich Chinese earns between US$ 50,000 and US$ 60,000 annually. With rising income, Chinese were becoming more affluent and the consumption of upmarket products including luxury products con- tinued to be an increasing trend. Wealthy Chinese were seeking high-priced luxury goods and fashion brands. A survey by MasterCard in 2008 found that the majority of Chinese preferred foreign fashion brands: 36.3% of the 1,800 Chinese respondents who had an income higher than US$ 16,000 annually pre- ferred foreign brands as opposed to 19.8% respondents who preferred domestic brands.
According to Euromonitor, the population with the highest income was living in the coastal areas of Shanghai, Nanjing and Guangzhou whereas the people with lower income live in the country-side.
China: The Fashion Industry
According to a 2007 McKinsey Study, the total apparel market in China was worth US$ 84 billion. Thus it was the third largest clothing market worldwide. Only the US (US$ 232 billion) and Japan (US$ 100 bil- lion) exceeded the one of China.xviii^ Considering the BRIC countries, China was the fastest growing in the apparel market. The study further indicates that 70% of clothing sales take place in department stores, flag- ship stores, company-owned stores, specialist retailers or in large department stores.
Around 9% of the total spending of Chinese was on clothing and footwear and this percentage was seen to be
stable for the next years (Euromonitor). However, spending on clothing differs by region as well as by the age of customers. The highest spending was in the Eastern Region of China. This region had the most af- fluent people with the highest income. Therefore, the marketing of high-end fashion focused on these areas in addition to the growing second-tier cities like Dalian, Harbin and Xi’an.xix^ Second, there was also a dif- ference on spending between different age groups. China’s urban young adults for example, aged between 18 and 24 and the group between 25 and 34 bought clothes much more often than Chinese in older age groups. According to a McKinsey Study (2007), they spent large amounts on clothing and were disposed to spend even higher amounts than their monthly income.
China: The Mannequin Market in China
In China, the use of mannequins became popular at the end of the socialism and with the economy’s boom. In the last 15 years, China’s economic development accelerated rapidly which lead to the fact that many western fashion companies entered China, using mannequins in their shop windows. A market review re- veals that in 2008 there were around 1,500 registered mannequin producers in China.xx^ Most of them pro-
duced at low quality and were lacking in technical know-how. For this reason these mannequins were only used in smaller, low-end shops. Even if there were no official statistics on a particular market, it is reason- able to assume that about 70%-80% of their customers were low end shops widely dispersed all over Chi- na. One reason for the high number of mannequin producers in China was the fact, that setting a produc- tion facility for these kinds of mannequins was not expensive, nor was the production process itself. It was especially not expensive for manufacturing companies that already operated in the production of related or similar products such as plastic items. Therefore, many manufacturing companies were actually diversify- ing and consider the mannequin business not as their core business but as a small addition to their produc- tion portfolio. Another reason for the high number of mannequin producers was the low production cost. This reason in addition to the absence of technical machinery led to the fact that most mannequins were mainly produced by hand without any machinery.
According to JP Asia the mannequin market in China was concentrated in specific areas.xxi^. There were five main areas where many mannequin producers were located: Guangdong, Fujian, Beijing, Shanghai, Jiangsu. Guangdong and Jiangsu, a fairly well developed industrial area in terms of mannequin production, had 72% of the total number of mannequin producers and 67% of the total mannequin production volume in China corresponding to the 55% of revenues. While the 11% volume in Shanghai corresponded to 17% of revenues. The difference between the volume and revenue percentages across the various areas could be explained with the average price per unit being the difference between Shanghai (800 RMB, US$ 117) and Jiangsu (350 RMB, US$ 51) at April 2009 exchange rate.
Regarding competition, even if there were many mannequin producers in China, only ten companies could be considered as direct competitors to Almax with a fairly significant degree of internationalisation: Chuanfa, Jacky mannequins, Reding Mannequins, Eurasia Arts, Xiamen Hipex Mannequins, Zhangzhou Worldwide Mannequin, Shangai Asterism Shopping Equipment Co., Ltd, Shanghai Yongcheng Display Products Manufacturer, Changshu East Mannequins S.A., Xiamen Nan Yang Mannequins & Hangers Co. Ltd, Shangai Poise Mannequins Display.
Most of the Chinese mannequin producers sold via agents in Mainland China, who were then responsible for overseas sales. This meant that the majority of producers in Mainland China hardly ever interacted with overseas clients. However, none of these ten companies had technical production capabilities comparable with the ones of Almax because none of the companies produced with extruders and none of them used polystyrene as a raw material. The Chinese mannequin market relied entirely on manual production. Most of the companies produced low-end fibre glass products with limited product varieties.xxii^ Moreover, re- search and development (R&D) was limited and innovation was rare, as most of the producers simply cop- ied models from market leaders overseas. That is also the reason why the bargaining power of buyers was limited, as there were only a few companies in China producing high-quality mannequins.
Vietnam
Mr Catanese needed to relax: he got confused after analyzing so many data. He went back one hour later after a refreshing bath in the hotel swimming pool and a sauna. Drinking an American coffee, he found out on line an interesting article from The New York Times: “what?” - he exclaimed - “the mail I received this morning highlighted the same considerations!”
“While Chinese wages are still less than $1 an hour, factory workers in Vietnam earn as little as $ a month for 48-hour workweek, including Saturdays. (…) When those increases are combined with a currency rising against the dollar at an annual pace of up to 10%, labor costs in China are now climbing at 25% a year or more. Inflation in China (…) raises the prospect that labor costs will soar even faster soon. That could push up prices for a wide range of goods exported to the United States. China is also phasing out its practice of charging lower corporate tax rates for foreign owned com- panies. By contrast Vietnam still offers foreign investors a corporate tax rate of zero for the first four years, and half the usual rate of 10% for the next four years (…) A popular saying among Western investors is that Vietnam is the next China” (The New York Times, June 18, 2008: “Inves- tors Seek Asian Options to Costly China”).
Foreign investors were stimulated to locate in these areas for several reasons: strategic position (ports, air- ports, railroad); infrastructure (telecommunication); tax benefits (tax exemption for a limited period of time); timing (from 3 months to max 1 year to set up a new venture); easiness of procedures (investment license was directly issued by the area administration).
Exhibit 1 Evolution of Sales and % of Distributors
In '000 EUR
Net Sales Distributors %
Source: Almax
Exhibit 2 Almax: Organizational Chart
Source: Almax
Exhibit 3 Almax Sales to Distributors 2003 – 2010
Source: Almax
Exhibit 4 Number of shops in Vietnam and China of important Almax European Clients
Source: Almax based on fashion websites/annual reports
Exhibit 7 GDP per capita Growth % 1990 -2009 in a selected group of countries
# 1990 1995 2000 2005 2006 2007 2008 2009 1 Iran China Estonia Singapore China China Romania China 2 Thailand Chile Russian Federation China Estonia Lithuania China India 3 Ireland Ireland Singapore Estonia Russian Federation Russian Federation Peru Bangladesh 4 South Korea Thailand Ireland Lithuania Lithuania Ukraine Uruguay Vietnam 5 Turkey South Korea Bulgaria Venezuela Romania India Iraq Morocco 6 Indonesia Vietnam South Korea Argentina Ukraine Peru Bulgaria Indonesia 7 Nigeria Romania China India Venezuela Argentina Argentina Nigeria 8 Tunisia Poland Luxembourg Vietnam India Estonia Russian Federation Uruguay 9 Japan Estonia Ukraine Turkey Argentina Vietnam Vietnam Tunisia 10 Singapore Indonesia Vietnam Bulgaria Bulgaria Uruguay Poland Poland
GDP per capita in Current USD growth %
Source: World Bank Data; Almax Analysis
Exhibit 8 GDP per capita Growth % 2007-2009 in a selected group of countries
1 China 13,6% Romania 9,6% China 8,5% 2 Lithuania 10,4% China 9,0% India 6,2% 3 Russian Federation 8,8% Peru 8,5% Bangladesh 4,3% 4 Ukraine 8,6% Uruguay 8,2% Vietnam 4,0% 5 India 8,2% Iraq 6,8% Morocco 3,6% 6 Peru 7,6% Bulgaria 6,7% Indonesia 3,4% 7 Argentina 7,6% Argentina 5,7% Nigeria 3,2% 8 Estonia 7,3% Russian Federation 5,4% Uruguay 2,5% 9 Vietnam 7,2% Vietnam 5,0% Tunisia 2,1% 10 Uruguay 7,2% Poland 5,0% Poland 1,6%
GDP per capita in Current USD growth %
Source: World Development Indicators & Global Development Finance - World Bank Data; Almax Anal- ysis
Exhibit 9 China: Country Profile
Indicator 2005 2006 2007 2008 2009
Inflation, consumer prices (annual %) 1,82 1,46 4,75 5,86 (0,70) Cost to export (US$ per con‐ tainer) 335 390 390 460 500
Time to export (days) 18 21 21 21 21 Time required to start a business (days) 48 35 35 41 38 Quality of port infrastruc‐ ture, WEF (1=extremely un‐ derdeveloped to 7=well de‐ veloped and efficient by international standards) n.a. n.a. 3,98 4,32 4, Air transport, registered carrier departures world‐ wide 1.349.269 1.542.564 1.753.550 1.853.088 2.140. Air transport, freight (million ton‐km) 7.579 7.692 11.189 11.386 11. Roads, goods transported (million ton‐km) 869.320 975.420 1.135.470,00 3.286.819,00 n.a. Roads, paved (% of total roads) 41 44,10 49,60 53,50 n.a.
Roads, total network (km) 3.345.187 3.456.999 3.583.715 3.730.164 n.a. Railways, goods transported (million ton‐km) 1.934.612 2.055.716 2.211.246 2.511.804 2.523.
Telephone lines 350.445.000 367.786.000 365.637.000 340.359.000 313.732.
Internet users 111.449.553 138.335.407 211.437.109 300.190.268 385.788. Lead time to export, median case (days) n.a. 2,60 n.a. n.a. 2, Final consumption expendi‐ ture, etc. (current US$ in billion) 1.182 1.338 1.728 2.181 2. Final consumption expendi‐ ture, etc. (annual % growth) 4,95 5,35 8,66 5,26 17, Final consumption expendi‐ ture, etc. (% of GDP) 52,37 49,33 49,46 48,24 47,
GDP (current US$ .000) 2.256.902.591 2.712.950.887 3.494.055.945 4.521.827.288 4.991.256.
GDP growth (annual %) 11,30 12,70 14,20 9,60 9,
GDP per capita (current US$) 1.731,13 2.069,34 2.651,26 3.413,59 3.748, GDP per capita (constant 2000 US$) 1.464,11 1.640,86 1.864,10 2.032,61 2.208, GDP per capita growth (an‐ nual %) 10,65 12,07 13,61 9,04 8, Unemployment, total (% of total labor force) 4,20 4,10 4,00 n.a. 4, Population growth (annual %) 0,59 0,56 0,52 0,51 0,
Population, total 1.303.720.000 1.311.020.000 1.317.885.000 1.324.655.000 1.331.380. Foreign direct investment, net outflows (% of GDP) 0,50 0,78 0,49 1,18 0, Foreign direct investment, net (BoP, current US$) 105.902.597.864 102.922.036.118 143.056.981.634 121.676.678.503 70.316.256. Foreign direct investment, net inflows (% of GDP) 5,19 4,57 4,58 3,87 2, Foreign direct investment, net inflows (BoP, current US$) 117.208.286.228 124.082.036.118 160.051.835.203 175.147.650.311 114.214.527. Source: World Bank
Exhibit 11 Vietnam vs China: Selected Business Costs
Comparison between Costs in Vietnam and China
Data collected Vietnam China (Fengxian)
Workers (General Industry): USD per month
Mid‐Level Engineers: USD per month
Electricity Rate for business use: charge USD per KWh aver‐ age on different zones
Gas rate per business use: USD per m3 average on different zones
Industrial estate rents (month‐ ly, USD per sqm)
Source: Viipip (Vietnam Investment Industrial Park Information Portal), 2008; JP Asia analysis 2009
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