Equitization and Reform:
Credit Suisse in Vietnam
Brittany Culver
Erik Gracey
Jo-Petter verson
nternational !arketin"
!erlin Sim#son
$ecem%er &&' ())*
Executive Summary
Vietnam+s economy is a dynamic environment ca##ed %y t,e recent accession into
t,e -./0 .,e accession is t,e last sta"e in a lon" #rocess of reforms initiated over
t1enty years a"o0 -,ile still si"nificantly influenced %y .,e Communist Party' Vietnam
is movin" to1ard a li%eral market economy0 .,e re"ulatory environment ,as im#roved
tremendously' creatin" an incentive for forei"n investment0 2side from certain
"overnment o1ned entities' suc, as railroads and air-traffic' %y ()&) forei"n investment
1ill %e a%le to account for one-,undred #ercent of invested ca#ital in a Vietnamese
com#any0
Vietnam is an emer"in" market and a #erfect o##ortunity for Credit Suisse to
continue its recent dominance of emer"in"-market "lo%al %ankin"0 Credit Suisse is a
1orld reno1ned financial institution' ,avin" satisfied investors' "overnment' and
individuals' 1,ile aidin" in economic "ro1t, t,rou", sound consultin" in financial
li%eralization0 Brady $ou"an' CE/ of Credit Suisse' ,as re#eatedly em#,asized t,e
im#ortance of develo#in" emer"in" markets0
.,e Vietnamese "overnment ,as identified t,eir need of ,el# in li%eralizin" t,eir
economy0 .,e rise of t,e 3o C,i !in, Stock e4c,an"e and t,e commitment %y t,e
Vietnamese "overnment to equitize its state o1ner enter#rises ,as created an intri"uin"
%usiness environment ready for Credit Suisse+s services0 .,e emer"in" and un#redicta%le
market#lace ,as t,e ,i", risk and ,i", return investors demand0 .,e "overnment ,as t,e
demand' Credit Suisse ,as t,e ca#acity' and Vietnam #rovides t,e o##ortunity' t,e only
t,in" left to do is develo# a strate"y0
(
Background
3istory
.,e current state of Vietnam is a result of a lon" #rocess of conquest' revolution'
and reform0 Vietnam is traditionally a Confucian society' dominated %y several lar"e
em#ires over t,e course of its ,istory0 .,e recent conquest of Vietnam occurred under
colonialism in &565 %y t,e 7renc,' and 1as a #art of 7renc, ndoc,ina %y &55*
89arrno1' &::*;0 Vietnam 1as taken over t,e Ja#anese durin" -orld -ar .1o' t,an
transferred %ack to 7rance after Ja#an+s defeat0 Vietnam declared its inde#endence and
1on it in &:6< %y defeatin" t,e 7renc,0
.,e country 1as t,ereafter divided into t,e communist nort, and t,e non-
communist sout,0 .,e infamous Vietnam -ar %rou",t t,e country %ack to"et,er' %ut at a
#rice0 .,e 1ar caused massive dama"e to t,e economy and "eneral #u%lic0 n &:5= t,e
$oi !oi renovation #olicy committed t,e "overnment to increase economic li%eralization
t,rou", e4#ort #romotion strate"ies 89arrno1' &::*;0 Vietnam ,as en>oyed constant
economic "ro1t, since t,e $oi !oi reforms' resultin" in increasin" livin" standards
89arrno1' &::*;0
Geo"ra#,y
Vietnam is located in Sout,east 2sia %orderin" t,e "ulf of .,ailand' Gulf of
.onkin and t,e Sout, C,ina Sea0 /n land it %orders C,ina' ?aos and Cam%odia 8C2'
())*;0 .,e terrain of Vietnam is lo1 and flat in t,e nort, and t,e sout,0 .,ere are Central
,i",lands and mountains in t,e nort, and nort,1est0 .,e climate is tro#ical in t,e sout,
and monsoonal in t,e nort, 1it, a ,ot rainy season from !ay to Se#tem%er and 1arm
and dry season from /cto%er to !arc,0 .,ere are also occasional ty#,oons %et1een !ay
@
and January t,at can cause e4tensive 8C2' ())*;0 Vietnam ,as e4tensive natural
resources in t,e form of tim%er' natural "as' oil' and minerals 8C2' ())*;0 ts "eo"ra#,y
is 1ell suited for economic "ro1t, considerin" t,e natural resources and close #ro4imity
to t,e emer"in" markets of .,ailand and C,ina0
Po#ulation Statistics 8C2 -orld 7act%ook;
2s of July ())*' t,e estimated #o#ulation of Vietnam is 56'(=('@6= 8C2' ())*;0
.,e a"e structure is: )-&< is (='@A0 &6-=6 years is a%out =*':A and =6 years and u# is
a%out 6'5A0 .,e ?an"ua"es in Vietnam ordered in descendin" im#ortance are
Vietnamese' En"lis,' C,inese' local dialects' and 7renc,0 .,e literacy rate is
A for t,e
total #o#ulation' :0;
C,an"e in
G$P
8ad>usted;
nflation
())) (')@* oined t,e -orld .rade /r"anization'
to create a more fair trade and investment environment for domestic and international
investors0 By a"reein" to conform to -./ standards' Vietnam a"reed to a %road ran"e
of trade standards0 .,ese standards include: trade 1it,out discrimination' and treatin"
forei"n and nationals equallyI creatin" a freer trade environment 1it, lo1ered trade
%arriers' a more #redicta%le trade environment' t,e #romotion of fair com#etition' all to
encoura"e develo#ment and economic reform 8-./' ())=;0
-,ile Vietnam did si"n t,e -./ a"reement in t,e %e"innin" of ())*' it does
take a fe1 years for a "overnment to im#lement ne1 trade standards t,rou",out t,eir
current system0 n com#liance to t,eir a"reement' Vietnam 1ill ,ave fully im#lemented
t,e ma>ority of -./ standards %y ()&)0 .,is includes ne1 re"ulations t,at 1ill allo1
one ,undred #ercent ca#ital contri%ution investment %y a forei"n entity in Vietnam
8-./' ())*' @=;0
Role of the Vietnamese Government
Communism and S/Es
Even 1,ile tec,nically defined as a socialist form of "overnment' t,e Communist
Party still remains t,e dominant #olitical force0 .,e #arty selects future leaders and
senior "overnment officials and "ives t,em e4tensive #olitical and ideolo"ical trainin"0
.,is stron" Communist influence makes t,e situation more difficult for forei"n investors
to enter t,e Vietnamese market0 Since communism fundamentally lies in t,e
unc,allen"ed stren"t, of t,e "overnment' any international investors 1it, a lar"e stake in
&)
any one investment could %e seen as a t,reat to #o1er0 .,is ,as led to t,e ma>ority of
%usinesses 1it,in Vietnam %ein" State /1ned Enter#rises 8S/Es;0
n Vietnam' t,e #rocess of equitization includes c,an"in" an S/E into a
stock,oldin" com#any 1,ere s,ares are ,eld in #rivate o1ners,i#0 .,e @'))) S/Es
currently equitized re#resent a%out &(A of #revious state-o1ned ca#ital 8SCC' ())*;0
Even 1,ile t,e communist "overnment ,as made t,is im#ortant ste# to conform to -./
and $oi !oi standards' t,ey ,ave still retained o1ners,i# of forty-si4 #ercent of t,e
s,ares of t,e ne1ly equitized firms0 2not,er t,irty #ercent are ,eld %y t,e mana"ers and
em#loyees of t,e firms' leavin" only t1enty four #ercent availa%le for outside investors0
/f t,e @'))) ne1ly equitized firms' only t1enty attracted forei"n investment0 .,e
Vietnamese "overnment ,as #led"ed to continually equitize S/Es' leavin" only a fe1
%usiness sectors com#letely in t,e "overnment+s control0 .,ese include rail1ays'
air#orts' t,e media' to%acco' and defense equi#ment0 Even 1it, t,is #led"e' t,e
Vietnamese "overnment sends mi4ed messa"es to #rivate investors' %y allo1in" t,em
freer trade re"ulations' %ut still im#osin" a forty-t1o #ercent cor#orate income ta4' t,e
,i",est cor#orate income ta4 in t,e area 8$oin" Business' ())*;0
-,ile t,e %enefits of equitization may seem a##arent' many Vietnamese o##ose
t,e #rivatization of S/Es0 S/Es ,ave some advanta"es over #rivate firms' in t,at t,ey
,ave easier contract a##lication' land and credit access' in addition to su%sidized loans0
3o1ever' once all of t,e intended S/Es are equitized' la1s re"ulatin" S/Es 1ill no
lon"er %e in effect' e4ce#t for t,ose %usiness sectors ke#t in "overnment control0
&&
Credit Suisse
Our Vision
.,e vision of Credit Suisse is to %ecome t,e 1orld+s #remier %ank' reno1ned for
its e4#ertise in investment %ankin"' #rivate %ankin" and asset mana"ement' and most
valued for its advice' innovation and e4ecution 8Credit Suisse' ())*;0
Out Mission
n order to ac,ieve our vision' Credit Suisse 1ill set ne1 standards: ne1 standards
in #artnerin" 1it, our clients and ne1 standards in #rovidin" t,em 1it, innovative and
inte"rated solutions 8Credit Suisse' ())*;
Reasons for Worldwide Success
Since its start in &56=' Credit Suisse ,as com%ined traditional values alon" 1it, a
lastin" drive for innovation to continually en,ance t,e Credit Suisse %rand0
3eadquartered in Juric,' S1itzerland' Credit Suisse is a leadin" financial services
com#any #rovidin" clients 1it, investment %ankin"' #rivate %ankin" and asset
mana"ement services0
Credit Suisse+s asset mana"ement services offer many different investment
#roducts' many are alternative investments0 .,ey also mana"e #ortfolios' mutual funds
and ot,er investment met,ods for institutions' "overnments' cor#orations and #rivate
individuals0 Credit Suisse ,as offices in ei",teen countries t,at focus s#ecifically on asset
mana"ement' %ut is o#erated "lo%ally on an inte"rated net1ork0
Credit Suisse+s #rivate %ankin" services #rovide Gcom#re,ensive advice and a
%road ran"e of investment #roducts and services tailored to t,e com#le4 needs of ,i",-
net-1ort, individuals "lo%allyH 8Credit Suisse' ())*;0 n addition' Credit Suisse #rovides
&(
asset and lia%ility mana"ement to t,ese clients includin" alternative investment #roducts0
.,is includes 1ealt, mana"ement and %ookin" #latforms in addition to t,eir %ankin"
services to %usiness and retail clients0
Credit Suisse also offers investment %ankin" services t,at include securities
#roducts and financial advisory to cor#orations' "overnment and institutional investors0
/#eratin" in 6* locations across (* countries' Credit Suisse s#ecializes in Ginnovative
solutions' dra1in" on e4#ertise from across t,e full s#ectrum of #roducts: de%t and equity
under1ritin"' sales and tradin"' mer"ers and acquisitions' investment researc,'
corres#ondent and #rime %rokera"e servicesH 8Credit Suisse' ())*;0
Credit Suisse is currently active in over 6) countries' and is one of t,e fe1 truly
inte"rated %anks' #rovidin" institutional and #rivate clients 1it, ra#id and effective
service0 GCredit Suisse+s %usiness model is t,e res#onse to constantly c,an"in" client
needs in an industry t,at is driven %y "lo%alization and ra#id tec,nolo"ical
develo#mentsH 8Credit Suisse' ())*;0
Reasons for Success in Vietnam
-it, t,e recent #rivatization #olicies for Vietnam+s State /1ned Enter#rises' t,e
market 1ill %e more monetarily fluid0 nvestment re"ulations ,ave also recently c,an"ed
due to im#lemented -./ standards0 .,e %usiness environment in Vietnam is full of
o##ortunities0 Credit Suisse+s e4#ertise and seasoned %usiness model for emer"in"
markets 1as a key factor in identifyin" t,e Credit Suisse as a "ood matc, for Vietnam0
&@
SWOT Analysis
Stren"t,s
Credit Suisse+s stren"t,s are: a commitment to emer"in" markets' #revious
involvement in Vietnam' and a stron" %rand name %olstered %y international reco"nition0
.,e im#ortance of emer"in" markets to Credit Suisse is o%vious0 Emer"in" markets ,ave
muc, more #otential for e4#losive "ro1t, t,an industrialized nations0 /ne of t,e "olden
rules of economics and certainly %ankin"' is t,at ca#ital tends to con"re"ate in areas t,at
offer t,e ,i",est return0 nvestors 1ant t,eir investments to "enerate ,i", returns' %ut
t,ey need #rofessional ,el# due to ,i", risks in,erent to emer"in" market economies0
Credit Suisse is t,erefore #rovidin" a service in ,i", demand to investors around t,e
1orld0
.,e emer"in" market se"ment ,as increased in im#ortance since t,e last lar"e
"lo%al de%t crisis in &::50 n a s#eec, to investors' Credit Suisse CE/ Brady $ou"an'
listed t,e ra#id "ro1t, and increasin" im#ortance of emer"in" markets as one of t,e main
t,emes in t,e ())=-())* a"enda 8$ou"an' ())6;0 $ou"an also ,i",li",ted Credit
Suisse+s commitment to emer"in" markets %y revealin" t,e market leadin" #osition of t,e
com#any in key emer"in" markets: Brazil' !e4ico' Russia' and C,ina0
Credit Suisse is a key #layer in emer"in" markets' %ut it is t,eir commitment to
2sia t,at adds credi%ility to t,eir #otential success in Vietnam0 Similarly to $ou"an+s
s#eec, in ())6' Credit Suisse 2sia Pacific CE/ Paul Calello told investors in a
#resentation on 2#ril (' ())*' G.,e develo#ment of emer"in" markets is a key %ankin"
trend in 2siaH 8Credit Suisse' ())*;0 .,e ne4t t,ree slides of t,e #resentation detail some
of t,e investment trends in 2sia0 .,e fourt, slide of t,e #resentation features t1o key
&<
emer"in" markets in 2sia' t,e first is Pakistan' t,e ot,er Vietnam0 Credit Suisse ,as
initiated a fund s#ecifically for #urc,asin" or #artnerin" 1it, forei"n com#anies in
emer"in" marketsI t,e fund is currently 1ort, B=0* %illion 8Credit Suisse' ())*;0
Credit Suisse ,as ackno1led"ed t,e im#ortance of t,e Vietnamese market for
over a decade0 -,ile most of its com#etitors %e"an o#erations in Vietnam in t,e early
+s' Credit Suisse 1aited until t,e "overnment initiated muc, need reforms0 Credit
Suisse ,as acted as a consultant to t,e #rocess of Vietnam credit ratin"' conducted %y
!oody+s' S*P' and 7itc, since ())& 8VietFamFet' ())*;0 n ())6' Credit Suisse ste##ed
u# its commitment in Vietnam %y actin" as t,e "uarantor in Vietnam+s successful
issuance of B*6) million 1ort, of international %onds 8Credit Suisse' ())*;0
Currently' Credit Suisse is 1orkin" on a B& %illion loan to Vinas,in' a state o1ned
s,i#%uildin" com#any and is also advisin" some of Vietnam+s lar"est S/Es on
equitization strate"ies 8VietFamFet' ())*;0 Credit Suisse o%tained an SSC license from
t,e "overnment allo1in" it to %uy and trade domestic securities in t,e 3o C,i !in, and
3anoi stock e4c,an"es0 .,e "ro1in" foot#rint of Credit Suisse in Vietnam necessitates
t,e need to esta%lis, a Vietnam %ranc,0
2fter Credit Suisse secured t,e loan to Vinas,in' t,e P! of Vietnam' F"uyen .an
$un" told Credit Suisse CE/ /s1ald J0 Grue%el' G ,o#e leadin" CE/s and
consultancies 1ill %e muc, involved in t,e Vietnamese market' and 1is, you every
success in Vietnam+s economy++8VietFamFet' ())*;0 .,e "overnment of Vietnam is not
alone in reco"nizin" t,e im#ortance of Credit Suisse in t,e develo#ment of emer"in"
markets0 .,e Credit Suisse %rand name is one of t,e most credi%le in t,e industry0 Credit
&6
Suisse ,as received many a1ards in ())* in t,e "lo%al %ankin" community' ,ere are >ust
a fe1:
-Glo%al nvestment Bank of t,e Eear
-Best ?evera"ed 7inance 3ouse
-Best 3i", Eield Bond 3ouse
-Best ?evera"ed 7inance 3ouse
-Best Emer"in" !arkets $e%t 3ouse
-Best nvestment Bank in Vietnam
- -Best nvestment Bank in ndonesia
-Best Equity Cnder1riter
-Best $e%t Cnder1riter
-Best ?on"-.erm Partner
-Best /verall nvestment Bank
.,e variety of a1ards illustrates t,e credentials of Credit Suisse' a %rand name t,at "ives
t,e com#any a com#etitive advanta"e in t,e ,i",ly saturated market of "lo%al %ankin"0
-eaknesses
.,e Credit Suisse Grou# ,as 1itnessed a decline in its net interest mar"in over t,e
#ast fe1 years0 .,e "rou#Ks net interest income ,as declined from B='&==0: million in
fiscal year ())0O( services, #redit Suisse would
-e an e3cellent consultant)
Threats
.,e main t,reats to Credit Suisse are its com#etitors0 Credit Suisse is not t,e only
com#any a1are of t,e #romise in Vietnam0 Cnfortunately' t,ere are many ot,er %anks
o#eratin" in Vietnam' includin" most of Credit Suisse "lo%al com#etitors0 2lt,ou", t,ere
are many com#etitors in Vietnam' t,e t,reat to Credit Suisse is not as si"nificant as it
could %e0 .,e strate"y of Credit Suisse+s com#etitors seems to %e' offer a %road ran"e of
&:
services in t,e ,o#es of creatin" demand for at least a fe1 of t,em0 Credit Suisse 1ill not
attem#t to com#ete in t,is matter0 Credit Suisse 1ill focus on a strate"y of s#ecialization
focusin" on t,e demands of t,e market' suc, as equitization0
Credit Suisse+s t,ree main com#etitors are $eutsc,e Bank' 3SBC' and !or"an
Stanley 8$atamonitor' ())*;0 3SBC and $eutsc,e Bank entered t,e market early in
&:
' 1,ile !or"an Stanley entered last year0 2ll t,ree offer a %road variety of services
like: im#ortMe4#ort finance' trade finance' insurance' securities' account services' and
#ersonal %ankin"0 So far' Credit Suisse+s com#etitors ,ave %een content to com#ete 1it,
t,e same services' stressin" %rand loyalty as t,e difference0 .,e s#ecialization strate"y of
Credit Suisse could s,ake u# t,e market %y inducin" its com#etitors to follo1 suit0
Political Risk
.,e #olitical risk in Vietnam ,as %een si"nificantly reduced %y economic and
#olitical reforms' %ut is still a t,reat to t,e com#any0 .,e #otential for risk e4ists %ecause
of t,e central control of t,e "overnment0 Po1er is concentrated into t,e ,ands of very
fe10 .,e CVP is still under t,e over1,elmin" influence of t,e rulin" elite and t,e
military 8%usiness monitor international' ())*;0 .,e CVP enacted a ne1 la1 t,is year
denyin" a lar"e sector of t,e Vietnamese economy t,e ri",t to strike 8%usiness monitor
international' ())*;0
.,e CVP is also en"a"ed in an on"oin" dis#ute 1it, et,nic minorities in t,e central
,i",lands' most nota%ly t,e !onta"nards0 ?ike many et,nic minorities in ?$Cs' t,e
!onta"nards measure lo1er in every economic statistic t,an t,e ma>ority 9in, Viet
#eo#le0 .,e !onta"nards ,ave suffered tremendously0 2fter fi",tin" on t,e C0S0 side in
t,e Vietnam -ar' ())'))) !onta"nards 1ere killed' many in #u%lic e4ecutions
()
8-as,in"ton .imes' ())=;0 .,e !onta"nards ,ave since %een moved from t,eir ancestral
land' livin" in e4treme #overty in reservations 1it, little access to #u%lic services0 .,e
Vietnamese "overnment ,as routinely denied t,e e4istence of any conflict and ,as
%lockaded t,e central ,i",lands from forei"n #ress 8-as,in"ton .imes' ())=;0
.,e !onta"nards ,ave ado#ted more violent forms of #rotest in t,e last five years
includin" direct attacks on Vietnamese military and #olice0 t is difficult to "ras# t,e
e4tent of t,e violence in t,e ,i",lands0 Vietnam is listed as one of t,e 1orst counties in
freedom of t,e Press0 .,e current situation is an a##allin" civil ri",ts a%use' %ut not a
direct t,reat yet to t,e %usiness sector in 3o C,i !in, City0 3o1ever' recent conflicts
,ave #roven to %e e4tremely disru#tive to 2sian ?$C economies' most nota%ly in
!yanmar and Sri ?anka0
Environmental Risk
.,ere are environmental risks affectin" t,e "lo%al %ankin" environment and t,e
environment in Vietnam0 .,e "lo%al %ankin" environment ,as %een ,it %y #oor forecasts
for t,e s,ort-medium term0 .,e #erformance of t,e "lo%al %ankin" industry is forecasted
to decelerate' 1it, a com#ound annual "ro1t, rate antici#ated at @06A for t,e five-year-
#eriod ())=-()&& 8$atamonitor' ())*;0 .,e decline in "ro1t, takes into account many
unfavora%le factors suc, as' ne1 "lo%al %ankin" re"ulations' mort"a"e uncertainty and
interest rate volatility0 Environmental risks in,erent to Vietnam are climate related risks:
monsoons' ty#,oons' flas,-floods' and tro#ical diseases #ose relative t,reats to Credit
Suisse 8C2 -orld 7act%ook' ())*;0 .,e sum of t,e environmental risk adds anot,er
dimension of needed ,ed"in" to ensure a successful %usiness venture0
Target arket
(&
2s stated in t,eir descri#tion of services' Credit Suisse tar"ets t,eir investment
%ankin" services to cor#orations' "overnment' and institutional investors0 2s a successful
international %ank' it 1as decided to ,ave t,e tar"et market %e t,e same entities for
forei"n investment into Vietnam0 .,ese 1ould include cor#orate investors defined as
com#anies t,at invest' or acquire control of ot,er com#aniesI and' institutional investors
t,at are %anks' insurance com#anies or retirement funds and financially so#,isticated
,ed"e funds 8Credit Suisse' ())*;0
Credit Suisse identifies t,e im#ortance of marketin" to an esta%lis,ed customer
%ase0 .,ese clients are already a1are of t,e re#utation of t,e com#any and ,ave an
esta%lis,ed %usiness relations,i# 1it, Credit Suisse0 .,ese clients ty#ically understand
t,e emer"in" markets and t,erefore are informed consumers' likely to res#ond to a
successful marketin" strate"y0
n addition' it 1as also decided to tar"et t,e countries and "overnments t,at are
currently t,e main contri%utors into Vietnam0 .ai1an' Sout, 9orea' Ja#an and 3on"
9on" are t,e to# four "overnments t,at are currently investin" into Vietnam 8Economist'
())*;0 By tar"etin" t,ese "overnments' Credit Suisse 1ill %e a%le to e4#lain t,e %enefits
of investin" in t,e emer"in" market since t,ey are already familiar 1it, current trade
trends and re"ulations0 .,e a%undance of funds flo1in" t,rou", t,e Vietnamese market
as a result of t,e equitization of S/Es 1ill %e a tar"et of Credit Suisse0 $omestic
investors 1ill ,ave a ne1 incentive to invest in t,e economy as more securities %ecome
availa%le on t,e 3o C,i !in, Stock E4c,an"e0
Product
((
3avin" esta%lis,ed t,e needs of our tar"et market' Credit Suisse 1ill develo#
#roducts t,at are syner"istic in nature' 1,ile takin" into account t,e current %usiness
environment0 .,e market at t,is time is too saturated to make #rivate %ankin" 1ort, t,e
e4tra cost0 .,erefore' Credit Suisse 1ill focus on asset mana"ement and investment
%ankin"0
n nvestment Bankin"' Credit Suisse currently offers securities #roducts and
financial advisory services to cor#orations' "overnments and institutional investors
8Credit Suisse' ())*;0 /#eratin" in 6* locations across (= countries' Credit Suisse+s
investment %ankin" %usiness s#ecializes in innovative solutions' dra1in" on e4#ertise
from across t,e full s#ectrum of #roducts: de%t and equity under1ritin"' sales and
tradin"' mer"ers and acquisitions' investment researc,' corres#ondent and #rime
%rokera"e services0 nvestment %ankin" in Vietnam 1ill %e very similar to t,is model' %ut
1ill focus s#ecifically on t,e services relevant to equitization0 Fecessarily' Credit Suisse
1ill em#,asize its com#etitive advanta"e in mer"er and acquisitions' de%t and equity
under1ritin"' and investment researc,0
n its asset mana"ement %usiness' Credit Suisse offers #roducts across t,e full
s#ectrum of investment classes' ran"in" from equities' fi4ed income and multi#le-asset
class #roducts' to alternative investments suc, as real estate' ,ed"e funds' #rivate equity
and volatility mana"ement 8Credit Suisse' ())*;0 Credit Suisse+s asset mana"ement
%usiness mana"es #ortfolios' mutual funds' and ot,er investment ve,icles for a %road
s#ectrum of clients ran"in" from "overnments' institutions and cor#orations to #rivate
individuals0
(@
2sset mana"ement in Vietnam 1ill %e a #rime focus for t,e com#any as its asset
mana"ement #erformance is one of t,e com#any+s %i""est 1eaknesses0 .,e market for
asset mana"ement is ,u"e in Vietnam' %ot, domestically and internationally0 .,e
domestic market is com#rised of t,e "overnment' #u%lic and #rivate %usinesses' and even
individuals interested in a mana"er for t,eir res#ective #ortfolios0 .,e volatility of t,e
market necessitates a #rofessional mana"er 1it, a successful track record in ,i",
riskM,i", yield market 1orld1ide0 Credit Suisse is t,at mana"er0
n addition to mana"ement services' Credit Suisse 1ill offer t1o introductory
#roducts0 .,e demand for emer"in" market funds is lar"e for investors t,at can afford t,e
risk involved0 Credit Suisse 1ill %e"in %y offerin" t1o mutual funds to meet t,e demand0
.,e funds 1ill %ot, %e com#rised of small amounts of equity from Vietnam+s most
successful listed com#anies0 /ne of t,e funds 1ill tar"et t,e needs of t,e domestic
market0 .,is fund 1ill %e com#rised of riskier securities' as t,e investment re"ulations
are less strin"ent domestically0 .,e international fund' also availa%le to domestic
investors' 1ill %e a fund ,ed"ed to decrease t,e risk0 .,e forei"n fund 1ill %e more
e4#ensive due to t,e ,i",er cost of conformin" to international %ankin" re"ulations' like
t,e ne1 Basel 2ccords enacted to inform #otential investors of t,e risks to t,eir #rivacy
and #ortfolios 8Credit Suisse' ())*;0 Credit Suisse 1ill monitor t,e success of t,ese funds
closely 1it, t,e "oal of offerin" more #roducts in t,e near future0
!lace
3o C,i !in, city is located on t,e sout,ern ti# of Vietnam0 .,e city is t,e
financial ca#ital of t,e country' and %oasts t,e first Stock E4c,an"e of Vietnam 1,ic,
o#ened in ())&' and is no1 one of 2sia+s most dynamic stock markets0 -it, over
(<
@))'))) %usinesses #o#ulatin" t,e city' it is also seen as t,e economic center of Vietnam
8Economist' ())*;0 .,e modern %usiness sector is com#osed of many lar"e enter#rises in
different industries includin": tec,nolo"y' electronics' information #rocessin"' li",t
industrials' and a"ro-#roducts 8Economist' ())*;0 .,e city ,as fifteen industrial #orts'
and t,e Nuan" .run" Soft1are Park' and t,e Sai"on 3i-.ec, Park0 .,e com#uter
com#any ntel invested one %illion dollars into t,eir #lant located in t,e ,eart of 3o C,i
!in, City0
.,e city accounts for t1enty #ercent of t,e national Gross $omestic Product and
t,irty #ercent of industrial #roduct value 8Economist' ())*;0 3o 3i !in, City also
contri%utes a%out t1enty-one #ercent to t,e national revenue #er year0 n addition to t,e
t,rivin" economy' ,i",er education is more develo#ed in 3o C,i !in, City t,an
any1,ere else in Vietnam0 7ifty universities are located 1it,in t,e city' 1it, over
@))'))) enrolled in t,e universities0 .,e universities include t,e Cniversity of
Polytec,nic' Cniversity of nformation .ec,nolo"y' 7aculty of Economics' t,e Cniversity
of medicine and t,e Cniversity of Bankin" 8Economist' ())*;0
3o C,i !in, City is t,e %est #lace to launc, Credit Suisse0 Credit Suisse 1ants
to %e in t,e financial ,u% of any city t,ey enter0 3o C,i !in, City is t,e over1,elmin"
financial center0 t is also t,e intellectual center0 2s evidenced %y t,e ,i",er enrollment
rate' 3o C,i !in, City ,as most of t,e countries youn" minds0
!romotion
.o #romote t,e entrance of Credit Suisse into t,e Vietnamese market' it ,as %een
decided t,at t1o #romotional activities 1ill %e undertaken0 Eac, activity 1ill address a
different sector of t,e defined tar"et market t,rou", a multitude of events0
(6
Soccer
Soccer is a social institution 1it,in Vietnam0 t is t,e most #o#ular s#ort' and
c,ildren are tau",t to #lay from t,eir yout,0 Vietnam ,as t1o ma>or soccer teams' t,e
Vietnam Fational 7oot%all .eam' and t,e V-?ea"ue 8vietnamnet' ())*0 .,e Fational
7oot%all .eam is a lar"e team t,at is very #o#ular 1it,in t,e nationals0 3o1ever' t,e V-
?ea"ue s#onsors yout, t,rou", adult lea"ues' and is a more successful team in different
tournaments0 n Vietnam last year' t,e V-?ea"ue s#onsored t,e .i"er Cu#' and also
#layed in t,e 9in"+s Cu#0 .,e adult V-?ea"ue team made it to t,e quarter-finals in %ot,
of t,ese tournaments0
t ,as %een decided t,at Credit Suisse 1ill ,el# s#onsor t,e V-?ea"ue' and its
#ro"rams for yout,s and adults alike0 By s,o1in" t,e local community t,at Credit Suisse
is interested in t,eir community t,rou", su##ortin" local yout, soccer teams' Credit
Suisse 1ill "ain a #ositive re#utation amon" locals0 2lso' %y su##ortin" t,e adult V-
?ea"ue teams' Credit Suisse 1ill %e a%le to "et t,eir name out to t,e domestic and forei"n
vie1ers of t,e tournaments0
.,is ,as #roved successful in t,e #ast 1it, Credit Suisse' as t,e ,ost a seven day
ru"%y tournament in 3on" 9on"' and is very #o#ular internationally and domestically
8Credit Suisse' ())*;0
2sian nvestment Conference
.,e 2sian nvestment Conference 82C; is an international event s#onsored %y
Credit Suisse 8Credit Suisse' ())*;0 3eld in 3on" 9on" every year' t,e conference is
seen as t,e leadin" event for forei"n investors to discover tomorro1+s o##ortunities and
issues facin" 2sia0 ?eadin" international cor#orate' "overnmental' and #rivate investors
(=
travel to 3on" 9on" to #artici#ate in seminars and meet 1it, ot,er investors to talk over
trade and investin" contract in a mediated forum0
n addition to t,e ,i",ly re"arded investment conference' Credit Suisse s#onsors a
seven day ru"%y tournament' called .,e Sevens0 .,e Sevens is a very #o#ular event
domestically and internationally' and attracts vie1ers all over t,e "lo%e0 Credit Suisse
s#onsors t,e entire event and t,eir lo"o can %e seen t,rou",out t,e entire event0 Credit
Suisse successfully com%ined t,e #rofessional "oals of t,eir conference 1it, t,e
im#ortant cultural ties to t,eir investors' to #rovide an influential conference ,i",ly
re"arded %y many #o1erful investors0
t is at t,e 2C t,at credit Suisse 1ill announce t,eir entrance to t,e most recent
emer"in" market in 2sia: Vietnam0 .o "ain interest into t,is market' it 1as decided t,at
t,e o#enin" s#eaker of t,e conference 1ill %e t,e Prime !inister of Vietnam0 .,e
o#enin" s#eec, at t,e 2C ,as in t,e #ast %een filled %y #residents' #rime ministers and
Fo%el Prize 1innin" economists 8Credit Suisse' ())*;0 n addition' since t,e conference
is %ased around t,e o##ortunities 1it,in 2sia' multi#le seminars and lectures re"ardin"
t,e u#comin" Vietnamese economy 1ill also %e included0 .,is 1ill ins#ire investors to
eit,er invest in Vietnam and t,eir ne1ly #rivatized S/Es' or inquire for more information
re"ardin" t,e economic status of Vietnam0 Eit,er 1ay' Credit Suisse sees %ot, of t,ese
o#tions as a %enefit' as investors 1ill ,ave more information re"ardin" t,e Vietnamese
Economy' and 1ill see Credit Suisse as a leader in t,is emer"in" market0
!rice
.o determine t,e #rice of investments 1it,in t,e Vietnamese economy' many
factors needed to %e accounted for0 Biddin"' #ersonal consultation' o#eratin" levera"e'
(*
market volatility' additional fees' and t,e %asic market #rice of t,e #roduct are all
determinants of t,e #rice for international investments0 t is im#ossi%le to analyze #ast
#ricin" due to #rivacy la1s0 Credit Suisse+s #ricin" 1ill remain a com#le4 #acka"e %ased
on current interest rates' future discounts' mana"ement services' #roducts offered' and a
num%er of ot,er factors unkno1n at t,is #oint in time0
!arket Entry Strate"y
.,e success of t,e venture is ,i",ly de#endent on t,e a%ility of Credit Suisse to
secure a >oint venture #artners,i#0 .,e -./ la1s concernin" %ankin" and ot,er financial
sectors allo1 for &))A forei"n o1ned %ranc,es starin" 2#ril &' ())* 8-./' ())*' @=-
ectives are to facilitate S/E reforms and im#rove efficiency
of t,e "overnment+s ca#ital resource utilization 8SCC' ())*;0 SCC also mana"es a
massive #ortfolio coverin" different sectors' suc, as financial services' ener"y'
manufacturin"' telecommunications' trans#ortation' consumer #roducts' ,ealt, care' and
information tec,nolo"y)
(5
t is o%vious from t,e com#any descri#tion on t,e SCC 1e%site t,at t,ere is "oal
com#ati%ility %et1een SCC and Credit Suisse0 Credit Suisse 1ould %enefit %y #artnerin"
1it, one of its lar"est customers' t,e Vietnamese "overnment0 SCC 1ould also #rovide
unquantifia%le access to market data and 1ould "reatly reduce re"ulatory ,urdles0 SCC
could %enefit %y #artnerin" 1it, one of t,e market leaders in equitization0 SCC ,as
#roved to %e muc, less efficient t,an Credit Suisse in mana"in" its equity0 .,e R/E for
SCC is near &&A' 1,ereas Credit Suisse is consistently over t,e ()A mark 8Credit
Suisse et al' ())* L SCC et al' ())*;0 2 %usiness #artners,i# %et1een Credit Suisse and
SCC 1ould %e an asset to %ot, com#anies0
Credit Suisse 1ill attem#t a ()A stake in SCC0 -./ re"ulations mandate t,at
no forei"n firm can take more t,an a @)A stake in a Vietnamese state o1ned %ankin"
entity 8-./' ())*'
Credit Suisse in Vietnam
Brittany Culver
Erik Gracey
Jo-Petter verson
nternational !arketin"
!erlin Sim#son
$ecem%er &&' ())*
Executive Summary
Vietnam+s economy is a dynamic environment ca##ed %y t,e recent accession into
t,e -./0 .,e accession is t,e last sta"e in a lon" #rocess of reforms initiated over
t1enty years a"o0 -,ile still si"nificantly influenced %y .,e Communist Party' Vietnam
is movin" to1ard a li%eral market economy0 .,e re"ulatory environment ,as im#roved
tremendously' creatin" an incentive for forei"n investment0 2side from certain
"overnment o1ned entities' suc, as railroads and air-traffic' %y ()&) forei"n investment
1ill %e a%le to account for one-,undred #ercent of invested ca#ital in a Vietnamese
com#any0
Vietnam is an emer"in" market and a #erfect o##ortunity for Credit Suisse to
continue its recent dominance of emer"in"-market "lo%al %ankin"0 Credit Suisse is a
1orld reno1ned financial institution' ,avin" satisfied investors' "overnment' and
individuals' 1,ile aidin" in economic "ro1t, t,rou", sound consultin" in financial
li%eralization0 Brady $ou"an' CE/ of Credit Suisse' ,as re#eatedly em#,asized t,e
im#ortance of develo#in" emer"in" markets0
.,e Vietnamese "overnment ,as identified t,eir need of ,el# in li%eralizin" t,eir
economy0 .,e rise of t,e 3o C,i !in, Stock e4c,an"e and t,e commitment %y t,e
Vietnamese "overnment to equitize its state o1ner enter#rises ,as created an intri"uin"
%usiness environment ready for Credit Suisse+s services0 .,e emer"in" and un#redicta%le
market#lace ,as t,e ,i", risk and ,i", return investors demand0 .,e "overnment ,as t,e
demand' Credit Suisse ,as t,e ca#acity' and Vietnam #rovides t,e o##ortunity' t,e only
t,in" left to do is develo# a strate"y0
(
Background
3istory
.,e current state of Vietnam is a result of a lon" #rocess of conquest' revolution'
and reform0 Vietnam is traditionally a Confucian society' dominated %y several lar"e
em#ires over t,e course of its ,istory0 .,e recent conquest of Vietnam occurred under
colonialism in &565 %y t,e 7renc,' and 1as a #art of 7renc, ndoc,ina %y &55*
89arrno1' &::*;0 Vietnam 1as taken over t,e Ja#anese durin" -orld -ar .1o' t,an
transferred %ack to 7rance after Ja#an+s defeat0 Vietnam declared its inde#endence and
1on it in &:6< %y defeatin" t,e 7renc,0
.,e country 1as t,ereafter divided into t,e communist nort, and t,e non-
communist sout,0 .,e infamous Vietnam -ar %rou",t t,e country %ack to"et,er' %ut at a
#rice0 .,e 1ar caused massive dama"e to t,e economy and "eneral #u%lic0 n &:5= t,e
$oi !oi renovation #olicy committed t,e "overnment to increase economic li%eralization
t,rou", e4#ort #romotion strate"ies 89arrno1' &::*;0 Vietnam ,as en>oyed constant
economic "ro1t, since t,e $oi !oi reforms' resultin" in increasin" livin" standards
89arrno1' &::*;0
Geo"ra#,y
Vietnam is located in Sout,east 2sia %orderin" t,e "ulf of .,ailand' Gulf of
.onkin and t,e Sout, C,ina Sea0 /n land it %orders C,ina' ?aos and Cam%odia 8C2'
())*;0 .,e terrain of Vietnam is lo1 and flat in t,e nort, and t,e sout,0 .,ere are Central
,i",lands and mountains in t,e nort, and nort,1est0 .,e climate is tro#ical in t,e sout,
and monsoonal in t,e nort, 1it, a ,ot rainy season from !ay to Se#tem%er and 1arm
and dry season from /cto%er to !arc,0 .,ere are also occasional ty#,oons %et1een !ay
@
and January t,at can cause e4tensive 8C2' ())*;0 Vietnam ,as e4tensive natural
resources in t,e form of tim%er' natural "as' oil' and minerals 8C2' ())*;0 ts "eo"ra#,y
is 1ell suited for economic "ro1t, considerin" t,e natural resources and close #ro4imity
to t,e emer"in" markets of .,ailand and C,ina0
Po#ulation Statistics 8C2 -orld 7act%ook;
2s of July ())*' t,e estimated #o#ulation of Vietnam is 56'(=('@6= 8C2' ())*;0
.,e a"e structure is: )-&< is (='@A0 &6-=6 years is a%out =*':A and =6 years and u# is
a%out 6'5A0 .,e ?an"ua"es in Vietnam ordered in descendin" im#ortance are
Vietnamese' En"lis,' C,inese' local dialects' and 7renc,0 .,e literacy rate is
A for t,etotal #o#ulation' :0;
C,an"e in
G$P
8ad>usted;
nflation
())) (')@* oined t,e -orld .rade /r"anization'
to create a more fair trade and investment environment for domestic and international
investors0 By a"reein" to conform to -./ standards' Vietnam a"reed to a %road ran"e
of trade standards0 .,ese standards include: trade 1it,out discrimination' and treatin"
forei"n and nationals equallyI creatin" a freer trade environment 1it, lo1ered trade
%arriers' a more #redicta%le trade environment' t,e #romotion of fair com#etition' all to
encoura"e develo#ment and economic reform 8-./' ())=;0
-,ile Vietnam did si"n t,e -./ a"reement in t,e %e"innin" of ())*' it does
take a fe1 years for a "overnment to im#lement ne1 trade standards t,rou",out t,eir
current system0 n com#liance to t,eir a"reement' Vietnam 1ill ,ave fully im#lemented
t,e ma>ority of -./ standards %y ()&)0 .,is includes ne1 re"ulations t,at 1ill allo1
one ,undred #ercent ca#ital contri%ution investment %y a forei"n entity in Vietnam
8-./' ())*' @=;0
Role of the Vietnamese Government
Communism and S/Es
Even 1,ile tec,nically defined as a socialist form of "overnment' t,e Communist
Party still remains t,e dominant #olitical force0 .,e #arty selects future leaders and
senior "overnment officials and "ives t,em e4tensive #olitical and ideolo"ical trainin"0
.,is stron" Communist influence makes t,e situation more difficult for forei"n investors
to enter t,e Vietnamese market0 Since communism fundamentally lies in t,e
unc,allen"ed stren"t, of t,e "overnment' any international investors 1it, a lar"e stake in
&)
any one investment could %e seen as a t,reat to #o1er0 .,is ,as led to t,e ma>ority of
%usinesses 1it,in Vietnam %ein" State /1ned Enter#rises 8S/Es;0
n Vietnam' t,e #rocess of equitization includes c,an"in" an S/E into a
stock,oldin" com#any 1,ere s,ares are ,eld in #rivate o1ners,i#0 .,e @'))) S/Es
currently equitized re#resent a%out &(A of #revious state-o1ned ca#ital 8SCC' ())*;0
Even 1,ile t,e communist "overnment ,as made t,is im#ortant ste# to conform to -./
and $oi !oi standards' t,ey ,ave still retained o1ners,i# of forty-si4 #ercent of t,e
s,ares of t,e ne1ly equitized firms0 2not,er t,irty #ercent are ,eld %y t,e mana"ers and
em#loyees of t,e firms' leavin" only t1enty four #ercent availa%le for outside investors0
/f t,e @'))) ne1ly equitized firms' only t1enty attracted forei"n investment0 .,e
Vietnamese "overnment ,as #led"ed to continually equitize S/Es' leavin" only a fe1
%usiness sectors com#letely in t,e "overnment+s control0 .,ese include rail1ays'
air#orts' t,e media' to%acco' and defense equi#ment0 Even 1it, t,is #led"e' t,e
Vietnamese "overnment sends mi4ed messa"es to #rivate investors' %y allo1in" t,em
freer trade re"ulations' %ut still im#osin" a forty-t1o #ercent cor#orate income ta4' t,e
,i",est cor#orate income ta4 in t,e area 8$oin" Business' ())*;0
-,ile t,e %enefits of equitization may seem a##arent' many Vietnamese o##ose
t,e #rivatization of S/Es0 S/Es ,ave some advanta"es over #rivate firms' in t,at t,ey
,ave easier contract a##lication' land and credit access' in addition to su%sidized loans0
3o1ever' once all of t,e intended S/Es are equitized' la1s re"ulatin" S/Es 1ill no
lon"er %e in effect' e4ce#t for t,ose %usiness sectors ke#t in "overnment control0
&&
Credit Suisse
Our Vision
.,e vision of Credit Suisse is to %ecome t,e 1orld+s #remier %ank' reno1ned for
its e4#ertise in investment %ankin"' #rivate %ankin" and asset mana"ement' and most
valued for its advice' innovation and e4ecution 8Credit Suisse' ())*;0
Out Mission
n order to ac,ieve our vision' Credit Suisse 1ill set ne1 standards: ne1 standards
in #artnerin" 1it, our clients and ne1 standards in #rovidin" t,em 1it, innovative and
inte"rated solutions 8Credit Suisse' ())*;
Reasons for Worldwide Success
Since its start in &56=' Credit Suisse ,as com%ined traditional values alon" 1it, a
lastin" drive for innovation to continually en,ance t,e Credit Suisse %rand0
3eadquartered in Juric,' S1itzerland' Credit Suisse is a leadin" financial services
com#any #rovidin" clients 1it, investment %ankin"' #rivate %ankin" and asset
mana"ement services0
Credit Suisse+s asset mana"ement services offer many different investment
#roducts' many are alternative investments0 .,ey also mana"e #ortfolios' mutual funds
and ot,er investment met,ods for institutions' "overnments' cor#orations and #rivate
individuals0 Credit Suisse ,as offices in ei",teen countries t,at focus s#ecifically on asset
mana"ement' %ut is o#erated "lo%ally on an inte"rated net1ork0
Credit Suisse+s #rivate %ankin" services #rovide Gcom#re,ensive advice and a
%road ran"e of investment #roducts and services tailored to t,e com#le4 needs of ,i",-
net-1ort, individuals "lo%allyH 8Credit Suisse' ())*;0 n addition' Credit Suisse #rovides
&(
asset and lia%ility mana"ement to t,ese clients includin" alternative investment #roducts0
.,is includes 1ealt, mana"ement and %ookin" #latforms in addition to t,eir %ankin"
services to %usiness and retail clients0
Credit Suisse also offers investment %ankin" services t,at include securities
#roducts and financial advisory to cor#orations' "overnment and institutional investors0
/#eratin" in 6* locations across (* countries' Credit Suisse s#ecializes in Ginnovative
solutions' dra1in" on e4#ertise from across t,e full s#ectrum of #roducts: de%t and equity
under1ritin"' sales and tradin"' mer"ers and acquisitions' investment researc,'
corres#ondent and #rime %rokera"e servicesH 8Credit Suisse' ())*;0
Credit Suisse is currently active in over 6) countries' and is one of t,e fe1 truly
inte"rated %anks' #rovidin" institutional and #rivate clients 1it, ra#id and effective
service0 GCredit Suisse+s %usiness model is t,e res#onse to constantly c,an"in" client
needs in an industry t,at is driven %y "lo%alization and ra#id tec,nolo"ical
develo#mentsH 8Credit Suisse' ())*;0
Reasons for Success in Vietnam
-it, t,e recent #rivatization #olicies for Vietnam+s State /1ned Enter#rises' t,e
market 1ill %e more monetarily fluid0 nvestment re"ulations ,ave also recently c,an"ed
due to im#lemented -./ standards0 .,e %usiness environment in Vietnam is full of
o##ortunities0 Credit Suisse+s e4#ertise and seasoned %usiness model for emer"in"
markets 1as a key factor in identifyin" t,e Credit Suisse as a "ood matc, for Vietnam0
&@
SWOT Analysis
Stren"t,s
Credit Suisse+s stren"t,s are: a commitment to emer"in" markets' #revious
involvement in Vietnam' and a stron" %rand name %olstered %y international reco"nition0
.,e im#ortance of emer"in" markets to Credit Suisse is o%vious0 Emer"in" markets ,ave
muc, more #otential for e4#losive "ro1t, t,an industrialized nations0 /ne of t,e "olden
rules of economics and certainly %ankin"' is t,at ca#ital tends to con"re"ate in areas t,at
offer t,e ,i",est return0 nvestors 1ant t,eir investments to "enerate ,i", returns' %ut
t,ey need #rofessional ,el# due to ,i", risks in,erent to emer"in" market economies0
Credit Suisse is t,erefore #rovidin" a service in ,i", demand to investors around t,e
1orld0
.,e emer"in" market se"ment ,as increased in im#ortance since t,e last lar"e
"lo%al de%t crisis in &::50 n a s#eec, to investors' Credit Suisse CE/ Brady $ou"an'
listed t,e ra#id "ro1t, and increasin" im#ortance of emer"in" markets as one of t,e main
t,emes in t,e ())=-())* a"enda 8$ou"an' ())6;0 $ou"an also ,i",li",ted Credit
Suisse+s commitment to emer"in" markets %y revealin" t,e market leadin" #osition of t,e
com#any in key emer"in" markets: Brazil' !e4ico' Russia' and C,ina0
Credit Suisse is a key #layer in emer"in" markets' %ut it is t,eir commitment to
2sia t,at adds credi%ility to t,eir #otential success in Vietnam0 Similarly to $ou"an+s
s#eec, in ())6' Credit Suisse 2sia Pacific CE/ Paul Calello told investors in a
#resentation on 2#ril (' ())*' G.,e develo#ment of emer"in" markets is a key %ankin"
trend in 2siaH 8Credit Suisse' ())*;0 .,e ne4t t,ree slides of t,e #resentation detail some
of t,e investment trends in 2sia0 .,e fourt, slide of t,e #resentation features t1o key
&<
emer"in" markets in 2sia' t,e first is Pakistan' t,e ot,er Vietnam0 Credit Suisse ,as
initiated a fund s#ecifically for #urc,asin" or #artnerin" 1it, forei"n com#anies in
emer"in" marketsI t,e fund is currently 1ort, B=0* %illion 8Credit Suisse' ())*;0
Credit Suisse ,as ackno1led"ed t,e im#ortance of t,e Vietnamese market for
over a decade0 -,ile most of its com#etitors %e"an o#erations in Vietnam in t,e early
+s' Credit Suisse 1aited until t,e "overnment initiated muc, need reforms0 CreditSuisse ,as acted as a consultant to t,e #rocess of Vietnam credit ratin"' conducted %y
!oody+s' S*P' and 7itc, since ())& 8VietFamFet' ())*;0 n ())6' Credit Suisse ste##ed
u# its commitment in Vietnam %y actin" as t,e "uarantor in Vietnam+s successful
issuance of B*6) million 1ort, of international %onds 8Credit Suisse' ())*;0
Currently' Credit Suisse is 1orkin" on a B& %illion loan to Vinas,in' a state o1ned
s,i#%uildin" com#any and is also advisin" some of Vietnam+s lar"est S/Es on
equitization strate"ies 8VietFamFet' ())*;0 Credit Suisse o%tained an SSC license from
t,e "overnment allo1in" it to %uy and trade domestic securities in t,e 3o C,i !in, and
3anoi stock e4c,an"es0 .,e "ro1in" foot#rint of Credit Suisse in Vietnam necessitates
t,e need to esta%lis, a Vietnam %ranc,0
2fter Credit Suisse secured t,e loan to Vinas,in' t,e P! of Vietnam' F"uyen .an
$un" told Credit Suisse CE/ /s1ald J0 Grue%el' G ,o#e leadin" CE/s and
consultancies 1ill %e muc, involved in t,e Vietnamese market' and 1is, you every
success in Vietnam+s economy++8VietFamFet' ())*;0 .,e "overnment of Vietnam is not
alone in reco"nizin" t,e im#ortance of Credit Suisse in t,e develo#ment of emer"in"
markets0 .,e Credit Suisse %rand name is one of t,e most credi%le in t,e industry0 Credit
&6
Suisse ,as received many a1ards in ())* in t,e "lo%al %ankin" community' ,ere are >ust
a fe1:
-Glo%al nvestment Bank of t,e Eear
-Best ?evera"ed 7inance 3ouse
-Best 3i", Eield Bond 3ouse
-Best ?evera"ed 7inance 3ouse
-Best Emer"in" !arkets $e%t 3ouse
-Best nvestment Bank in Vietnam
- -Best nvestment Bank in ndonesia
-Best Equity Cnder1riter
-Best $e%t Cnder1riter
-Best ?on"-.erm Partner
-Best /verall nvestment Bank
.,e variety of a1ards illustrates t,e credentials of Credit Suisse' a %rand name t,at "ives
t,e com#any a com#etitive advanta"e in t,e ,i",ly saturated market of "lo%al %ankin"0
-eaknesses
.,e Credit Suisse Grou# ,as 1itnessed a decline in its net interest mar"in over t,e
#ast fe1 years0 .,e "rou#Ks net interest income ,as declined from B='&==0: million in
fiscal year ())0O( services, #redit Suisse would
-e an e3cellent consultant)
Threats
.,e main t,reats to Credit Suisse are its com#etitors0 Credit Suisse is not t,e only
com#any a1are of t,e #romise in Vietnam0 Cnfortunately' t,ere are many ot,er %anks
o#eratin" in Vietnam' includin" most of Credit Suisse "lo%al com#etitors0 2lt,ou", t,ere
are many com#etitors in Vietnam' t,e t,reat to Credit Suisse is not as si"nificant as it
could %e0 .,e strate"y of Credit Suisse+s com#etitors seems to %e' offer a %road ran"e of
&:
services in t,e ,o#es of creatin" demand for at least a fe1 of t,em0 Credit Suisse 1ill not
attem#t to com#ete in t,is matter0 Credit Suisse 1ill focus on a strate"y of s#ecialization
focusin" on t,e demands of t,e market' suc, as equitization0
Credit Suisse+s t,ree main com#etitors are $eutsc,e Bank' 3SBC' and !or"an
Stanley 8$atamonitor' ())*;0 3SBC and $eutsc,e Bank entered t,e market early in
&:
' 1,ile !or"an Stanley entered last year0 2ll t,ree offer a %road variety of serviceslike: im#ortMe4#ort finance' trade finance' insurance' securities' account services' and
#ersonal %ankin"0 So far' Credit Suisse+s com#etitors ,ave %een content to com#ete 1it,
t,e same services' stressin" %rand loyalty as t,e difference0 .,e s#ecialization strate"y of
Credit Suisse could s,ake u# t,e market %y inducin" its com#etitors to follo1 suit0
Political Risk
.,e #olitical risk in Vietnam ,as %een si"nificantly reduced %y economic and
#olitical reforms' %ut is still a t,reat to t,e com#any0 .,e #otential for risk e4ists %ecause
of t,e central control of t,e "overnment0 Po1er is concentrated into t,e ,ands of very
fe10 .,e CVP is still under t,e over1,elmin" influence of t,e rulin" elite and t,e
military 8%usiness monitor international' ())*;0 .,e CVP enacted a ne1 la1 t,is year
denyin" a lar"e sector of t,e Vietnamese economy t,e ri",t to strike 8%usiness monitor
international' ())*;0
.,e CVP is also en"a"ed in an on"oin" dis#ute 1it, et,nic minorities in t,e central
,i",lands' most nota%ly t,e !onta"nards0 ?ike many et,nic minorities in ?$Cs' t,e
!onta"nards measure lo1er in every economic statistic t,an t,e ma>ority 9in, Viet
#eo#le0 .,e !onta"nards ,ave suffered tremendously0 2fter fi",tin" on t,e C0S0 side in
t,e Vietnam -ar' ())'))) !onta"nards 1ere killed' many in #u%lic e4ecutions
()
8-as,in"ton .imes' ())=;0 .,e !onta"nards ,ave since %een moved from t,eir ancestral
land' livin" in e4treme #overty in reservations 1it, little access to #u%lic services0 .,e
Vietnamese "overnment ,as routinely denied t,e e4istence of any conflict and ,as
%lockaded t,e central ,i",lands from forei"n #ress 8-as,in"ton .imes' ())=;0
.,e !onta"nards ,ave ado#ted more violent forms of #rotest in t,e last five years
includin" direct attacks on Vietnamese military and #olice0 t is difficult to "ras# t,e
e4tent of t,e violence in t,e ,i",lands0 Vietnam is listed as one of t,e 1orst counties in
freedom of t,e Press0 .,e current situation is an a##allin" civil ri",ts a%use' %ut not a
direct t,reat yet to t,e %usiness sector in 3o C,i !in, City0 3o1ever' recent conflicts
,ave #roven to %e e4tremely disru#tive to 2sian ?$C economies' most nota%ly in
!yanmar and Sri ?anka0
Environmental Risk
.,ere are environmental risks affectin" t,e "lo%al %ankin" environment and t,e
environment in Vietnam0 .,e "lo%al %ankin" environment ,as %een ,it %y #oor forecasts
for t,e s,ort-medium term0 .,e #erformance of t,e "lo%al %ankin" industry is forecasted
to decelerate' 1it, a com#ound annual "ro1t, rate antici#ated at @06A for t,e five-year-
#eriod ())=-()&& 8$atamonitor' ())*;0 .,e decline in "ro1t, takes into account many
unfavora%le factors suc, as' ne1 "lo%al %ankin" re"ulations' mort"a"e uncertainty and
interest rate volatility0 Environmental risks in,erent to Vietnam are climate related risks:
monsoons' ty#,oons' flas,-floods' and tro#ical diseases #ose relative t,reats to Credit
Suisse 8C2 -orld 7act%ook' ())*;0 .,e sum of t,e environmental risk adds anot,er
dimension of needed ,ed"in" to ensure a successful %usiness venture0
Target arket
(&
2s stated in t,eir descri#tion of services' Credit Suisse tar"ets t,eir investment
%ankin" services to cor#orations' "overnment' and institutional investors0 2s a successful
international %ank' it 1as decided to ,ave t,e tar"et market %e t,e same entities for
forei"n investment into Vietnam0 .,ese 1ould include cor#orate investors defined as
com#anies t,at invest' or acquire control of ot,er com#aniesI and' institutional investors
t,at are %anks' insurance com#anies or retirement funds and financially so#,isticated
,ed"e funds 8Credit Suisse' ())*;0
Credit Suisse identifies t,e im#ortance of marketin" to an esta%lis,ed customer
%ase0 .,ese clients are already a1are of t,e re#utation of t,e com#any and ,ave an
esta%lis,ed %usiness relations,i# 1it, Credit Suisse0 .,ese clients ty#ically understand
t,e emer"in" markets and t,erefore are informed consumers' likely to res#ond to a
successful marketin" strate"y0
n addition' it 1as also decided to tar"et t,e countries and "overnments t,at are
currently t,e main contri%utors into Vietnam0 .ai1an' Sout, 9orea' Ja#an and 3on"
9on" are t,e to# four "overnments t,at are currently investin" into Vietnam 8Economist'
())*;0 By tar"etin" t,ese "overnments' Credit Suisse 1ill %e a%le to e4#lain t,e %enefits
of investin" in t,e emer"in" market since t,ey are already familiar 1it, current trade
trends and re"ulations0 .,e a%undance of funds flo1in" t,rou", t,e Vietnamese market
as a result of t,e equitization of S/Es 1ill %e a tar"et of Credit Suisse0 $omestic
investors 1ill ,ave a ne1 incentive to invest in t,e economy as more securities %ecome
availa%le on t,e 3o C,i !in, Stock E4c,an"e0
Product
((
3avin" esta%lis,ed t,e needs of our tar"et market' Credit Suisse 1ill develo#
#roducts t,at are syner"istic in nature' 1,ile takin" into account t,e current %usiness
environment0 .,e market at t,is time is too saturated to make #rivate %ankin" 1ort, t,e
e4tra cost0 .,erefore' Credit Suisse 1ill focus on asset mana"ement and investment
%ankin"0
n nvestment Bankin"' Credit Suisse currently offers securities #roducts and
financial advisory services to cor#orations' "overnments and institutional investors
8Credit Suisse' ())*;0 /#eratin" in 6* locations across (= countries' Credit Suisse+s
investment %ankin" %usiness s#ecializes in innovative solutions' dra1in" on e4#ertise
from across t,e full s#ectrum of #roducts: de%t and equity under1ritin"' sales and
tradin"' mer"ers and acquisitions' investment researc,' corres#ondent and #rime
%rokera"e services0 nvestment %ankin" in Vietnam 1ill %e very similar to t,is model' %ut
1ill focus s#ecifically on t,e services relevant to equitization0 Fecessarily' Credit Suisse
1ill em#,asize its com#etitive advanta"e in mer"er and acquisitions' de%t and equity
under1ritin"' and investment researc,0
n its asset mana"ement %usiness' Credit Suisse offers #roducts across t,e full
s#ectrum of investment classes' ran"in" from equities' fi4ed income and multi#le-asset
class #roducts' to alternative investments suc, as real estate' ,ed"e funds' #rivate equity
and volatility mana"ement 8Credit Suisse' ())*;0 Credit Suisse+s asset mana"ement
%usiness mana"es #ortfolios' mutual funds' and ot,er investment ve,icles for a %road
s#ectrum of clients ran"in" from "overnments' institutions and cor#orations to #rivate
individuals0
(@
2sset mana"ement in Vietnam 1ill %e a #rime focus for t,e com#any as its asset
mana"ement #erformance is one of t,e com#any+s %i""est 1eaknesses0 .,e market for
asset mana"ement is ,u"e in Vietnam' %ot, domestically and internationally0 .,e
domestic market is com#rised of t,e "overnment' #u%lic and #rivate %usinesses' and even
individuals interested in a mana"er for t,eir res#ective #ortfolios0 .,e volatility of t,e
market necessitates a #rofessional mana"er 1it, a successful track record in ,i",
riskM,i", yield market 1orld1ide0 Credit Suisse is t,at mana"er0
n addition to mana"ement services' Credit Suisse 1ill offer t1o introductory
#roducts0 .,e demand for emer"in" market funds is lar"e for investors t,at can afford t,e
risk involved0 Credit Suisse 1ill %e"in %y offerin" t1o mutual funds to meet t,e demand0
.,e funds 1ill %ot, %e com#rised of small amounts of equity from Vietnam+s most
successful listed com#anies0 /ne of t,e funds 1ill tar"et t,e needs of t,e domestic
market0 .,is fund 1ill %e com#rised of riskier securities' as t,e investment re"ulations
are less strin"ent domestically0 .,e international fund' also availa%le to domestic
investors' 1ill %e a fund ,ed"ed to decrease t,e risk0 .,e forei"n fund 1ill %e more
e4#ensive due to t,e ,i",er cost of conformin" to international %ankin" re"ulations' like
t,e ne1 Basel 2ccords enacted to inform #otential investors of t,e risks to t,eir #rivacy
and #ortfolios 8Credit Suisse' ())*;0 Credit Suisse 1ill monitor t,e success of t,ese funds
closely 1it, t,e "oal of offerin" more #roducts in t,e near future0
!lace
3o C,i !in, city is located on t,e sout,ern ti# of Vietnam0 .,e city is t,e
financial ca#ital of t,e country' and %oasts t,e first Stock E4c,an"e of Vietnam 1,ic,
o#ened in ())&' and is no1 one of 2sia+s most dynamic stock markets0 -it, over
(<
@))'))) %usinesses #o#ulatin" t,e city' it is also seen as t,e economic center of Vietnam
8Economist' ())*;0 .,e modern %usiness sector is com#osed of many lar"e enter#rises in
different industries includin": tec,nolo"y' electronics' information #rocessin"' li",t
industrials' and a"ro-#roducts 8Economist' ())*;0 .,e city ,as fifteen industrial #orts'
and t,e Nuan" .run" Soft1are Park' and t,e Sai"on 3i-.ec, Park0 .,e com#uter
com#any ntel invested one %illion dollars into t,eir #lant located in t,e ,eart of 3o C,i
!in, City0
.,e city accounts for t1enty #ercent of t,e national Gross $omestic Product and
t,irty #ercent of industrial #roduct value 8Economist' ())*;0 3o 3i !in, City also
contri%utes a%out t1enty-one #ercent to t,e national revenue #er year0 n addition to t,e
t,rivin" economy' ,i",er education is more develo#ed in 3o C,i !in, City t,an
any1,ere else in Vietnam0 7ifty universities are located 1it,in t,e city' 1it, over
@))'))) enrolled in t,e universities0 .,e universities include t,e Cniversity of
Polytec,nic' Cniversity of nformation .ec,nolo"y' 7aculty of Economics' t,e Cniversity
of medicine and t,e Cniversity of Bankin" 8Economist' ())*;0
3o C,i !in, City is t,e %est #lace to launc, Credit Suisse0 Credit Suisse 1ants
to %e in t,e financial ,u% of any city t,ey enter0 3o C,i !in, City is t,e over1,elmin"
financial center0 t is also t,e intellectual center0 2s evidenced %y t,e ,i",er enrollment
rate' 3o C,i !in, City ,as most of t,e countries youn" minds0
!romotion
.o #romote t,e entrance of Credit Suisse into t,e Vietnamese market' it ,as %een
decided t,at t1o #romotional activities 1ill %e undertaken0 Eac, activity 1ill address a
different sector of t,e defined tar"et market t,rou", a multitude of events0
(6
Soccer
Soccer is a social institution 1it,in Vietnam0 t is t,e most #o#ular s#ort' and
c,ildren are tau",t to #lay from t,eir yout,0 Vietnam ,as t1o ma>or soccer teams' t,e
Vietnam Fational 7oot%all .eam' and t,e V-?ea"ue 8vietnamnet' ())*0 .,e Fational
7oot%all .eam is a lar"e team t,at is very #o#ular 1it,in t,e nationals0 3o1ever' t,e V-
?ea"ue s#onsors yout, t,rou", adult lea"ues' and is a more successful team in different
tournaments0 n Vietnam last year' t,e V-?ea"ue s#onsored t,e .i"er Cu#' and also
#layed in t,e 9in"+s Cu#0 .,e adult V-?ea"ue team made it to t,e quarter-finals in %ot,
of t,ese tournaments0
t ,as %een decided t,at Credit Suisse 1ill ,el# s#onsor t,e V-?ea"ue' and its
#ro"rams for yout,s and adults alike0 By s,o1in" t,e local community t,at Credit Suisse
is interested in t,eir community t,rou", su##ortin" local yout, soccer teams' Credit
Suisse 1ill "ain a #ositive re#utation amon" locals0 2lso' %y su##ortin" t,e adult V-
?ea"ue teams' Credit Suisse 1ill %e a%le to "et t,eir name out to t,e domestic and forei"n
vie1ers of t,e tournaments0
.,is ,as #roved successful in t,e #ast 1it, Credit Suisse' as t,e ,ost a seven day
ru"%y tournament in 3on" 9on"' and is very #o#ular internationally and domestically
8Credit Suisse' ())*;0
2sian nvestment Conference
.,e 2sian nvestment Conference 82C; is an international event s#onsored %y
Credit Suisse 8Credit Suisse' ())*;0 3eld in 3on" 9on" every year' t,e conference is
seen as t,e leadin" event for forei"n investors to discover tomorro1+s o##ortunities and
issues facin" 2sia0 ?eadin" international cor#orate' "overnmental' and #rivate investors
(=
travel to 3on" 9on" to #artici#ate in seminars and meet 1it, ot,er investors to talk over
trade and investin" contract in a mediated forum0
n addition to t,e ,i",ly re"arded investment conference' Credit Suisse s#onsors a
seven day ru"%y tournament' called .,e Sevens0 .,e Sevens is a very #o#ular event
domestically and internationally' and attracts vie1ers all over t,e "lo%e0 Credit Suisse
s#onsors t,e entire event and t,eir lo"o can %e seen t,rou",out t,e entire event0 Credit
Suisse successfully com%ined t,e #rofessional "oals of t,eir conference 1it, t,e
im#ortant cultural ties to t,eir investors' to #rovide an influential conference ,i",ly
re"arded %y many #o1erful investors0
t is at t,e 2C t,at credit Suisse 1ill announce t,eir entrance to t,e most recent
emer"in" market in 2sia: Vietnam0 .o "ain interest into t,is market' it 1as decided t,at
t,e o#enin" s#eaker of t,e conference 1ill %e t,e Prime !inister of Vietnam0 .,e
o#enin" s#eec, at t,e 2C ,as in t,e #ast %een filled %y #residents' #rime ministers and
Fo%el Prize 1innin" economists 8Credit Suisse' ())*;0 n addition' since t,e conference
is %ased around t,e o##ortunities 1it,in 2sia' multi#le seminars and lectures re"ardin"
t,e u#comin" Vietnamese economy 1ill also %e included0 .,is 1ill ins#ire investors to
eit,er invest in Vietnam and t,eir ne1ly #rivatized S/Es' or inquire for more information
re"ardin" t,e economic status of Vietnam0 Eit,er 1ay' Credit Suisse sees %ot, of t,ese
o#tions as a %enefit' as investors 1ill ,ave more information re"ardin" t,e Vietnamese
Economy' and 1ill see Credit Suisse as a leader in t,is emer"in" market0
!rice
.o determine t,e #rice of investments 1it,in t,e Vietnamese economy' many
factors needed to %e accounted for0 Biddin"' #ersonal consultation' o#eratin" levera"e'
(*
market volatility' additional fees' and t,e %asic market #rice of t,e #roduct are all
determinants of t,e #rice for international investments0 t is im#ossi%le to analyze #ast
#ricin" due to #rivacy la1s0 Credit Suisse+s #ricin" 1ill remain a com#le4 #acka"e %ased
on current interest rates' future discounts' mana"ement services' #roducts offered' and a
num%er of ot,er factors unkno1n at t,is #oint in time0
!arket Entry Strate"y
.,e success of t,e venture is ,i",ly de#endent on t,e a%ility of Credit Suisse to
secure a >oint venture #artners,i#0 .,e -./ la1s concernin" %ankin" and ot,er financial
sectors allo1 for &))A forei"n o1ned %ranc,es starin" 2#ril &' ())* 8-./' ())*' @=-
ectives are to facilitate S/E reforms and im#rove efficiency
of t,e "overnment+s ca#ital resource utilization 8SCC' ())*;0 SCC also mana"es a
massive #ortfolio coverin" different sectors' suc, as financial services' ener"y'
manufacturin"' telecommunications' trans#ortation' consumer #roducts' ,ealt, care' and
information tec,nolo"y)
(5
t is o%vious from t,e com#any descri#tion on t,e SCC 1e%site t,at t,ere is "oal
com#ati%ility %et1een SCC and Credit Suisse0 Credit Suisse 1ould %enefit %y #artnerin"
1it, one of its lar"est customers' t,e Vietnamese "overnment0 SCC 1ould also #rovide
unquantifia%le access to market data and 1ould "reatly reduce re"ulatory ,urdles0 SCC
could %enefit %y #artnerin" 1it, one of t,e market leaders in equitization0 SCC ,as
#roved to %e muc, less efficient t,an Credit Suisse in mana"in" its equity0 .,e R/E for
SCC is near &&A' 1,ereas Credit Suisse is consistently over t,e ()A mark 8Credit
Suisse et al' ())* L SCC et al' ())*;0 2 %usiness #artners,i# %et1een Credit Suisse and
SCC 1ould %e an asset to %ot, com#anies0
Credit Suisse 1ill attem#t a ()A stake in SCC0 -./ re"ulations mandate t,at
no forei"n firm can take more t,an a @)A stake in a Vietnamese state o1ned %ankin"
entity 8-./' ())*'