HO CHI MINH OPEN UNIVERSITY

BADM5329 – INTERNATIONAL BUSINESS

Student's name and ID Trần Thị Mai Duyên - 2154010150

Campus Vo Van Tan
Your lecturer’s name Mr. Dang Huynh Anh Duy
Word count

I hereby affirm that, in the submission of all work for this assessment, I have carefully read,
comprehended, and consented to adhere to the stipulations and anticipations outlined in OU's
academic integrity regulations.
 LIST OF CONTENTS
1. Introduction to the report..............................................................................................................1
2. Introduction of the Honda Motor Co., Ltd....................................................................................1
3. Introduction about Vietnam and the activities of Honda Motor Co., Ltd. presence here.............2
3.1. About Vietnam..............................................................................................................................2
3.1.1. Political system, economic system.............................................................................................2
3.1.2. Key economic indicators............................................................................................................3
3.1.3. Risks in Vietnam for multinational enterprises..........................................................................4
3.1.4. Key transnational organisations in Vietnam..............................................................................5
3.1.5. Tariffs in Vietnam......................................................................................................................6
3.2. Activities of Honda Motor Co., Ltd. in Vietnam..........................................................................6
3.2.1 Benefits and drawbacks that MNEs bring to Vietnam................................................................7
4. Globalization challenges laying ahead for the Honda Motor Co., Ltd.........................................7
Conclusion:...........................................................................................................................................8
References:...........................................................................................................................................8
List of Vietnam:....................................................................................................................................8
List of English:.....................................................................................................................................9

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 LIST OF TABLE:

Table 1: Worldwide unit sales for the fiscal year ened March 31, 2022
......................................................................................................................................................................... 1

Table 2: Economic and financial indicators

......................................................................................................................................................................... 3

Table 3: Activities of Honda Vietnam

......................................................................................................................................................................... 6

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 LIST OF FIGURE:

Figure 1: Consolidated financial results

......................................................................................................................................................................... 2

Figure 2: GDP growth rate 2010-2020............................................................................................................3

Figure 3: GDP growth rate in 2018-2022 (%)

......................................................................................................................................................................... 4

Figure 4: Inflation and core inflation in September over the years..........................................................5

Figure 5: Registered FDI capital over the years in Vietnam

..............................................................................................................................................................5

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 LIST OF ACRONYMS:

MNE: Multinational enterprises

GDP: Gross Domestic Product

WTO: World Trade Organization

CPTPP: Comprehensive and Progressive Agreement for Trans-Pacific Partnership

FDI: Foreign Direct Investment

RCEP: Regional Comprehensive Economic Partnership

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 1. Introduction to the report
The main purpose of multinational enterprises is to increase profits. Globalization is the process of
connecting economies around the world in many industries and blurring national borders, making it
easier for multinational enterprises to conduct their business activities. That's why multinational
enterprises see globalization as a stepping stone to achieving their goals. This report is written to
discuss the globalization process of Honda Motor Co., Ltd. by focusing on the activities of this
multinational enterprise in the Vietnamese market.

2. Introduction of the Honda Motor Co., Ltd.

According to the Honda Global website (n.d) posted in the history section, Honda Motor Co., Ltd.
was founded in 1948 by Mr. Soichiro Honda. The main products that Honda Motor Co., Ltd.
provides are motorbikes, cars, and electronic products. According to the Honda Global website
(n.d) posted in the company overview section, after 75 years of operation, Honda Motor Co., Ltd.
has globalized its business activities with 382 domestic and overseas affiliated companies, including
313 consolidated subsidiaries and 69 affiliated companies. Information on the Honda Global (n.d)
website also demonstrates the global presence of Honda Motor Co., Ltd. through worldwide sales
posted on the Honda Global (n.d) website in the Overview section. Company (table 1)

Table 1: Worldwide unit sales for the fiscal year ened March 31, 2022
(Source: Honda Global, n.d)

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 3. Introduction about Vietnam and the activities of Honda Motor Co., Ltd. presence here
According to the Honda Global website (n.d) posted in the Company Overview section, Asia is the
region with the highest profit percentage (54%) of Honda Motor Co., Ltd. (figure 1)

Figure 1: Consolidated financial results

(Source: Honda Global, n. d)

For that reason, choosing Vietnam as the country to analyze Honda's globalization process is
reasonable.

3.1. About Vietnam

3.1.1. Political system, economic system

According to the Government Information Portal (n.d), Vietnam is a country operating under a one-
party political system and the transition to a socialist market economy in 1986 was a breakthrough
in the thinking and practice of leading the innovation cause of the Communist Party of Vietnam
(Anh, 2022).

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3.1.2. Key economic indicators
Important economic indicators of our country include Gross Domestic Product (GDP) growth
reaching about 6.8% to 7% from 2017 to 2019 (table 2) (Vietnam Bond Market Association,
2/2023).

Table 2: Economic and financial indicators

(Source: Vietnam Bond Market Association, 2/2023)

During the Covid 19 pandemic, Vietnam has grown to become an emerging mid-range country
(Tinh & Ngan, 2022). However, because of the negative impact of the COVID-19 pandemic
disrupting socio-economic activities, our country's GDP in 2020 had the lowest increase in the
period from 2011-2020, according to the General Statistics Office (2021) estimates that with a GDP
growth rate of 2.91%, our country is one of the countries with the highest growth rate in the world
(Figure 2)

Figure 2: GDP growth rate 2010-2020

(Source: General Statistics Office, 2021)

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By 2021, GDP will reach a growth rate of 2.58% (Ministry of Finance, 2022). GDP in 2022 will
increase at 8.02% (General Statistics Office, 2023), this also proves that our country's economy is
recovering well after the effects of the COVID-19 pandemic (figure 3)

Figure 3: GDP growth rate in 2018-2022 (%)

(Source: General Statistics Office, 2023)

3.1.3. Risks in Vietnam for multinational enterprises

The level of inflation in Vietnam is the risk that gives Multinational enterprises (MNE) headaches,
the inflation level will reach 3.82% by September 2022 (Vietnam Bond Market Association, 2022)
(Figure 4).

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 Figure 4: Inflation and core inflation in September over the years
(Source: Vietnam Bond Market Association, 2022)

3.1.4. Key transnational organisations in Vietnam

Advantages and disadvantages of the activities of the World Trade Organization bring to
Vietnam

When Vietnam became a member of the World Trade Organization (WTO) in 2007, this was also
an important milestone for Foreign Direct Investment (FDI) activities in Vietnam (Hoang et al.,
2022) As shown in Figure 5, while FDI before Vietnam joined the WTO was not high, only one
year after our country became an official member of the WTO, FDI flowing into Vietnam increased
dramatically. Attracting FDI also contributes to boosting the economy because FDI plays a very
important role in creating jobs, supplementing development investment capital, and promoting
technology transfer and integration into the international economy (Minh, 2020). WTO membership
gives Vietnamese business executives and entrepreneurs access to international markets as well as
better connections with foreign companies (de Oliveira et al., 2021).

Figure 5: Registered FDI capital over the years in Vietnam

(Source: Vietnam Foreign Investment Agency, 2021)

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However, after Vietnam joined the WTO and liberalized regulations on access to the Vietnamese
market, small and medium-sized enterprises faced a significant increase in competition (Platonova
& Nga, 2016). Another challenge that Vietnam faces after joining the WTO is how to make
important changes in Vietnam's legal framework to conform to the basic values of "international
standards" while still between being "socialist-oriented" (Phuong, Nguyen, & Vu, 2020).

3.1.5. Tariffs in Vietnam

Seven of the Regional Comprehensive Economic Partnership (RCEP) members, that is, Australia,
Brunei Darussalam, New Zealand, Japan, Malaysia, Singapore, and Vietnam, have already agreed
to eventually eliminate tariffs under the Comprehensive and Progressive Agreement for Trans-
Pacific Partnership (CPTPP) agreement. After CPTPP took effect on January 14, 2019, Vietnam
agreed to a 0.5% – 2.5% annual phased tariff cut in this agreement, entirely removing tariffs to zero
in the thirteenth year of its enforcement (Badri Narayanan, Sen, & Srivastava, 2023).

3.2. Activities of Honda Motor Co., Ltd. in Vietnam

Honda Motor Co., Ltd. entered into a joint venture with three other companies, Asian Honda Motor
Company (Thailand) and Vietnam Engine and Agricultural Machinery Corporation, to establish
Honda Vietnam Company in 1996. After more than 27 years of presence. In Vietnam, producing
2.5 million motorbikes and 23,000 cars per year, Honda Vietnam has become a prestigious name in
the Vietnamese market when it comes to the field of motorbike and car manufacturing (Table 3)
(Honda VietNam, 2023).

Table 3: Activities of Honda Vietnam

(Source: Honda VietNam, 2023)

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Understanding that motorbikes are the main means of transportation for Vietnamese people, Honda
Vietnam always tries its best to bring customers the best quality motorbike products at affordable,
user-friendly prices and environmentally friendly (Honda VietNam, 2023). According to the open
letter of the Vietnam Motorcycle Manufacturers Association website (2018), the five largest
motorcycle manufacturers including Honda Vietnam, SYM Vietnam, Suzuki Vietnam, and Piaggio
Vietnam are mentioned. This means that Honda Vietnam's main competitors in the field of
motorbike manufacturing in Vietnam are the remaining four enterprises. Although it only started the
car business in 2006, in the field of the car business, Honda Vietnam has also achieved great
success (Honda VietNam, 2023).

3.2.1 Benefits and drawbacks that MNEs bring to Vietnam

FDI is one of the three main sources of knowledge that Vietnam receives from advanced countries
so the benefits that MNEs bring to Vietnam are improving the productivity of the domestic
economy by transferring technology and spreading knowledge through FDI (Tung & Binh, 2022).
MNEs also bring challenges in terms of environmental pollution as CO2 emissions based on the
MNE's global supply chain are high for both developed and developing countries (Duan & Jiang,
2021).

4. Globalization challenges laying ahead for the Honda Motor Co., Ltd.
The war between Russia and Ukraine disrupted the global supply chain, causing commodity prices
to increase sharply (Ahmed, Hasan, & Kama, 2023). The COVID-19 epidemic has caused a
shortage of semiconductors that almost all global automakers are facing (Ramani, Ghosh, & Sodhi,
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2022). These things have had a significant impact on Honda Motor Co., Ltd. because it will be
difficult to import necessary spare parts as well as export the company's products.

Conclusion:
In summary, this article has provided some information about the activities of Honda Motor Co.,
Ltd. in Vietnam to better understand the globalization of this Multinational enterprise. The article
also analyzes the difficulties when Honda Motor Co., Ltd. operates in Vietnam as well as the values
and challenges that MNEs bring to Vietnam. Finally, better understand how current globalization
has affected Honda Motor Co., Ltd. in particular and multinational companies in general.

References:

List of Vietnam:
Anh, T. T. (2022, July 11). Thống nhất nhận thức và tập trung nguồn lực để đưa kinh tế tập thể,
kinh tế hợp tác đi đúng hướng, hiệu quả, bền vững. Tạp chí cộng sản. Truy cập ngày 16/11/2023 tại:
https://www.tapchicongsan.org.vn/web/guest/media-story/-/asset_publisher/V8hhp4dK31Gf/
content/thong-nhat-nhan-thuc-tap-trung-nguon-luc-dua-kinh-te-tap-the-kinh-te-hop-tac-phat-trien-
dung-huong-hieu-qua-va-ben-vung

Bộ tài chính. (2022). GDP năm 2021 của Việt Nam tăng 2,58%. Truy cập ngày 16/11/2023 tại:
https://mof.gov.vn/webcenter/portal/btcvn/pages_r/l/tin-bo-tai-chinh?
dDocName=MOFUCM222589

Hiệp hội Các nhà sản xuất xe máy Việt Nam. (2020). Thư ngỏ. Truy cập ngày 16/11/2023 tại:
https://vamm.vn/thu-ngo/

Hiệp hội Thị trường Trái phiếu Việt Nam. (10/2022). BÁO CÁO THÁNG 9/2022. Truy cập ngày
16/11/2023 tại: https://vbma.org.vn/storage/reports/October2022/VBMA_BAO%20CAO%20TTTP
%20THANG%209%202022.pdf

Hiệp hội thị trường trái phiếu Việt Nam. (2023). Các chỉ số kinh tế và tài chính. Truy cập ngày
16/11/2023 tại: https://vbma.org.vn/vi/investor-centre/economy-index

Honda Việt Nam. (2019). Giới thiệu về Honda Việt Nam. Truy cập ngày 16/11/2023 tại:
https://www.honda.com.vn/gioi-thieu/gioi-thieu-honda-viet-nam

Thông tin điện tử Chính phủ. (n.d). Hệ thống chính trị. Truy cập ngày 16/11/2023 tại:
https://chinhphu.vn/he-thong-chinh-tri-68381
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Tổng cục thống kê. (2021). Kinh tế Việt Nam 2020: một năm tăng trưởng đầy bản lĩnh. Truy cập
ngày 16/11/2023 tại: https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2021/01/kinh-te-viet-
nam-2020-mot-nam-tang-truong-day-ban-linh/

Tổng cục thống kê. (2023). Điểm sáng tình hình kinh tế - xã hội quý IV và năm 2022. Truy cập ngày
16/11/2023 tại: https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2023/01/diem-sang-tinh-hinh-
kinh-te-xa-hoi-quy-iv-va-nam-2022/

List of English:
Ahmed, S., Hasan, M. M., & Kamal, M. R. (2023). Russia–Ukraine crisis: The effects on the
European stock market. European Financial Management, 29(4), 1078-1118.
https://doi.org/10.1111/eufm.12386

Badri Narayanan, G., Sen, R., & Srivastava, S. (2023). The Potential Impact of Tariff Liberalisation
on India’s Automobile Industry Global Value Chain Trade: Evidence From an Economy-Wide
Model. Foreign Trade Review, 00157325231161931. https://doi.org/10.1177/00157325231161931

de Oliveira, R. T., Nguyen, T., Liesch, P., Verreynne, M. L., & Indulska, M. (2021). Exporting to
escape and learn: Vietnamese manufacturers in global value chains. Journal of World Business,
56(4), 101227. https://doi.org/10.1016/j.jwb.2021.101227

Duan, Y., & Jiang, X. (2021). Pollution haven or pollution halo? A Re-evaluation on the role of
multinational enterprises in global CO2 emissions. Energy Economics, 97, 105181. Retrieved from:
https://doi.org/10.1016/j.eneco.2021.105181

Hoang, H. H., Huynh, C. M., Duong, N. M. H., & Chau, N. H. (2022). Determinants of foreign
direct investment in Southern Central Coast of Vietnam: A spatial econometric analysis. Economic
Change and Restructuring, 1-26. https://doi.org/10.1007/s10644-020-09315-3

Honda Global. (n.d). Company Overview. Retrieved November 16, 2023 from:
https://global.honda/en/about/overview.html?from=navi_header_drawer_global_en

Honda Global. (n.d). History. Retrieved November 16, 2023 from:

https://global.honda/en/brand/history.html?from=navi_header_drawer_global_en

Minh, N. N. (2020). Foreign Direct Investment and Carbon Dioxide Emissions: Evidence from
Capital of Vietnam. International Journal of Energy Economics and Policy, 10(3), 76–83.

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Phuong, N. C., Nguyen, T. D. K., & Vu, H. P. (2020). Politics and institution of corporate
governance in Vietnamese state-owned enterprises. Managerial Auditing Journal, 35(5), 667-684.
Retrieved from: https://doi.org/10.1108/MAJ-02-2018-1810

Platonova, I. N., & Nga, P. T. H. (2016). Issues of Vietnam’s SMEs after joining the WTO. Russian
Foreign Economic Journal, (12), 8-17.

Ramani, V., Ghosh, D., & Sodhi, M. S. (2022). Understanding systemic disruption from the Covid-
19-induced semiconductor shortage for the auto industry. Omega, 113, 102720. Retrieved from:
https://doi.org/10.1016/j.omega.2022.102720

Tung, L. T., & Binh, Q. M. Q. (2022). The impact of R&D expenditure on firm performance in
emerging markets: evidence from the Vietnamese listed companies. Asian Journal of Technology
Innovation, 30(2), 447-465. Retrieved from: https://doi.org/10.1080/19761597.2021.1897470

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