Country Comparision For Exportation, Philipenes And Vietnam

Country Justification Report

Vietnam and Philippines

17 September 2007

Wool-Works Pty Ltd.

Head of research and development for

Wool-Works

Table of Contents

Executive Summary 3

1.0 Introduction 4

1.1 Purpose 4

1.2 Company Profile 4

1.3 Product Profile 4

2.0 Political & Legal Environment 5

3.0 Economical Factors 6

3.1 Micro Economic Factors 6

3.2 Macro Economic Analysis 7

3.3 Economic Analysis Table 11

3.4 Summary 12

4.0 Bi-lateral Relations 13

5.0 Demographic Analysis Table 14

6.0 Cultural & Social Environment 15

6.1 Hofstede’s Dimensions 15

6.2 Cross Cultural Literacy 16

7.0 Geographic Analysis 17

8.0 Country Choice 19

8.1 Conclusion 20

Appendix One 21

Appendix Two 22

Appendix Three 23

9.0 References 24

Executive Summary

Wool- Works is a small firm located in Queensland, which specialises in the sales of scoured fleece which is used in all areas of the textile industry.

Globalisation has played a large role in the textile industry, particularly in wool. Due to the the opportunities that arise from globalization of production, Wool-Works seeks to become an International Business and therefore is looking to expand its sales internationally. Wool-Works has narrowed down two potential countries to export its fleece; the Philippines and Vietnam.

An examination of the economic, cultural and socio-political factors suggests the Vietnam is the more suitable Country in which to export.

Wool-Works plans to enter the Vietnamese textile industry buy exporting its goods through joint venture with a large raw materials supplier in Hanoi. This mode of entry was chosen as it will provide Wool-works with a competitive advantage, minimal risks, better understanding of the Vietnamese way of life and benefits associated with existing relationships with local supply chains and distribution networks.

1.0 Introduction

1.1 Purpose / Scope

The purpose of this report is to look for a suitable country to export

Wool-Works Australian wool. After narrowing this down to two countries, Vietnam and the Philippines, a research report is to be carried out to compare the two countries. A competitor analysis will not be needed.

1.2 Company Profile

Wool-Works is a private Australian company located in Queensland.

Wool-Works has been operating since 1997 and specialises in distributing raw materials to textile companies, particularly garments. Wool-Works turn over for 2006/2007 financial period was $6.7 million with net profits totalling $3.4 Million and seeks to gain further revenue by exporting its goods.

1.3 Product Profile

Wool-Works offers a high quality scorned merino fleece which is classed at 20.6-22.5. The fleece is sourced from local farms.

1.4 Demand for Product

According to Textiles Intelligence Agency (http://www.textilesintelligence.com/til/press.cfm?prid=374 ) and wool-news (http://www.woolnews.net/news_item.php?ID=1216. 02/08/2007 ), it is predicted that Vietnam aims to spend US $180 million on projects to increase raw material supplies. The source also quotes that Vietnam currently relies on substantial imports of fibres, yarns, fabrics and garment accessories.

Demand wool in the Philippines is also significant; as it can be seen from textile intelligence source that the textile and garment sector in the Philippines is a vital part of the country’s economy. (http://www.textilesintelligence.com/til/press.cfm?prid=374)

2.0 Political & Legal Environment

Philippines Flag Vietnam Flag

When choosing a country to export goods, the political and legal environment is very important; needing a stable country with stable business practices needed, and fair rules and regulations.

Both these countries are under the ASEAN agreement, which “aims to accelerate economic growth, social progress and cultural development in the region through joint endeavours to promote a prosperous and peaceful community of South-East Asian nations” www.dfat.gov.au accessed 13/09/07 The Australian Government Department of Foreign Affairs.

The Philippines is a democratic presidential system, which is modelled on the American presidential system.

Vietnam is a communist government, as opposed to the Philippines democratic system. Vietnam is slowly undertaking economic reform, and is starting to slightly move towards a democratic state.

Export tariffs are relatively