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In September 1995, Hewlett-Packard Asia Pacific (HPAP) was evaluating its long term strategic investment options for doing business in Vietnam. Analysis revealed that even though the Vietnamese information technology (IT) market was small, it represented a promising market with untapped potential. HPAP had begun to distribute some Hewlett Packard (HP) products in Vietnam. HPAP had to consider if it should enter the Vietnamese IT market in a more strategic fashion. After US withdrawal from Vietnam in 1975, the communist controlled the country. It invaded Cambodia in 1978 and resulted in worldwide sanctions. After its withdrawal from Cambodia in 1989, economic ties with the rest of the world were normalized. The lifting of the US trade embargo in 1994 brought benefits and smoother access to soft loans and aids. There was also a reversal of policy of orthodox Marxist-Leninist beliefs to economic reform and openness. The 71 million population was basically literate and the country was endowed with oil reserves and extensive mineral resources. Light industries (textiles, food processing) were more concentrated in the south and heavy industries (steel, power generation) in the north. The current IT market size was about US$30 million but was expected to grow to US$500 million in 2000. Government and related agencies accounted for 35% of the market, MNCs another 35%, small and medium enterprises 25%, and home and small office users the balance 5%. Vietnam's IT-2000 Initiative by the government aimed to create a national data communications network and educate Vietnamese in the use of computer technology. It was also to develop the IT industry to a level where it can help in national development and establish a domestic industry in components manufacturing. Several segments of the IT market on the basis of industry were financial services, telecommunications, hotel and tourism, manufacturing, oil and gas, and government. Segmentation by benefits yielded four segments: economy, technology, mission critical mission sensitive and geographical coverage. Some major players in the Vietnamese IT market were Digital Equipment Corporation (DEC), a leading supplier of networked computer systems, software and services; International Business Machine (IBM), the world's largest information systems and services company; Unisys, the ninth largest systems and PC vendor in the world; and Compaq, the leading manufacturer of PC systems (desktops, portables and servers).

The HP company was ranked as one of the two most admired companies in America in 1985 by Fortune magazine. HP possessed extensive experience in entering into emerging Asian markets. It was a multi-domestic corporation with a largely Asian management team in its Southeast Asia subsidiary. HP enjoyed strong reputation and brand identity. Its product portfolio was greatly diversified with autonomous units dealing with computation, measurement and communications. HP was the industry leader in open systems technology with specialized knowledge and experience in this area.

HP Southeast Asia had its headquarters in Singapore with fully-owned subsidiaries and appointed distributors in the region. With the lifting of

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