The Vietnamese Defense Industry: Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016
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Product Synopsis
This report is the result of ICD's extensive market and company research covering the Vietnamese defense industry. It provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news..
Introduction and Landscape
Why was the report written?
The Vietnamese Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016 offers the reader insights into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Vietnamese defense industry.
What is the current market landscape and what is changing?
Vietnam is one of the world's fastest-growing defense markets and is expected to spend US$16 billion on its armed forces during the forecast period. As a result of years of underfunding in the Vietnamese defense budget, the country's armed forces are expected to undergo an extensive modernization program. This, coupled with economic recovery, is expected to increase Vietnam's defense expenditure by 2016.
What are the key drivers behind recent market changes?
Vietnamese defense expenditure was primarily driven by factors such as modernization plans, territorial disputes with China and China's growing military capability. Vietnam is expected to spend US$6 billion on the acquisition of weapons systems during the forecast period. Factors such as territorial claims in the South China Sea, Chinese naval build-up and the acquisition of modern military hardware systems to replace outdated and aging equipment are anticipated to drive the country's military spending in the forecast period.
What makes this report unique and essential to read?
The Vietnamese Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016 provides detailed analysis of the current industry size and growth expectations from 2011 to 2016, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
Key Features and Benefits
The report provides detailed analysis of the current industry size and growth expectations from 2011 to 2016, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
The report includes trend analysis of imports and exports, together with its implications and impact on the Vietnamese defense industry.
The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances and strategic initiatives.
The report helps the reader to understand the competitive landscape of the defense industry in Vietnam. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives and a brief financial analysis.
Key Market Issues
In March 2011, the Vietnamese government passed legislation that prohibits selling stakes of state-owned defense companies to the private sector. The legislation further stipulates that the state will hold 100% of the charter capital in enterprises involving national defense and security, and military held commercial enterprises. This legislation prevents private participation and thwarts any foreign direct investment into the country's defense sector.
Vietnam released its third defense whitepaper in 2009 which revealed the country's defense expenditure for the first time during 2004-2008. This was seen by many as a step towards building confidence with both its neighbours and countries in the west, which is in line with its foreign policy of building cordial relations with other countries.
Vietnam's military industrial base is still in a nascent stage of development. The country's defense companies are predominantly government-owned and are operated by the military, which has prevented foreign investment into the defense sector and limited technological innovation. As a result, the country's domestic companies are unable to develop and manufacture technologically advanced defense systems.
Key Highlights
Vietnamese defense expenditure registered a CAGR of 12.25% during the review period and is estimated at US$3 billion in 2012. It is expected to grow at a CAGR of 12.52% during the forecast period to reach an estimated US$5 billion in 2016. Overall, the country is expected to spend an estimated US$18 billion on its armed forces during the forecast period, of which approximately US$6 billion will be allocated for capital expenditure.
Vietnamese homeland security expenditure registered a CAGR of 21.89% during the review period and is expected to grow at a CAGR of 20.04% during the forecast period to reach an estimated US$3 billion in 2016. With the country sharing borders with several other countries, and enjoying a strategic location near the maritime trade route, the chances of illicit drug trafficking and smuggling are heightened.
Despite relying on foreign arms sources, defense imports to Vietnam registered a steep decline from 2008-2009. Arms imports began to rise in 2010, mainly due to the need to counter China's increasing naval capabilities. Arms imports are projected to remain at 2011 levels during the forecast period as the country focuses on replacing outdated defense systems and strengthening its Navy and Air Force.
Table of Contents
1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Defense expenditure is projected to grow at a CAGR of 12.52% during the forecast period
3.1.2. Territorial dispute and acquisition of advanced defense systems is expected to drive military spending
3.1.3. Military expenditure as a percentage of GDP is expected to decrease during the forecast period
3.2. Analysis of Defense Budget Allocation
3.2.1. Share of capital expenditure in the overall defense budget is expected to increase
3.2.2. Vietnam's capital expenditure is expected to grow at a CAGR of 14.18% during the forecast period
3.2.3. Vietnam is expected to spend US$11.8 billion on revenue expenses over the forecast period
3.2.4. Defense expenditure is expected to correspond with national economic growth
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security expenditure is expected to grow at a CAGR of 20.04% during the forecast period
3.3.2. Human trafficking, drugs trade and maritime security to drive homeland security spending
3.3.3. Vietnam faces a minimal threat from foreign terrorist organizations
3.4. Benchmarking with Key Global Markets
3.4.1. Vietnamese defense expenditure expected to remain modest compared to leading spenders
3.4.2. The country will continue to be a significant player in the global arms market
3.4.3. Vietnam's defense expenditure as a percentage of GDP is higher than some leading defense spenders
3.4.4. Vietnam has a moderate per-capita defense expenditure
3.4.5. Vietnam faces negligible threat from foreign terrorist organizations
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Market opportunities for air defense systems expected to increase
3.5.2. Demand for aircraft is expected to increase
3.5.3. Investment in naval defense systems is anticipated to increase
3.5.4. Maintenance repair and overhaul activities to provide excellent market opportunities
4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limited domestic defense capabilities drives the country's defense imports
4.1.2. Defense imports are expected to increase during the forecast period
4.1.3. Russia is a significant defense trade partner of the country
4.1.4. Aircraft and ships account for the majority of defense imports during the review period
4.2. Export Market Dynamics
4.2.1. The country has been unable to access the global defense market
5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low
5.1.2. Bargaining power of buyer: medium
5.1.3. Barrier to entry: medium
5.1.4. Intensity of rivalry: low
5.1.5. Threat of substitution: low to medium
6 Market Entry Strategy
6.1. Market Regulation
6.1.1. Vietnam has not disclosed any offset obligation
6.2. Market Entry Route
6.2.1. Foreign equipment manufacturers can enter the market through direct commercial sales
6.2.2. Government to government deals are an attractive entry route to the country's defense market
6.3. Key Challenges
6.3.1. Lack of private participants and foreign direct investment may restrict domestic defense industry growth
6.3.2. Lack of transparency impedes the growth of Vietnam's defense industry
7 Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. Vietnam Shipbuilding Industry Corporation (VINASHIN): overview
7.2.2. Vietnam Shipbuilding Industry Corporation (VINASHIN): products
7.2.3. Vietnam Shipbuilding Industry Corporation (VINASHIN): recent announcements and strategic initiatives
7.2.4. Vietnam Shipbuilding Industry Corporation (VINASHIN): alliances
7.2.5. Vietnam Shipbuilding Industry Corporation (VINASHIN): recent contract awards
8 Business Environment and Country Risk
8.1. Business Confidence
8.1.1. Market capitalization trend - Hochiminh Stock Exchange, Vietnam
8.2. Economic Performance
8.2.1. GDP at constant prices (US dollars)
8.2.2. GDP per capita at constant prices (US dollars)
8.2.3. GDP at current prices (US dollars)
8.2.4. GDP per capita at current prices (US dollars)
8.2.5. GDP split by key segments
8.2.7. Inflation rate
8.2.8. Current account balance as a percentage of GDP
8.2.9. Exports as a percentage of GDP
8.2.10. Imports as a percentage of GDP
8.2.11. Exports growth
8.2.12. Imports growth
8.2.13. External debt as a percentage of GDP
8.3. Labor Force
8.3.1. Size of labor force by age group
8.3.2. Unemployment rate
8.4. Demographics
8.4.1. Annual disposable income
8.4.2. Annual per capita disposable income
8.4.3. Total population
8.4.4. Urban and rural population
8.4.5. Female percentage of population
8.4.6. Male percentage of population
8.4.7. Median age of the population
8.4.8. Population density
8.4.9. Age distribution of the total population
8.4.10. Age distribution of the male population
8.4.11. Age distribution of the female population
8.4.12. Number of households
8.5. Political and Social Risk
8.5.1. Political stability
8.5.2. Terrorism index
8.5.3. Transparency index
9 Appendix
9.1. Contact Us
9.2. About SDI
9.3. Disclaimer
List of Tables
Table 1: Vietnamese Defense Expenditure, 2007-2011
Table 2: Vietnamese Defense Expenditure, 2012-2016
Table 3: Vietnamese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as
Table 4: Vietnamese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as
Table 5: Vietnamese Defense Budget Split Between Capital and Revenue Expenditure (%),
Table 6: Vietnamese Defense Budget Split Between Capital and Revenue Expenditure (%),
Table 7: Vietnamese Capital Budget Allocation (US$ billion), 2007-2011
Table 8: Vietnamese Capital Budget Allocation (US$ billion), 2012-2016
Table 9: Vietnamese Revenue Budget Allocation (US$ billion), 2007-2011
Table 10: Vietnamese Revenue Budget Allocation (US$ billion), 2012-2016
Table 11: Vietnamese Defense Expenditure Growth and GDP Growth (%), 2007-2011
Table 12: Vietnamese Defense Expenditure Growth and GDP Growth (%), 2012-2016
Table 13: Vietnamese Homeland Security Budget (US$ billion), 2007-2011
Table 14: Vietnamese Homeland Security Budget (US$ billion), 2012-2016
Table 15: Benchmarking with Key Markets - 2007-2011 vs. 2012-2016
Table 16: SDI Terrorism Index
Table 17: Vietnam Shipbuilding Industry Corporation (VINASHIN) - Product Focus
Table 18: Vietnam Shipbuilding Industry Corporation (VINASHIN) - Alliances
Table 19: Vietnam Shipbuilding Industry Corporation (VINASHIN) - Recent Contract Wins
List of Figures
Figure 1: Vietnamese Defense Expenditure, 2007-2011
Figure 2: Vietnamese Defense Expenditure, 2012-2016
Figure 3: Vietnamese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure
Figure 4: Vietnamese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure
Figure 5: Vietnamese Defense Budget Split Between Capital and Revenue Expenditure (%),
Figure 6: Vietnamese Defense Budget Split Between Capital and Revenue Expenditure (%),
Figure 7: Vietnamese Capital Budget Allocation (US$ billion), 2007-2011
Figure 8: Vietnamese Capital Budget Allocation (US$ billion), 2012-2016
Figure 9: Vietnamese Revenue Budget Allocation (US$ billion), 2007-2011
Figure 10: Vietnamese Revenue Budget Allocation (US$ billion), 2012-2016
Figure 11: Vietnamese Defense Expenditure Growth and GDP Growth (%), 2007-2011
Figure 12: Vietnamese Defense Expenditure Growth and GDP Growth (%), 2012-2016
Figure 13: Vietnamese Homeland Security Budget (US$ billion), 2007-2011
Figure 14: Vietnamese Homeland Security Budget (US$ billion), 2012-2016
Figure 15: SDI Terrorism Heat Map, 2011
Figure 16: SDI Terrorism Index, 2011
Figure 17: Benchmarking with Key Markets - 2007-2011 vs. 2012-2016
Figure 18: Defense Expenditure of the World's Largest Military Spenders (US$ Billion),
Figure 19: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2011
Figure 20: Per-capita Defense Expenditure of the Largest Military Spenders in the World (US$),
Figure 21: Vietnamese Defense Import Trend, 2007-2011 (TIV values)
Figure 22: Vietnamese Defense Imports by Country (%), 2007-2011
Figure 23: Vietnamese Defense Imports by Category (%), 2007-2011
Figure 24: Industry Dynamics Porter's Five Forces Analysis
Figure 25: Hochiminh Stock Exchange Market Capitalization (US$ Billion), 2007-2011
Figure 26: Vietnam GDP at Constant Prices (US$ Billion), 2007-2016
Figure 27: Vietnam GDP Per Capita at Constant Prices (US$), 2007-2016
Figure 28: Vietnam GDP at Current Prices (US$ Billion), 2007-2016
Figure 29: Vietnam GDP Per Capita at Current Prices (US$), 2007-2016
Figure 30: Vietnam GDP by Key Segments (%) 2010 and 2011
Figure 31: Vietnam Inflation Rate (%), 2007-2016
Figure 32: Vietnam Current Account Balance as a Percentage of GDP (%), 2007-2016
Figure 33: Vietnam Exports as a Percentage of GDP (%), 2007-2016
Figure 34: Vietnam Imports as a Percentage of GDP (%), 2007-2016
Figure 35: Vietnam Exports Growth (%), 2007-2016
Figure 36: Vietnam Imports Growth (%), 2007-2016
Figure 37: Vietnam External Debt as a Percentage of GDP (%), 2007-2011
Figure 38: Vietnam Size of Labor Force in 15-59 Age Group (Million), 2007-2016
Figure 39: Vietnam Unemployment Rate (%), 2007-2016
Figure 40: Vietnam Annual Disposable Income (US$ Billion), 2007-2016
Figure 41: Vietnam Annual Per Capita Disposable Income (US$), 2007-2016
Figure 42: Vietnam Total Population (Million), 2007-2016
Figure 43: Vietnam Urban and Rural Population (%), 2007-2016
Figure 44: Vietnam Female as Percentage of Population (%), 2007-2016
Figure 45: Vietnam Male as Percentage of Population (%), 2007-2016
Figure 46: Vietnam Median Age of Population (Years), 2007-2016
Figure 47: Vietnam Population Density (per Square Kilometer), 2007-2016
Figure 48: Vietnam Population Distribution by Age (%), 2007-2016
Figure 49: Vietnam Male Population Distribution by Age (%), 2007-2016
Figure 50: Vietnam Female Population Distribution by Age (%), 2007-2016
Figure 51: Vietnam Households, Number of (Million), 2007-2016
Figure 52: Global Terrorism Heat Map, 2011
Figure 53: Vietnam Transparency Index, 2007-2011
Companies Mentioned
Vietnam Shipbuilding Industry Corporation (VINASHIN)
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