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Measures to Expand Market Inroads into the Vietnamese Construction Market

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To the construction industry that had recently suffered from a depressed domestic construction economy, the overseas construction market offers a foothold to overcome the limitations of the domestic market. In order to promote the continuous growth and development of overseas construction exports, Korean construction companies need to secure overseas market information, and to be strongly competitive. However the Korean construction industry has weaknesses in its ability to obtain information and experience, which are the most important factors in entering the overseas construction market. Therefore, this study aims to suggest business entry road maps by business types, in order to enter the Vietnamese construction market, which presents abundant development potential. To measure the Vietnamese construction market, a market entry evaluation model, which integrates the evaluation scores of marketability and competitiveness, was utilized to analyze the market entry potential by project types. According to the analysis results, general building projects and infrastructure projects in Vietnam in the long term are projected to expand from the currently dominant private investment projects, to a larger scope, along with the increase of public investments. In particular, as for public investments in the general building field, market entries will be smoother in the form of Public-Private Partnership.
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KSCE Journal of Civil Engineering (2013) 17(7):1568-1577
Copyright 2013 Korean Society of Civil Engineers
DOI 10.1007/s12205-013-0351-8
1568
Construction Management
pISSN 1226-7988, eISSN 1976-3808
www.springer.com/12205
Measures to Expand Market Inroads into the Vietnamese Construction Market
Jung-Ho Yu*, Hyoun-Seung Jang**, Soon-Wook Kwon***, and Bo-Sik Son****
Received July 11, 2012/Accepted January 25, 2013
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Abstract
To the construction industry that had recently suffered from a depressed domestic construction economy, the overseas construction
market offers a foothold to overcome the limitations of the domestic market. In order to promote the continuous growth and
development of overseas construction exports, Korean construction companies need to secure overseas market information, and to be
strongly competitive. However the Korean construction industry has weaknesses in its ability to obtain information and experience,
which are the most important factors in entering the overseas construction market. Therefore, this study aims to suggest business
entry road maps by business ty pes, in order to enter the Vietnamese construction market, which presents abundant development
potential. To measure the Vietnamese construction market, a market entry evaluation model, which integrates the evaluation scores of
marketability and competitiveness, was utilized to analyze the market entry potential by project types. According to the analysis
results, general building projects and infrastructure projects in Vietnam in the long term are projected to expand from the currently
dominant private investment projects, to a larger scope, along with the increase of public investments. In particular, as for public
investments in the general building field, market entries will be smoother in the form of Public-Private Partnership.
Keywords: Vietnam, construction market, marketability, competitiveness
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1. Introduction
The total value of overseas construction project orders awarded
to Korean construction companies is renewing its record every
year. Under the annual goal of overseas project orders worth 200
billion won, the Korean government is also making great efforts,
including changes in systems and policies. To the construction
industry that had recently suffered from a depressed domestic
construction economy, the overseas construction market offers a
foothold to overcome the limitations of the domestic market, and
to make a new leap forward along with the government's diversified
efforts.
Meanwhile, the Korean construction industry has weaknesses
in its ability to obtain information and experience, which are the
most important factors in entering the overseas construction
market, and also presents a lack of systematic market entry
strategies (Lee et al., 2007). In particular, construction companies
with no experience in overseas construction projects are facing
difficulties in collecting overseas information.
Recently, South Asian countries including Vietnam are
experiencing a growth of construction demand due to their
economic growth. According to market forecasts (Global Insight,
2011), the Asian market share in the global construction market
is expected to reach 42.3% in 2018 (Fig. 1).
In order to respond to such a global construction trend, and
promote the continuous growth and development of overseas
construction exports, Korean construction companies need to
secure overseas market information, and to be strongly competitive.
In this context, this study aims to suggest business entry road maps
by business types, in order to enter the Vietnamese construction
market, which presents abundant development potential.
This study will first identify types of business entries, based on
the cases of the inroads of domestic construction companies into
the Vietnamese market. Secondly, this study will analyze
marketability by project types and work types, through a survey
of the domestic players experienced in entering the Vietnamese
*Member, Associate Professor, Dept. of Architectural Engineering, Kwangwoon University, Seoul 139-701, Korea (E-mail: myazure@kw.ac.kr)
**Member, Associate Professor, School of Architecture, Seoul National University of Science & Technology, Seoul 139-743, Korea (Corresponding
Author, E-mail: jang@seoultech.ac.kr)
***Member, Associate Professor, Dept. of Architectural Engineering, Sungkyunkwan University, Suwon 440-746, Korea (E-mail: swkwon@skku.edu)
****Assistant Professor, Dept. of Architectural Engineering, Namseoul University, Cheonan 331-707, Korea (E-mail: bsson@nsu.ac.kr)
Fig. 1. Changes in Regional Market Size
Measures to Expand Market Inroads into the Vietnamese Construction Market
Vol. 17, No. 7 / November 2013 1569
market, and analyze the competitiveness of domestic construction
players. Finally, this work will draw strategic directions to expand
inroads into the Vietnamese construction market. To this end,
business implementation strategies will be examined in current,
short-term, and long-term perspectives, using a market attractiveness
analysis model.
2. Literature Review
In reviewing the existing studies aimed for the expansion of
the overseas construction market, Park et al. (2008) analyzes the
requirements from the overseas construction industry for Korean
construction companies to facilitate their overseas market inroads,
and benchmarks the overseas construction support systems in
advanced countries. Based on this, he suggests a financial guarantee
plan for overseas construction projects in the country's overseas
construction support system, measures to link Official
Development Assistance (ODA) and construction projects, the
establishment of an overseas construction trade center, and an
establishment plan for new business models. Song (2009) proposes
measures for the country's small and medium construction
companies to effectively manage risks, and provide systematic
supports based on existing reference data, so that companies would
continue the recently growing overseas market inroads. Kim et al.
(2009) analyzes real options to improve market volatility and
uncertainty, instead of employing the existing discounted cash flow
method. Through this, he suggests a model that supports companies
in their rational decision making, by helping them evaluate market
entry plans through an integrated consideration of decision making
factors, such as the matter of entry, country, and project type.
Lee et al. (2007) derives problems in the overseas market
inroads of domestic construction companies, and then suggests a
new strategy through a SWOT analysis on the problems, such as
project orders focused on industrial structure and insufficient
governmental support policies. In addition, Park et al. (2004),
using the SWOT analysis method, compares and analyzes the
competitiveness of domestic construction engineering companies
in Russia, Libya, and Indonesia that have large market potentials,
suggests their problems and difficulties through interviews with
relevant experts, and analyzes the improved technical expertise
of domestic construction engineering companies, and the causes
for their lowered external competitiveness. Based on such
activities, he suggests measures to facilitate overseas market
inroads by domestic companies.
This study is a continuance of existing studies, and intends to
develop areas where market entry strategies and road maps
suited to the specific characteristics of target entry markets have
not, thus far, been suggested.
3. Project Participation Types in the Vietnamese
Construction Market
Figure 2 below indicates the market inroads into Vietnam, for
three years from 2008 to 2011 (International Construction
Information Service, ICAK). Construction contracts accounted
for the largest share at 181 cases, followed by design contracts at
63 cases and construction management contracts, including
feasibility studies, at 21 cases. These are significantly high numbers
of contracts, compared with those in other Asian countries.
Therefore, Vietnam is expected to be a country of high market
entry potential for Korean construction players in the future.
As with the number of contracts, the contract values of Korean
companies in the Vietnamese construction market exhibit a
dominant share of ‘construction’ in terms of contract type, as
shown in Fig. 3 (International Construction Information Service,
ICAK). On the other hand, ‘design’ contracts comprise a lower
portion in terms of their value, compared with their number. In
particular, there was only one design and construction contract,
but its value amounted to $428,770,000, which confirms a larger
value share per contract, in comparison with other contract types.
Consequently, market inroads equipped with a multiple structure
that additionally covers construction or construction supervision,
are considered as more desirable than inroads with the sole task
of design.
The types of project participation that are complete or currently
underway in the Vietnamese construction market, by various
construction project types, are shown in Table 1. The ordering
organizations can be divided into the private sector, government
organizations, and public corporations. The work types are
segmented into general building, infrastructure, and industrial
structure projects. The types of project participation are segmented
into design, construction supervision, construction, and project
Fig. 2. The Number of Contracts by Korean Companies in the Viet-
namese Construction Market (2008-2010)
Fig. 3. The Contract Values of Korean Companies in the Vietnam-
ese Construction Market (2008-2010)
Jung-Ho Yu, Hyoun-Seung Jang, Soon-Wook Kwon, and Bo-Sik Son
1570 KSCE Journal of Civil Engineering
management.
Currently, the Vietnamese construction market indicates that
construction companies enjoy a more lively participation in the
general building field among various project types, than in the
infrastructure and industrial structure fields. In particular, as for
private projects, the market inroads into construction and design
service projects are vibrant, while the overall types of project
participation exhibit a wide variety, extending to construction
management services. On the other hand, in the infrastructure
and industrial structure fields, market entries among public
contract projects are found to be only in construction.
Thus, for the expansion of inroads into the Vietnamese
construction market, active measures are required for the
participation of a number of construction players in various
project types. If relevant measures are drawn up, this will help
further facilitate inroads into the Vietnamese market in future. A
business entry model for Vietnamese construction projects is
composed as shown in Table 2, based on the data about the
current status of business entries in Table 1.
The types of project participation by domestic companies in
the Vietnamese construction market can be largely divided into
public projects and private projects. Among them, public
projects are segmented into government-driven public contract
projects, and aid/loan projects (public investment projects)
supported by international financial institutions. Private projects
can be segmented into private contract projects ordered by local
private companies, and private investment projects, including
self-investment projects and foreign investment projects. In
Table 1. The Status of Vietnam's Project Orders, Project Types, and Project Participation Types
Ordering
Organization
Type of Ordering
Organization Title of Project Type of
Construction Type of Project Type of Project Participation
TID-PVFC Private Dolphin Plaza General Building Private Investment
Project
Construction, Design Service,
Construction Supervision
Service
HaiBinh-Dong
RiWon Private Habico Tower General Building Private Contract
Project
Construction, CM(for fee),
Design Service, Construction
Supervision Service
Hanoi North Ankaing
JVC Public Corporation North Ankaing New
City Project General Building Public Investment
Project Design Service
Doosan Heavy
Industries &
Construction Co Ltd
Private Habico Multipurpose
Complex General Building Private Contract
Project CM (for fee)
The Foreign
Ministry
Government
Organization
The Foreign Ministry
Office General Building Public Contract
Project
CM (for fee), Design Service,
Construction Supervision
Service
Sabecoland Co. Public Corporation Sabeco Tower General Building Public Contract
Construction CM (for fee)
M & C Private Sai Gon M&C Tower General Building Private Contract
Project Construction
Petro VietNam Public Corporation
Camau 2 × 750 mw
Combined-Cycle Power
Plant Project
Industrial
Structure
Public Contract
Construction Construction
Ministry of
Transportation
Government
Organization Can Tho Brideg Infrastructure Public Investment
Construction Construction
Novaland Private Sunrise City General Building Private Contract
Project Construction
Ministry of
Transportation
Government
Organization
Sai Gon East-West
Highway Infrastructure Public Investment
Construction Construction
Bitexco Private Bitexco Financial
Tower General Building Private Contract
Project CM (for fee)
Bitexco Private THE manor housing
project General Building Private Investment
Project
CM (for fee), Construction
Supervision Service
DUC MANH Private VINH TRUNG
PLAZA PROJECT General Building Private Investment
Project
CM (for fee), Construction
Supervision Service
Hirand vina co.ltp Private Apartment General Building Private Contract
Project Design Service
Vinalines Government
Organization
Vanphong Harbor
Project Infrastructure Public Contract
Project Construction
HCMC People's
Committee
Government
Organization Thu Thiem Tunnel Infrastructure Public Contract
Project Construction
EVN(Electricity of
Vietnam) Public Corporation Pha Lai Themal Power
Plant
Industrial Struc-
ture
Public Contract
Project Design Service
Vietnam Expressway
Corp. (3 cases)
Government
Organization
Noibai-Laocai Expwy
Const. Infrastructure Public Investment
Project Design and Construction
Measures to Expand Market Inroads into the Vietnamese Construction Market
Vol. 17, No. 7 / November 2013 1571
addition, Public-Private Partnership (PPP) projects that are
executed in cooperation between private and public sectors are
observed as one of the country's project types.
4. Expansion of the Inroads into the Vietnamese
Construction Market
4.1 Survey
With the aim of establishing a market entry strategy for the
Vietnamese construction market, the potential for market inroads
by project types can be measured by marketability and
competitiveness. Marketability can be measured in terms of
attractiveness of the target market, levels of competition, and
barriers to market entry. Competitiveness can be measured in
terms of the capability of project management, marketing capability,
tangible assets, and intangible assets (Porter, 1990, 1991;
Monitor, Company, 1991; Rugman and D’Cruz, 1991, 1993). If
both marketability and competitiveness in a project field are
high, the entry potential into the respective field can be judged as
high. Meanwhile, if marketability is high but competitiveness is
low in a field, or, if competitiveness is high but marketability is
low, their entry potentials are considered as relatively low. If both
marketability and competitiveness are low, the entry potential is
considered as almost zero. The detailed criteria for the evaluation
of marketability and competitiveness are as shown in Table 3.
In addition, a survey questionnaire was designed for the periodic
Table 2. Types of Project Participation according to Vietnamese Construction Project Types
Type of Work Type of Project Type of Project Participation
General
Building
Private Investment Projects CM (for fee), Design Service, Construction Service, Construction, Desig n and Construc-
tion
Private Contract Projects CM (for fee), Design Service, Construction Supervision Service, Construction
Public Investment Projects Design Service, Design and Construction
Public Contract Projects Design and Construction, CM (for fee), Construction Supervision Service, Construction
Infrastructure
Private Investment Projects -
Private Contract Projects -
Public Investment Projects Construction (Overseas Loan Project)
Public Contract Projects Construction
Industrial
Structure
Private Investment Projects -
Private Contract Projects -
Public Investment Projects -
Public Contract Projects Construction
Table 3. Areas and Items for the Evaluation of Marketability and Competitiveness
Marketability Competitiveness
Areas of Evaluation Items of Evaluation Areas of Evaluation Items of Evaluation
Market
Attractiveness
Size of the target market
Profitability of the target market
Marketability of the target market
Capability of
Project
Management
Ability to manage the pre-design phase
Ability to manage the design phase
Ability to manage the procurement phase
Ability to manage the construction phase
Ability to manage the post-construction phase
Levels
of
Competition
Levels of competition in the target market
Superiority levels of major competitors in
the target market
Likelihood of potential competitors' entry into
the target market
Capability of
Marketing
Ability to collect market and project ordering infor-
mation
Ability to draw up and present project proposals
Ability to analyze project feasibility
Financing skills
Marketing skills (installment-sale / lease)
Market
Entry
Barriers
Requested levels of technical expertise in the
target market
Requested levels of legislative/institutional
compliance in the target market
Likelihood of resources procurement in the
target market
Tangible Assets
The number, experience, and specialization levels
of human resources
Ability to secure funding
Levels of the information management system infra
Levels of the local office and the information col-
lection network
Levels of the organization exclusively
Levels of the organization exclusively responsible
for overseas projects
An increased score in competition levels indicates a correspo nding
decline in competition levels. An increased score in market entry barri-
ers indicates a corresponding loosening in market entry barriers.
Intangible Assets
Levels of specialized technologies and knowhow
Levels of the company's brand name and reputation
Ability to manage the relationships with customers
/ordering bodies
Ability to manage partnerships or execute J/V
Ability for global supply (workforce/equipment/con-
struction materials/companies, etc)
Jung-Ho Yu, Hyoun-Seung Jang, Soon-Wook Kwon, and Bo-Sik Son
1572 KSCE Journal of Civil Engineering
evaluations of marketability and competitiveness, by defining
the current status and the prospects within the next three to five
years as short-term prospects, and the prospects after five years
as long-term prospects. The survey conducted one month
(January 12, 2011~February 11, 2011) and 130 surveys were
distributed to various construction companies. This survey involved
81 people (survey returned rate: 62.3%) engaged in Vietnam-
related construction businesses (an average experience of 17.5
years). 52 questionnaire copies from the general building field,
15 copies from the infrastructure field, and 14 copies from the
industrial structure field were analyzed. The distribution of total
experiences for the subjects is shown in Table 4.
4.2 A Model for the Evaluation of Market Inroads by Project
Types
In this study, a market entry evaluation model, which integrates
the evaluation scores of marketability and competitiveness, was
utilized to analyze the market entry potential by project types
(Fig. 4). This model was built through a simplified application of
the basic concept of the TOPSIS (Technique for Order
Preference by Similarity to the Ideal Solution), which is one of
the multi-criteria decisions making models. The TOPSIS is
based on the concept that an alternative suggested as the value of
a multi-criteria decision making question should be located at the
shortest distance from the PIS (Positive Ideal Solution), and at
the farthest distance from the NIS (Negative Ideal Solution).
From the geometric perspective, the TOPSIS means that a
selected alternative should have the nearest Euclidean distance
from the PIS, and the farthest Euclidean distance from the NIS.
In other words, by converting alternatives into their distances
from the PIS and NIS, an alternative relatively closest to the ideal
solution is selected as an optimal option (Chakladar and
Chakraborty, 2008). The basic concept of the evaluation model
of the market entry potential by project types proposed in this
study is to measure the distance from the origin (0, 0) to a certain
measurement point (xi, yi) of marketability and competitiveness,
on a plane coordinate system with two axes of marketability (x)
and competitiveness (y), and to assess that a greater distance
represents a larger potential for market entry.
‘A’ quantifies the current potential for market entry, by taking
into account the current levels of marketability and compe-
titiveness. Likewise, ‘C’ quantifies the market entry potential in
the next five years, exhibiting relatively long-term prospects.
‘B’, as the distance between the current and future prospect
values, measures the growth (short-term prospects) of market
entry potentials from the present time to the point of five years
later, in other words, over the next three to five years. However,
even if the future conditions are worsened, compared to the
present time (CA), B always has a positive value. Thus, even if B
has a positive value, this doesn't lead to the evaluation that the
future market prospects would be always brighter than the
current market conditions. Thus, in case the future prospects are
worse than the current status (CA), a caution is required to
project, that as for the short-term prospects (B), the market entry
potential over the next three to five years would decline even if B
has a positive value. Such content can be more conveniently
understood in visual terms, when analyzed with graphs.
4.3 Directions to Expand Market Inroads by Project Types
4.3.1 General Building Projects
The results of the potential for market entry in the general
building field, through the analysis of marketability and
competitiveness, are as shown in Fig. 5.
The current status of the general building field in Vietnam,
Table 4. The Status of Subjects Experienced in Vietnamese Construction Projects in the Survey
Experience
Field 1~5 Years 6~10 Years 11~15 Years 16~20 Years 21~25 Years 25~30 Years 30 Years ~ Total
General Building 4 5 1 9 13 12 8 61
Infrastructure 6 3 - - 3 3 - 15
Industrial Structure- -5441-14
Fig. 4. An Evaluation Model for Market Entries through Marketabil-
ity and Competitiveness
Fig. 5. Marketability and Competitiveness of the General Building
Field
Measures to Expand Market Inroads into the Vietnamese Construction Market
Vol. 17, No. 7 / November 2013 1573
which is examined based on marketability and competitiveness,
indicates that private investment projects are most promising in
this field (Table 5).
If the current competitiveness is 49.1 or above in private
investment projects, the potential for market entry into this
project type can be considered as existent. However, the current
marketability remains at 40.3, suggesting that competition
among Korean companies is inevitable. In order to overcome
such a situation, we need to find certain measures to facilitate the
participation of Korean construction companies in overseas
private investment projects. When reviewing by the components
of competitiveness, analysis shows the ability to manage projects
to be the lowest among the components. This raises the urgent
need to strengthen the capability of project management for
smooth market inroads into the general building field.
In terms of short-term prospects, the most improving project
type was found to be public investment projects. However, it
should be noted that the growth of competitiveness (11.8), rather
than the growth of marketability (4.0), was critically influential
on this result. While the overall marketability slightly increases,
such a positive assessment on future marketability was mostly
due to an increase in attractiveness of the target market (7.5),
among the detailed evaluation items. Therefore, Korean cons-
truction players will need to secure vibrant market entries into
general building field by improving competitiveness. From a
long-term perspective, the improvement level in marketability
was analyzed to be insignificant, which is likewise interpreted as
resulting from an improved level of competitiveness. Thus, the
strengthening of competitiveness is considered as essential to
secure the potential for consistent market entries into the general
building field. Specifically, among the components of compe-
titiveness, the enhancement of competitiveness in tangible assets
was analyzed to be comparatively insufficient.
4.3.2 Infrastructure Projects
When the infrastructure field in Vietnam is examined based on
marketability and competitiveness, private investment projects
(58.6) and public contract projects (57.8) were revealed to be
promising at present, with a minor gap between them (Fig. 6).
In reviewing by the components of competitiveness, tangible
assets and intangible assets scored 45.5, which is slightly lower
than marketing capability (47.0) and the capability of project
management (46.8). In marketability, the levels of competition
Table 5. Evaluation Result in the General Building by Project Types
Project Type Evaluation Current Short-Term Prospects Long-Term Prospects
Public Contract Marketability 38.0 54.5 2.7 9.2 40.7 62.8
Competitiveness 39.0 8.8 47.8
Private Contract Marketability 39.5 59.2 5.4 11.3 45.0 70.3
Competitiveness 44.1 9.9 54.0
Public Investment Marketability 39.5 58.9 4.0 12.4 43.5 70.5
Competitiveness 43.7 11.8 55.5
Private Investment Marketability 40.3 63.5 4.4 10.9 44.7 74.1
Competitiveness 49.1 10.0 59.1
Table 6. Expected Types of General Building Projects by Time
Period
Time Expected Project Types in the General Building Field
Present Private Investment Projects > Private Contract Projects
Public Investment Projects > Public Contract Projects
Short-Term
Prospects
Public Investment Projects > Private Contract Projects
Private Investment Projects > Public Contract Projects
Long-Term
Prospects
Private Investment Projects > Public Investment Projects
Private Contract Projects > Public Contract Projects
Fig. 6. Marketability and Competitiveness of the Infrastructure Field
Table 7. Evaluation Result in the Infrastructure by Project Types
Project Type Evaluation Current Short-Term Prospects Long-Term Prospects
Public Contract Marketability 35.0 57.8 6.8 18.0 41.8 75.4
Competitiveness 46.0 16.7 62.7
Public Investment Marketability 33.6 56.8 8.1 17.4 41.7 74.1
Competitiveness 45.9 15.4 61.3
Private Investment Marketability 36.2 58.6 9.4 22.2 45.5 80.5
Competitiveness 46.2 20.2 66.3
Jung-Ho Yu, Hyoun-Seung Jang, Soon-Wook Kwon, and Bo-Sik Son
1574 KSCE Journal of Civil Engineering
(29.9) and entry barriers (32.2) were observed to be lower than
the attractiveness of the target market (46.5).
Such results indicate that infrastructure field has a high level of
attractiveness, but also presents strong competition and high
entry barriers in the current market. The project type that is
expected to improve most in the short term was revealed to be
private investment projects, as shown in Table 8. However, it is
noteworthy that during this period, the improvement of compe-
titiveness (20.2) in private investment projects was significantly
more influential on the outcome, compared with the improvement
of marketability (9.4).
In the long term, private investment projects are forecast to still
be promising in Vietnam's infrastructure field. In terms of
marketability, compared with the attractiveness of the target
market (65.2), levels of competition (35.1) and entry barriers
(36.4) were significantly lower, necessitating corresponding
measures. Therefore, the strengthening of competitiveness is
considered essential in securing the potential for consistent
market inroads into this field. Specifically, among the components
of competitiveness, the ability for project management was
analyzed to be relatively low.
4.3.3 Industrial Structure Projects
The results of market entry potential in the industrial structure
projects, through the analysis of marketability and compe-
titiveness, are as shown in Fig. 7. Meanwhile, industrial structure
projects are an area of low repetition, and the number of
industrial structure projects investigated in this study was much
lower than those of general building or infrastructure projects. As
a result, the establishment of medium and long-term market
entry strategies, by dividing into project types, has limitations in
this field. Therefore, this study conducted an analysis on
marketability and competitiveness of the industrial field in
Vietnam without division into project types. However, the entry
potential into the overall industrial structure market in a target
country is projected to be similar to the prospects of the country's
economic development. This projection is also in accordance
with our analysis results.
The current competitiveness in Vietnam's industrial structure
projects scored 51.9, suggesting a good potential for market
inroads into the industrial structure field. On the other hand, the
current marketability marked a high level at 43.3. When
reviewing by the components of competitiveness, the capability
of project management (58.5) posted the highest level, followed
by intangible assets (52.7), marketing capability (50.3), and
tangible assets (46.0). As shown Table 9, the scores of marketing
capability and tangible assets were lower than the average of
competitiveness (51.9), suggesting the need for reinforcement in
the respective areas. In addition, in reviewing by the components
of marketability, attractiveness of the target market scored 47.4,
which is higher than the levels of competition (40.9) and entry
barriers (41.5).
This outcome means that the strong attractiveness of the given
market leads to corresponding fierce competition. Moreover, our
analysis revealed that there are difficulties in market inroads into
this field. This is interpreted as caused by the difficulties in
fulfilling the conditions required for project participation, such as
PQ (Pre-Qualification), including similar project performances
in the past.
When observing short-term prospects, the overall marketability
exhibits a slight increase, including a substantial jump in
attractiveness of the target market to 14.2. However, the levels of
competition and entry barriers are predicted to decline to -5.7 and
-3.9, respectively. This offers a projection that the market inroads
into this field will grow more difficult, along with tougher
competition with other players.
For long-term prospects, unlike the current status, marketability
Table 8. Expected Types of Infrastructure Projects by Time Period
Time Expected Project Types in the Infrastructure Field
Current Private Investment Projects Public Investment Projects > Public Contract Projects
Short-Term Prospects Private Investment Projects > Public Investment Projects Public Contract Projects
Long-Term Prospects Private Investment Projects > Public Investment Projects Public Contract Projects
Fig. 7. Marketability and Competitiveness of the Industrial Struc-
ture Field
Table 9. Evaluation Result in the Industrial Structure by Project Types
Project Type Evaluation Present Short-Term Prospects Long-Term Prospects
Tot a l Marketability 43.3 67.5 1.5 14.7 44.8 80.1
Competitiveness 51.9 14.6 66.5
Measures to Expand Market Inroads into the Vietnamese Construction Market
Vol. 17, No. 7 / November 2013 1575
(44.8) was revealed to be lower than competitiveness (66.5). In
marketability, attractiveness of the target market (61.6) was
observed to be higher than the levels of competition (35.2) and
entry barriers (37.6). This suggests that marketability will improve
according to the demand increase from economic growth, but the
levels of competition will also grow fierce alongside it. Entry
barriers were also found to be lower than the attractiveness of the
target market, which is analyzed as the result of the difficulties in
fulfilling the conditions required for project participation. In
particular, from the review by the components of competitiveness,
the capability of project management was significantly high
(71.0), while intangible assets (68.7), marketing capability (65.8),
and tangible assets (60.4) were comparatively low. Therefore,
these areas will need to be further strengthened.
4.4 Implications
The current levels of Korean companies' participation in the
Vietnamese market by project types, which were analyzed
through the case study and expert interviews, are outlined in
Table 10. General building and infrastructure projects in Vietnam
are projected to expand from the current focus on private
investment projects, to a wider range of project types in the long
term, along with increased public investments. In particular,
public investments in the country's general building field exhibit
the form of PPP (Public-Private Partnership), and the infrastructure
field is characterized in the form of ODA loan projects.
In observing the results of market analysis by project types,
public contract projects through bidding are expected to gradually
decline in Vietnam. Therefore, Korean construction players will
need to develop their projects with a focus on public and private
investment projects in the general building field, aid and loan
projects that are effective in securing stable financing and
enhancing profitability in the infrastructure, and selective order-
winning activities in the industrial structure field. In the
meantime, while it is important for Korean companies to obtain
orders through competitive bidding, by demonstrating their
abilities based on overseas project experiences as they have done
to date, they will additionally need to strengthen their compe-
titiveness to win orders, by proposing measures for securing
finances to ordering organizations in an initial phase of their
projects. In such investment projects, smooth flows of the funds
to be invested in the projects, and the collection of the invested
funds, are important factors. As a result, relevant market analyses
should conducted beforehand. The competitiveness related to
this may require the ability to manage the pre-design phase. In
addition, the ability to manage partnerships, or execute J/Vs
(Joint Ventures), will be necessary to reduce those risks with a
high chance of occurrence.
5. Conclusions
In this study, among South Asian construction markets that
have recently shown abundant development potentials, a time-
periodic analysis on the directions to enter the Vietnamese
construction market by project types was conducted, based on
the coordinates of marketability and competitiveness. According
to the analysis results, general building projects and infrastructure
projects in Vietnam in the long term are projected to expand
from the currently dominant private investment projects, to a
larger scope, along with the increase of public investments. In
particular, as for public investments in the general building field,
market entries will be smoother in the form of PPP. For public
investments in the infrastructure field, market entries will be
more convenient, by adopting the form of ODA projects. Such
analysis results have certain implications. As overseas projects
become gradually more complex and larger, and the scale of
individual project units becomes larger, the financing of project
costs is emerging as the most important issue to ordering
organizations. Accordingly, if contractors can provide ordering
organizations with the solutions to such an issue, the chances of
winning orders will increase. This study carried out a survey
based on experts who have completed, or are currently executing
projects in the Vietnamese construction market, within a relatively
limited scope, in other words, the measures for Vietnamese
construction market inroads by project types. As a result, this
work couldn't deal with various strategies for overseas market
inroads. However, this work is still considered to provide the
basic data that can help Korean construction companies who
plan to enter the Vietnamese market strengthen their medium and
long-term capabilities. To complement this study, further research
will be necessary, which establishes the strategies to expand
project orders from the Vietnamese construction market through
advanced approaches, such as project types by work types, and
the scenario of target project types for market entry.
References
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Kim, J. K. (2010). “2010 International construction outlook.” International
Construction Magazine, ICAK, pp. 37-48.
Kim, B. I., Kim, D. Y., and Han, S. H. (2009). “Supporting market entry
Table 10. Current Status and Prospects for the Facilitation of Viet-
nam's Projects by Project Types
Public Projects Private Projects
Public
Contract
Public
Investment
(Aid/Loan
Projects)
Private
Contract
Private
Investment
General Building ◆● ◆●
Infrastructure ◆● ●
Industrial Structure ○ ○
(: Facilitation, : Under Market Formation, : Promising)
Jung-Ho Yu, Hyoun-Seung Jang, Soon-Wook Kwon, and Bo-Sik Son
1576 KSCE Journal of Civil Engineering
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Appendix. Summarized Survey Form
Marketability Questionnaire
Areas of
Evaluation Items of Evaluation
Private Investment
Projects
Private Contract
Projects
Public Investment
Projects
Public Contract
Projects
AS-IS
S  L
(110)
TO-BE
S  L
(110)
AS-IS
S  L
(110)
TO-BE
S  L
(110)
AS-IS
S  L
(110)
TO-BE
S  L
(110)
AS-IS
S  L
(110)
TO-BE
S  L
(110)
Market
Attractiveness
Size of the target market
Profitability of the target market
Marketability of the target market
Levels of
Competition
Levels of competition in the target market
Superiority levels of major competitors in the
target market
Likelihood of potential competitors' entry into
the target market
Market Entry
Barriers
Requested levels of technical expertise in the
target market
Requested levels of legislative/institutional com-
pliance in the target market
Likelihood of resources procurement in the tar-
get market
Measures to Expand Market Inroads into the Vietnamese Construction Market
Vol. 17, No. 7 / November 2013 1577
Competitiveness Questionnaire
Areas of
Evaluation Items of Evaluation
Private Investment
Projects
Private Contract
Projects
Public Investment
Projects
Public Contract
Projects
AS-IS
S  L
(110)
TO-BE
S  L
(110)
AS-IS
S  L
(110)
TO-BE
S  L
(110)
AS-IS
S  L
(110)
TO-BE
S  L
(110)
AS-IS
S  L
(110)
TO-BE
S  L
(110)
Capability of
Project
Management
Ability to manage the pre-design phase
Ability to manage the design phase
Ability to manage the procurement phase
Ability to manage the construction phase
Ability to manage the post-construction phase
Capability of
Marketing
Ability to collect market and project ordering
information
Ability to draw up and present project proposals
Ability to analyze project feasibility
Financing skills
Marketing skills (installment-sale / lease)
Tangible
Assets
The number, experience, and specialization levels
of human resources
Ability to secure funding
Levels of the information management system
infra
Levels of the local office and the information col-
lection network
Levels of the organization exclusively responsi-
ble for overseas projects
Intangible
Assets
Levels of specialized technologies and knowhow
Levels of the company's brand name and reputa-
tion
Ability to manage the relationships with custom-
ers / ordering bodies
Ability to manage partnerships or execute J/V
Ability for global supply (workforce/equipment/
construction materials/companies, etc.)
Article
This study mainly aims to assess the current condition of claim causes against contractors in Vietnam-based construction projects. A questionnaire, which consists of 73 claim causes, is designed for data collection. Project-specific data with regard to the frequency and severity of 73 claim causes are collected from practitioners through conducting direct interviews and using private emails. Together with separate analyses of either frequency or severity, an integrated view of both frequency and severity is presented for 73 claim causes and various groups of claim causes are also proposed for practical applications. In addition, a combined dimension, called as concerning scale, is developed using principal component analysis and, then, a benchmark level for claim management is established. This study could help practitioners to know which claim causes are severe in frequency and/or impact. Hence, practitioners could establish proper strategies to manage claim-related problems of construction projects, in which they are directly involved. Furthermore, this study could provide construction project parties, especially foreign organizations, with a better understanding of claim panorama in the Vietnamese construction market.
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With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
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Incl. bibliographical notes and references, index, biographical note on the author
2010 International construction outlook International Construction Magazine, ICAK, pp. 37-48. analysis
  • J K Kim
Kim, J. K. (2010). " 2010 International construction outlook. " International Construction Magazine, ICAK, pp. 37-48. analysis. " Korean Journal of Construction Engineering and Management, Vol. 10, No. 5, pp. 135-147.