BUSINESS CASE

SO DOES BUSINESS
Notes to editors:
*The analysis is based on Worldpanel data, household panel in
Urban Vietnam 4 key cities (Ho Chi Minh City, Ha Noi, Da Nang
and Can Tho), total FMCG excluding Gift for in-home
consumption.
Data period: 4 weeks ending 23 February 2020 versus 4 weeks
ending 3 March 2019.
 ALL FUNCTIONS ARE
REQUIRED TO RE-VISIT
THEIR PLANS AND
PROPOSE
ALTERNATIVES
 THE OUTBREAK
Relative to other Asian countries, Vietnam has significant achievements in terms of how the
country dealt with the coronavirus outbreak. Nonetheless, COVID-19, the disease caused by
the new coronavirus strain, has nonetheless posed a major challenge for the country’s
economic growth, and is likely to continue to unless it is fully dealt with.

With the onset of COVID-19, Vietnamese businesses, especially those in the manufacturing
sector, are experiencing a slowdown or cease in production, due to the lack of raw
materials from China.
 THE OUTBREAK
The economic toll on Vietnam is already visible. Many airlines have halted and cancelled their
flights to the infected destinations. The most affected industries are tourism, transport,
electronics, agriculture, and insurance.

As it is, in the first two months of 2020, the COVID-19 epidemic caused serious damage to
Vietnam’s tourism (10% of SPVB source of business growth). A survey conducted by the Vietnam
Tourism Advisory Council shows that the hotel bookings and occupancy rates from the north to
the south in Vietnam were decreasing by between 20 and 50 percent compared to the same
period last year. The number of international visitors coming in March 2020 is expected to be
reduced by over 60 percent, and domestic tourists may be reduced by 80 percent due to fears of
this deadly virus. The tourism workforce was asked to take unpaid and temporary leave. All told,
the COVID-19 epidemic will result in an estimated loss of between $5.9 and $7 billion for
Vietnam’s tourism in the next three months.

Likewise, many restaurants, shops, cinemas, and entertainment places are also severely affected
 THE OUTBREAK
Vietnam has mandated that people wear face masks at crowded places such as airports, bus
stations, supermarkets and on public transport. Foot traffic in shopping centers has dropped, as
people do not want to be in public spaces where they could be infected.

Ho Chi Minh City officials have announced restrictions on organizing meetings attended by over
1,000 people. In addition, all bars, clubs, cinemas, massage parlors, karaoke shops, and online
gaming centers will be closed from 6:00 pm on March 15 until March 31. Officials in Hanoi have
implemented similar measures until March 31.

Vietnam railway authorities have suspended several domestic routes from Hanoi and Ho Chi
Minh City from March 16.

It is said that these bans might be continued if the outbreak won’t be in better control.
 THE OUTBREAK
In the initial 2020 Resolution of the Ministry of Planning and Investment, the GDP growth was
forecasted to reach 6.8 percent in 2020. After the COVID-19 outbreak, the Ministry of Planning
and Investment discussed two possible scenarios and its impact on the country's GDP. In the case
that the coronavirus can be contained in the second quarter of 2020, the GDP was projected to
increase by 6.09 percent. The ministry acknowledges that the initial GDP growth target of 6.8
percent will be a great challenge, and it is likely that the growth target will not be met.

The government has targeted the economic growth for 2020 to be 6.8 percent but has warned
that if disruptions to supply chains continue due to the virus, then growth could slow to 5.96
percent.

The State Bank of Vietnam (SVB) (central bank) has cut interest rates by 0.5-1 percentage points
and to scrap transaction fees. The central bank also ordered commercial banks in the country to
follow suit and they offered US$12.4 billion in preferential credit to affected businesses.
 THE OUTBREAK
After the COVID-19 outbreak, the
Ministry of Planning and Investment
discussed two possible scenarios and its
impact on the country's GDP. The initial
GDP growth projection before the virus
outbreak was at 6.8 percent. In the case
that the coronavirus can be contained in
the second quarter of 2020, the GDP was
projected to increase by only 6.09
percent. In the same scenario, the
agriculture will grow at a rate of 2.35
percent, the industry sector will grow at
a rate of 7.1 percent and the services
sector will grow at a rate of 6.47 percent.
 THE OUTBREAK
After the COVID-19 outbreak, the
Ministry of Planning and
Investment discussed two
possible scenarios and its impact
on the country's CPI. In the case
that the coronavirus can be
contained in the second quarter
of 2020, the CPI was projected to
increase by 4.86 percent. In the
same scenario, the country's GDP
will increase by 6.27 percent.
 THE OUTBREAK
As many countries have not officially confirmed trade
regulations and agricultural produce could not be turned into
revenue, the need to preserve agricultural goods poses a great
challenge. For consumer goods, consumer spending in Vietnam
has increased for online services after the COVID-19 outbreak
but the virus outbreak led to a decline in spending for out-of-
home activities. After the ministry of health had advised all
citizens to perform mouthwash and regularly washing hands,
the value for personal care products in times of COVID-19 grew
significantly in Vietnam.
 THE OUTBREAK
After the COVID-19 outbreak, the
Ministry of Planning and
Investment discussed two possible
scenarios and its impact on the
country's services sector. In the
case that the coronavirus can be
contained in the second quarter of
2020, the services sector was
projected to increase by 6.47
percent. In the same scenario, the
agriculture sector will grow at a
rate of 2.35 percent and the
industry sector will grow at a rate
of 7.1 percent.
 THE OUTBREAK
After the outbreak of COVID-
19, commonly referred to as
coronavirus, half of the
surveyed Vietnamese
businesses believed that their
revenues will decrease by 16
percent or more.
Nevertheless, consumer
spending has increased for
online shopping and delivery
services.
 THE OUTBREAK
After the outbreak of COVID-19,
commonly referred to as
coronavirus, there were winning
and losing sectors in terms of
consumer expenditure. While
the communication sector lost
21 percent in consumer
spending, online shopping and
delivery services noticed an
increase of 20 percent.
According to the source, the
digital industry may help with
counteracting risks and
uncertainty in the economy.
 THE OUTBREAK
After the COVID-19 outbreak, also
commonly known as coronavirus,
around half of the surveyed
Vietnamese citizens in urban
areas reduced their frequency of
visiting a supermarket, grocery
store or wet market. The same
survey showed that the majority
of the respondents have changed
their consumption behavior with
regards to entertainment
activities and travel plans as well.
THE OUTBREAK
THE OUTBREAK
 THE OUTBREAK
After the COVID-19 outbreak, also
commonly known as coronavirus,
Vietnamese citizens in urban
areas were afraid but believed
that the virus will not spread fast
in the country. Nevertheless, the
majority of them have changed
their consumption behavior with
regards to entertainment
activities and travel plans.
 SPVB CHALLENGES
In the latest urgent Executive Meeting, the Leadership Team identified several hot
burning issues due to the outbreak that need to be addressed.

Externally, the biggest logistics supplier for us has sent an urgent notice about the
probability of delivery service level drop by 5% as they have constraint on part-time
delivery men student resources & prioritize for face mask delivery. Our Out-of-home
advertising agency rejected to reimburse 50% of the advanced payment we set out for
new product launch this Summer considering the outbreak not as Force Major – and
similarly with our Raw material suppliers. 50% of On-premise customers are turning to
bad debt with their financial status & cash flow constraints.

Internally, from Sellers, there have been many calls via hotline expressing their fear of
losing jobs, yet they don’t want to go out for selling to expose to the pandemic risk. Over
production, 30% of shop floor workers with 2 kids are requesting for work-from-home to
take care of their children without any paycut. Productivity dropped 5%, as estimated.
 GROUP DISCUSSION
The progress of the COVID-19 epidemic is increasingly complicated and unpredictable in the
world and Vietnam in particular. The worst scenario is that an economic crisis will occur when the
USD, Yen and Euro fall dramatically and China’s GDP is at a record low. Of course, Vietnam’s
economy would also then be heavily affected by the domino effect. As Functional Leaders, please
re-visit your original plans.ans

1. What are your proposal to SPVB

2. What is your proposal for your applied