Individuals and Private Enterprises

Vietnam will become a full member of the WTO and fully integrate to the global economy in the coming years. With the effects of many other factors including globalisation, deregulation and the support of technology, all Vietnamese enterprises are facing a number of challenges in marketing. In order to overcome the challenges as well as to take full advantage of opportunities, Vietnamese enterprises have responded by changing the way they conduct marketing in very fundamental ways.

The Bank for Investment and Development of Vietnam, a State-owned commercial bank, where I had more than 8 years working experience, is facing more difficulties than ever before. Identifying, valuating these challenges as well as assessing the marketing strategies, which BIDV should implement, are the urgent works and have practical value for the development of BIDV in this important period. The current commercial banking system in Vietnam took shape in the early 1990s, when the commercial banks were split from the State Bank of Vietnam.

At present, excluding 43 representative offices of foreign banks, there are 76 commercial banks operating in Vietnam, which includes 6 State-owned commercial banks (SOCBs), 37 join-stock commercial banks, 28 branches of foreign banks and 5 joint-venture banks. The foreign bank sector, including branches of foreign banks and joint venture banks, is quite restricted in operating in Vietnam. All four biggest banks are SOCBs, those banks account of about 75 per cent of the total asset, lending, as well as fund mobilization of the Vietnam banking market.

The popular banking products and services in Vietnam are credit, deposit and money transfer. Some banks have been offering modern banking services such as debit, credit card. The international accounting standards and practices have been gradually introduced since early 2005. The main customers of SOCBs are SOEs, and the key customers of joint-stock banks are Is&PEs (Is&PEs). The foreign banks mainly serve foreign companies. But at present, SOCBs are trying to access the Is&PEs market and many big and profitable SOEs prefer to borrow from foreign banks.

To compare with other countries in the region and around the world, Vietnamese commercial banks are quite small in size, according to the ranking of the five hundred largest banks by assets in Asia, listed by Asiaweek magazine in 2000, the biggest bank in Vietnam, the Bank for Agriculture and Rural Development of Vietnam (BARD) is the 344th and BIDV is 364th. Founded in 1967, BIDV is one of the oldest banks and the second biggest bank in Vietnam with 79 branches in all Vietnam’s provinces and cities and 8. 563 staffs by June 2005 (BIDV Magazine, August 2005).

Besides the banking activity, BIDV has three companies: the Securities Company, the BIDV Asset Management Company and the Leasing Company. BIDV is supplying the banking products and services to two key customer fields: Is;PEs market and SOEs market. – The main products and services, offered by BIDV to the Is;PEs market, are credit and deposit. Due to not considering the Is;PEs customers as the target market in the past, so its credit products, offering to this market, were not diversifying and less competitive with complicated procedure to compare with joint-stock banks.

So in result, the market share of BIDV is small in comparison with joint-stock banks such as the Vietnam International Join-stock Bank, Saigon Commercial Bank and Asian Join-stock Commercial Bank. Meanwhile, thanks to the big asset and high reputation in Vietnam, the market share in fund mobilization of BIDV is twenty percent over total market share. – Lending to the SOEs is the most important operation of BIDV, by the end of 2004, nearly 70 per cent of BIDV’s profit in 2004 came from lending to SOEs. In present, BIDV has the highest market share of 30 per cent in granting loan to SOEs.

(Source: operation report of BIDV, 2004) All biggest State-owned corporations in Vietnam are BIDV’s credit customers. However the main banking services, offered to SOEs, are money transfer and international settlement. BIDV banking services are uncompetitive in comparison to other SOCBs, famous in supplying banking services for SOEs such as: the Bank for Foreign Trade of Vietnam in supplying international settlement banking service and the Bank for Rural and Agriculture Development of Vietnam in money transfer with a large banking net-work system.

Because of bad performance, SOEs always ask for low lending interest rate, that leads to the low credit margin of BIDV (1,4% in 2004) (BIDV Magazine, January 2005) compared to the average rate of join-stock banks (3% in 2004) (source: http://www. sbv. gov. vn/TinThoibao. asp? tin=432). Furthermore, the integration process of Vietnam has been leaving the favor policies with SOEs, and that has negatively affected the operation efficiency as well as the repayment ability of SOEs.

In the past years, according to the Vietnam accounting standard, BIDV always got profit. But since early 2005, after applying new accounting standards, the ratio of bad debt of BIDV has risen sharply. Recently, BIDV has applied the banking modernization program, which brought many advantages on banking services. But with the lack of experience in developing service and operating the intelligence system, the modern banking services of BIDV are still not convenient and less competitive.