The Situation and Legal Problems of Thai Jewelry Business that Hinder Outward Foreign Direct Investment: A Case Study of the Investment of Thai Jewelry Business in Vietnam
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Abstract
Thailand is another important jewelry market in the world with prospect to continue growing in the future owing to the skilled workmanship and the unique patterns and designs of jewelry in the middle to hi-end level. Nevertheless, Thailand's jewelry industry has been impacted by a number of factors, including shortage of raw materials in the country, which has led to the relocation of production bases to countries with raw materials. In addition, the higher minimum wages and shortage of labor in the country are some of the factors to push the owner of jewelry business to have the factory to other countries which have plenty and cheaper labor cost. Currently, the rate of wages in Thailand is higher than that of neighboring countries including Vietnam. Another push factor is that the domestic market is not growing as predicted. There are many different stages of jewelry business which can be related to foreign direct investment. Stage of business is related to the decision on the suitable host country, for example, in case those entrepreneurs would like to set up production bases, they may decide to invest directly in foreign countries with lower production resources and wages. Differently, in case that the owner of jewelry business in Thailand has the main goal to expand the market, he may need to have stores in the country with high purchasing power. To consider all relevant factors, one of the most attractive countries to invest in jewelry business is Vietnam. Although Vietnam is an attractive market for Thai jewelry manufacturing and distribution businesses, there are many obstacles to hinder outward foreign direct investment of Thai entrepreneurs. All obstacles cannot be solved by entrepreneurs themselves; therefore, the support by legal instruments, measures and government agencies concerned is important to increase the efficiency and success of the investment.
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