Vnese advertisements – How to stand on our ground? (Part 1)
80% market shares are held by more than 20 foreign advertising companies. This statistics showed by VAA do not surprise people in the field and rise a question: How to resolve the difficulties and help thousands of domestic companies to stand their ground in their own home?
According to specialists, Vnese advertising industry has been founded for 10 years, when the US remove the embargo. At that time, foreign advertising companies with large production warehouses corporation like Unilever, CocaCola, Pepsi enlivened this young industry.
Vnese advertising companies back then only took execution parts, broadcasting plan. Gradually, learning from foreign fellow companies, domestic advertising companies grew and started to accept whole packaged contracts. From only less than a hundred, approximately 5000 Vnese is now participating in the market.
However, there is a fact that among 1 billion USD revenue from advertising every year, domesic companies only contribute 10-20%. More than 80% left belong to the few big foreign companies.
More clearly, if only take execution into account, domestic companies are accounted for over 90%. But if we consider also biggest advertising contracts, foreign companies are accounted for 90%. The main reason is foreign customers have little confidence on expertise of Vnese advertising companies, therefore they only hire foreign companies. Very few Vnese companies received advertising contract from these corporation customers, if there is some, is only contracts that another foreign companies hire them to execute.
What is the reason making Vnese advertisers struggle in there own home?
The first problem – current income tax in VN. The tax imposed on corporation in this industry is very high (28%), it has been carrying since the 90s, when advertising is a profit generators.
At the time, foreign corporation had just stepped into VN, they paid the exact same cost that it was in their countries, they paid up to 40.000-100.000 USD, while the cost to rent the space was only few millions VND/year. However, at current time, a same large billboard can only request for 10.000-20.000 USD while the rent takes almost that price. High tax, high competition, lower profit leading to lower re-investments. To encourage advertising to develop to an important industry, we need good education and regulations.