Mekong Corporation and the Vietnam Motor Vehicle Industry (B‪)‬

At the time of the Mekong Corporation (Mekong) and the Vietnam Motor Vehicle Industry (A) case, product 9A96H002, some analysts felt that the Vietnamese automotive market was about to expand substantially. By 2007, the industry's capacity had increased enormously to nearly 150,000. However, the domestic sales had only expanded to approximately 40,000, and exports were negligible. This (B) case examines the government's interventionist policies that stimulated the expansion of production capacity while restraining vehicle sales. A key element was the continuation of very high import tariffs and other taxes that maintained a protected market for domestic manufacturers. In this context, Mekong continued to operate successfully. This case encourages students to consider the appropriate role of government in stimulating economic development, as well as appropriate corporate strategy in a protected market.