Nokia: Knowing customer taste the key to success

Can you give us a brief overview of Nokia?
The history of Nokia began in the 19th century in Helsinki, Finland, and by the 1990s it had become one of the world leading telecommunication firms.
     Because of its creativity in mobile phones, Nokia is considered one of the top ten trademarks in the world with 39 percent of the world market share. In the fourth quarter of 2003, it sold 55.35 million mobile phones, earning more than EUR 7 billion.

What do you think about Vietnam’s mobile phone market?
The number of mobile phone users in Vietnam currently accounts for just three percent of the population. Although this is quite low compared with other developed countries in the region such has Hong Kong, Singapore and Thailand, it indicates that Vietnam has potential.
     With the establishment of new providers like S-Fone and Vietel, etc, the number of mobile phone users in Vietnam has increased. This year’s demand for mobile phones will increase by between 15 and 17 percent, and could be higher if the government addressed its taxation and telecommunication charging policies.

What is the key to the success of Nokia in Vietnam?
Nokia first came to Vietnam in 1996 and has been the leader in the local market since 1999. This success is due to Nokia’s findings about local customer taste and meeting their demand.
     Customers choose Nokia phones because of their good design, long life, Vietnamese-friendly software, and their reasonable prices. Moreover, Nokia’s warranty and maintenance services nationwide provide complete support to its customers.

To win the trust of customers, what has Nokia concentrated on?
One of the concerns of both manufacturers and distributors is combating the spread of counterfeit and pirated goods. Nokia distributes hundreds of millions of products around the world. This impressive figure has triggered a boom in counterfeit and pirated goods. For example, some explosions have occurred recently involving Nokia mobile phones in Vietnam. Inspections have shown that these were caused by counterfeit, low quality batteries. These incidents have had negative impact on our prestige.
     Vietnam’s mobile phone market has also become diversified with products from various manufacturers, which has led to the entry of illegally imported mobile phones. Vietnam’s import tax rate remains high, so prices of officially distributed goods are higher than those of illegally imported goods of low quality, which attract customers because of their cheaper prices.
     To address this situation we have undertaken many measures, including providing information that allows customers to recognize genuine Nokia products and batteries.

What have you planned for Nokia’s future development during Vietnam’s integration process?
It is important to know about customer taste, on which we then market appropriate products. There are two inclinations in using mobile phones. The first is to use high-end, fashionable phones and the second is to use phones with simple functions that are easy to use and, more importantly, are cheap.
     With this in mind we have imported and will continue to import and distribute mobile phones that meet the various demands of customers. We have now developed many agencies in Vietnam, and have recently agreed for the FPT Distribution Company to be our authorized nationwide distributor.
     In co-operating with FPT, a leading information technology company in Vietnam, we believe Nokia will maintain its reign at the top of the local market.

As one of the biggest investors of Finland, what do you assess the Vietnam investment environment and what should the Vietnamese government do to improve its competitiveness?
Import tax rates in Vietnam remain quite high compared with other countries in the region. In Vietnam we are subject to a tax rate of 20 percent (10 percent imported tax + 10 percent VAT), while in Malaysia and Singapore it is between three and five percent. This has encouraged the illegal import of mobile phones of low quality, thus creating obstacles to the development of the local mobile phone market. We hope that the Vietnamese government will adjust its tax policies so we can become more competitive in the local market.
     Also, high telecommunication charges have had a negative impact on the sale of mobile phones, and Nokia products in particular. I think that telecommunication charges in Vietnam should be adjusted to be in keeping with international standards. A high rate of individual income tax has also impeded our efforts to recruit outstanding talent for managerial positions.

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