Group: Offshore Outsourcing

Our client, Anevia, designs, develops and produces products in France for the distribution of digital television programming and Video on Demand (VoD) which is then exported around the world, including areas of high $ correlation. The downward trend of the greenback in recent months has strongly encouraged the company to consider, in choosing its partners, which take part in the production and or, even the engineering and quality control. So it was quite natural for our client to turn towards our Vietnam site in Hanoi.

However, a 100% turn towards the $ is not without risk either, because after all, even if it seems that reducing the U.S. budget deficit (a downward influence on a currency) is not for tomorrow, the situation is not brilliant either in Europe. A rebound of the greenback in the event of a geopolitical crisis should never be excluded. Anevia is still delivering the bulk of its production in Europe and Pentalog coming on, in the case of a Vietnamese production, with about 50% of its cost determined in Euros and 50% in $, we agreed upon on a 50/50 exhange risk… making the risk virtually disappear. From a formal point of view, nothing easier, 50% of the bill is invoiced directly in $ and 50% in €.

But our client who liked this idea, did not want to just stay there and wished to see the price adjustment procedure to be equally as creative. Indeed, he hoped that the revision of our prices would not exceed the inflation rate in Vietnam. This obliged us to calculate our prices in Vietnamese Dong at the beginning of the contract. The new value is then calculated in € and $ and is limited to 10% maximum per year.
I think we must think about integrating this type of billing practice in our market offers and our .com.

Back in 2001 when I moved to Germany the $/DEM exchange rate was exactly flip flopped to what it is today (1.5). I personally see the $ diving down to somewhere in the region of 1.65 and staying there, but of course that is only speculation!