Starting a business in a new country, or expanding an existing one, can be both rewarding and difficult. That is especially the case when the country is Vietnam, which is quickly becoming a regional hub for investment and entrepreneurship. To successfully navigate the country’s unique laws, culture, and economy, it is essential to be thoroughly prepared. This guide provides a checklist of useful things that anyone planning to do business in Vietnam should learn about the country.
Understand The Economic Environment
Vietnam’s economy reads like a dream for businesses: strong GDP growth over the last decade, a young and well-educated workforce, and World Trade Organisation membership with multiple free-trade agreements. These all look very attractive from a business perspective, but it is important to also consider the challenges its economy presents. Bureaucratic inefficiencies are still a common complaint, as are infrastructure limitations, although the situation seems to be improving in both regards.
Conduct Thorough Market Research
Although not a particularly large country by land area, Vietnam has a population of around 100 million people, with an extraordinary range of diversity between different regions and cities. Achieving business success in Hanoi does not guarantee that you can transplant your business unchanged to Da Nang and expect the same results, for instance. Tailoring your offering, marketing, and pricing is essential for success, which makes thorough and localised market research very important. It is also important not to overlook the importance of social media among Vietnamese consumers. The younger generations are especially influenced by digital media, and researching social media trends and online habits can yield a lot of useful information.
Register Your Company
Once you have reviewed Vietnam’s economic conditions and your market research confirms that there is an audience for your products in the country, company registration should be your next step. This involves choosing a legal structure, reserving a company name, supplying the correct documents, and applying for certificates. The typical processing time is 2-6 weeks. Many businesses work with local legal advisors to avoid errors which could delay the process. Depending on the industry your company operates in, you may also need licenses. This is the case for food services, manufacturing, education, and some others. You might need to acquire these from regional authorities, the national regulating body of that industry, or both.
Plan for Compliance and Reporting
Vietnam has its own approaches to taxes and accounting. For businesses, tax returns are filed monthly, quarterly, or annually depending on the size and type of business, and companies are generally subject to corporate income tax, VAT, and sector-specific duties. This all makes taxes complicated. Meanwhile, accounting in Vietnam must follow Vietnamese standards, rather than international ones like IFRS. Many businesses hire local accountants, but with the AI transformation, there may soon be digital solutions to these issues.
Understand Labour Laws and Culture
Vietnam has a young, educated, and tech-savvy workforce, and labour costs tend to be substantially lower than they are in the west. However, you need to understand labour laws and cultural expectations well in order to hire locally. That means registering employment contracts with the correct authorities, contributing to various insurance schemes for your employees, and following regulations with regard to working hours and leave entitlements. Vietnam’s business culture may also be new and different for foreign business owners.
Open a Business Bank Account
All registered businesses in Vietnam must open a corporate bank account, and this is how you will pay your taxes, receive payments from customers, and handle costs like payroll. Although foreign banks operating in Vietnam can provide Vietnamese corporate accounts, a director or legal representative of the company is required to be physically present in the country in order to open one. After the initial setup, most banking tasks can be handled digitally.
Protect Your Intellectual Property
In some countries, courts may allow you to argue that your intellectual property (IP) is being infringed upon even if you have not registered it through a patent, copyright, or trademark. However, that is not the case in Vietnam. Registration with the National Office of Intellectual Property is the only means of protection available. Not registering could lead to others imitating your brand or using things your
business has created in ways you do not wish.
Leverage Government Incentives and Support
Vietnam’s government is committed to improving the business environment in the country, and as such is promoting foreign investment by offering incentives and support. These vary depending on the area of business you work in and your location, but they can include cuts in corporate tax rates, exemptions from import duties, and land use rights. These must be applied for and require supporting documents, but the information is usually published online.
Build Strategic Relationships and Networks
“Guanxi” is the Chinese term for conducting business through personal relationships, and neighbouring countries like Vietnam share this concept. Business there is heavily based on trust and knowing your partners well, which means it is a good idea to start networking before you launch a business. Spending time in the country, engaging with local events, and joining industry associations can all help you establish a credible reputation and get to know other business people.
Make Use of Digital Infrastructure
While things like registering a company, opening a bank account, and registering IP can still take weeks to process, Vietnam has made other areas significantly more efficient. Tax declarations, insurance filings, and many licenses are now handled online thanks to the government’s investment in digital infrastructure projects such as the National Public Service Portal. This has helped to minimize paperwork and make it easier to deal with the government directly, rather than through intermediaries. infrastructure projects such as the National Public Service Portal. This has helped to minimise paperwork and make it easier to deal with the government directly, rather than through intermediaries.
Conclusion
Businesses that prepare thoroughly will reap the rewards in Vietnam. Those who do not put themselves at risk of a lot of easily avoidable mistakes. This checklist can help make sure nothing is overlooked before your business takes the plunge, and it applies whether you are establishing a small local business or expanding a multinational one.
