Interested in starting a business in Vietnam as a foreigner?

It would surely be in your interest to know more about Vietnam businesses as Vietnam is one of the fastest-growing regions in the world with a GDP growth rate of approximately 7%- something even developed and developing countries can hardly guarantee these days. With the signing of the Trans-Pacific Partnership (TPP) in 2016, GDP may grow even higher 2030 making foreign business in Vietnam very big and prominent. In fact, it is taken as an extension to China and has most the west investing for exports making business in Vietnam for foreigners a lucrative enterprise. Thus there are great advantages of doing business in Vietnam.

But as with anything new, it takes time, efforts and the right kind of knowledge to get it off to a great start. We mention a few things one ought to keep in mind while thinking and starting a new business in Vietnam. The advantages of doing business in Vietnam are many. But you get it only by know what business to start in Vietnam and following all the laws properly.

1. Be clear what business to start in Vietnam:

Vietnam is a growing economy that promises good returns for industries that produce for local markets and exports. These days it produces everything from Mobile Phones to Cars to Shoes to Furniture, Clothes and so on. But all of these have different dynamics be it for local consumption or exports, including the availability of raw materials, manpower, setting up of plant and local know-how. One must be clear about the activity to be pursued and then think of the scale of investment. If one does not have deep pockets, Vietnam is a good place to start a small/ medium enterprise.

2. Be clear whether it is for the local economy or exports:

Vietnam has a population of 9.6 million (9.6 crores). While setting up a business, it’s important to know whether to produce locally or import and sell. These days Vietnam gives good incentives to businesses to set up production bases to export worldwide and quite a few businesses from even China have moved there owning to cheap labor and govt incentives. Otherwise, simply to sell in Vietnam may not be such a great idea.

3. Know the local work culture of Vietnam:

Vietnamese business culture is quite similar to other ASEAN countries. Coming directly to the point like in the west may seem rude here. Gifting, showing respect, etiquette, etc are a part and parcel of getting down to doing business in Vietnam. Doing business in Vietnam involves client entertainment, drinking, visiting hotels, etc where one must show respect towards the client and not discuss taboo subjects. The right business attire in Vietnam is also of great importance.

Vietnamese take their own time coming to any conclusion. That being the case, it’s important to appraise them of documents and details before-hand. Coming right down to the point early in the negotiation when doing business in Vietnam is taken to be rude. Every enterprise which starts a business in Vietnam has a story behind it that needs to be heard out by new investors wanting to start a business in Vietnam. It’s much later that documents, Terms and Conditions and the likes come into the picture. Patience is thus a virtue here to do business in Vietnam.

4.Know the legalities and laws:

One should know the legalities and laws which govern an enterprise that has foreign money in Vietnam. These change as per circumstances, and needs of the country. It thus best to get legal assistance from a local law firm adept with these issues. For instance, the enactment of “Laws on Investment and Enterprise of 2014” means Vietnam has its own clear-cut legal system on how to regulate and establish a business environment with foreign money in the country. These are meant to improve the business environment in the country of Vietnam and bring in fairness in competition while at the same time, helping preserve and develop the local enterprise. As of now, this law mandates that any foreign entity can enter Vietnam for business in two forms:

a. Apply for Business Registration Certificate.

In case, case of a JV or 100% foreign ownership, the party should apply for a first investment registration certificate followed by an application for the Certificate of Registration of the enterprise.

b. Invest directly by purchasing shares

in Vietnamese Companies either as shareholders or as shareholders and managing authorities is almost like buying a business in Vietnam, and if done with the right enterprise could be the best business opportunity in Vietnam. Either way, the consent, approval, and concurrence of the local body holding stakes is of prime importance.

Both the above options have their pros and cons and ideally, are suited to particular situations. When, where and why either then need to be used can best be explained by anyone with a finer understanding of legalities. It thus makes sense to first approach a business consultant cum law firm which can help do both, register an enterprise, as also advise on the right and legal way of going about it.