Found along the South China Sea, Vietnam borders Cambodia and Laos to the west, and China to the north.
The nation warred through the 20th century, including a civil war that began in 1954 and ended with reunification in 1975.
The 1986 Doi Moi policy was enacted to lead Vietnam from its central-oriented economy to an economy based on the market.
Tran Dai Quang was elected president in January 2016, but the position is mainly ceremonial. The true power in Vietnam rests with Nguyen Phu Trong, Secretary-General of the Communist Party.
Vietnam has one of the fastest-growing economies in Southeast Asia, and has prioritized becoming a developed nation by 2020. Vietnam’s GDP per capita has increased by 350% since 1991, second only to China, and boasts the fastest-growing middle-class in South Asia.
Vietnam has one of the fastest-growing economies in Southeast Asia, and has prioritized becoming a developed nation by 2020.
It has also been an attractive destination for foreign business, with foreign investment accounting for 8% of Vietnam’s GDP (the highest among markets in the Association of Southeast Asian Nations).
More than half of the foreign business investment comes from manufacturing, especially mobile phones. Around 70% of Samsung’s smartphones are made in Vietnam, with the majority being overseas exports.
The capital of Vietnam is Hanoi however the nation’s largest city is Ho Chi Minh City (formerly Saigon). Ho Chi Minh City is known as the financial hub of Vietnam and was listed by CNN as one of the top ten emerging cities in the world for launching a startup business.
In 2016, foreign business investment accounted for 24% of Ho Chi Minh City, with the government projecting an 8.5% increase by the end of 2017.
Among other businesses, Ho Chi Minh City currently hosts Haivl, a social media website, and Tiki, an ecommerce website that hopes to be “Vietnam’s Amazon.”
Hanoi, home to most of Vietnam’s government buildings, isn’t too far behind Ho Chi Minh City, boasting lower labor costs and an ideal geographical location for domestic and international business.
Vietnamese cities Haiphong and Da Nang are also worth mentioning, as they are less congested with competition. Haiphong is Vietnam’s third largest city and is known for its seaport, which offers a convenient path for imports and exports. Haiphong also led Vietnam in foreign business investment in 2016 ($2.74 billion USD), showcasing the global interest in the city.
Da Nang’s rapidly-improving infrastructure, along with an IT and communications sector which earned $58 million USD in software exports in 2016, make it a worthy location for your business as well.
The official currency of Vietnam is the Vietnamese dong, issued by the State Bank of Vietnam.
The US and Vietnam are closely connected through their currency with a crawling peg, which provides exchange rate stability between the trading partners.
Considered one of the most stable Asian currencies of 2017, the dong has aided Vietnam in attracting foreign business investment, and by expanding their economy by over 6% in the past two years.
Considered one of the most stable Asian currencies of 2017, the dong has aided Vietnam in attracting foreign business investment, and by expanding their economy by over 6% in the past two years
The increased foreign interest in Vietnamese imports is caused by the value of the Vietnamese dong compared to “stronger” currencies like the US dollar.
Weaker currencies increase a country’s exports, as goods are generally more expensive in countries that have a stronger currency. This boosts sales for the weak-currency country and, in turn, the country’s economic growth.
Unsurprisingly, Vietnamese is the official language in Vietnam. French is the most spoken foreign language, which makes historical sense considering Vietnam was once a French colony. English is spoken in some major cities, however, many Vietnamese don’t understand English, especially in remote areas. As a foreign business looking to purchase Vietnamese exports, it’s recommended that you identify whether or not your business will need a translator or interpreter for your trip to Vietnam.
The Vietnamese telecommunications market is largely controlled by three major operators — Viettel, Vinaphone and Mobifone.
In November 2016, Vietnam’s Ministry of Information and Communications enforced registration rules on SIM cards, canceling over 12 million cards that had been illegally registered.
As a foreigner to Vietnam, it is important that you register your SIM card with an approved provider.
SIM cards are sold at many kiosks across Vietnam and your passport must be provided to purchase one. Considering Viettel is the largest telecoms provider in Vietnam and is owned by the Vietnamese government, it’s the recommended choice for foreigners based on its stability and security.
One great part about Vietnam is that mobile data is very cheap, with a month of unlimited 4G data costing under $9 USD.
Vietnam’s dedication to foreign investment has included providing international businesses with resources to find Vietnamese suppliers.
Your business can obtain a supplier’s list by visiting the Vietnamese embassy, or by visiting the trade commission in your country. The Vietnamese Trade Promotion Agency can provide your business with market research and analysis to help your business create a business plan.
In addition to these resources, there are trade magazines, associations and agents in Vietnam that can help your business find the perfect supplier.
There are three different ways to obtain a Vietnamese tourist visa as a US citizen: in-advance from a Vietnamese embassy, online through the Vietnamese Immigration Department website or by obtaining a written letter of approval (requires contacting a travel agency prior to departure).
These tourist visas cost $45 USD for one-month single entry and $55 for three-month single entry.
Business visas for Vietnam cost $95 USD for one-month single entry and $110 for three-month single entry. Multiple-entry and longer-duration business visas cost more.
Vietnamese business visas require an official invitation from a Vietnamese business partner, along with your personal information, passport and date of arrival and departure.
Wifi hotspots in Vietnam are easy to find, especially in major cities like Hanoi and Ho Chi Minh City. Coffee shops, fast food joints and most hotels and office buildings are likely locations, and there is even a mobile application called Wiman that will locate wifi spots in Vietnam for you.
Internet censorship is an issue in Vietnam. The Communist Party allows Vietnamese citizens to access certain websites like Yahoo and Google, as long as these websites provide the names of individuals and organizations that are critical of the government and communism, or those that advocate for human rights.
In October 2017, Phan Kim Khanh, a 24 year old student from Vietnam, was sentenced to six years in jail, plus four years of probation, for “conducting propaganda against the state” through a blog.
Despite Vietnam’s sweeping economic reforms and new openness to social change, including gay, lesbian and transgender rights, media censorship is still strictly enforced by Vietnam’s Communist Party.
Vietnamese business culture focus on the social connection made between business partners. Some believe this stems from Confucianism’s impact on Vietnamese society, which stresses how people’s actions are affected by the relationships they have.
Sharing personal information about your family and hobbies will improve your relationship with Vietnamese suppliers, and can often decide whether or not they export to your business and at what rate.
Seniority is also important in Vietnamese business culture, especially when dealing with the Vietnamese government or any state-owned organization.
Most Vietnamese business connections are initially made through referrals and recommendations from associates, and this tends to be where the best prices are found. With this in mind, hiring a Vietnamese interpreter, and especially having a local Vietnamese representative, is important when in negotiations with potential Vietnamese supply partners.
Most decisions in Vietnamese businesses are done by committee, with no individual having absolute power. As a result, individual personal connections aren’t as essential as they are in many other Asian cultures, however, the connection that is made with the group is.
When a Vietnamese business client disagrees with something said, they will remain silent so they don’t “lose face” or offend. Knowing this trait can help you understand their opinion on aspects of the meeting that remain hidden due to their fear of being disrespectful.
The Vietnamese are punctual and expect foreign visitors to act similarly. Although they can understand excessive traffic or unforeseen circumstances, it’s suggested that you arrive on time for all meetings.
Before sitting down with Vietnamese business partners to discuss negotiations, it’s customary that you have tea and exchange gifts. Vietnamese people appreciate when Westerners can greet them by correctly saying xin chao (pronounced seen-chow) + given name + title, as it demonstrates an interest in the Vietnamese culture. It’s suggested that you listen to an audio sample of xin chao before your meeting, as Vietnamese is a tonal language and the phrase can have five meanings other than “hello” based on how it’s pronounced.
Vietnamese people appreciate when Westerners can greet them by correctly saying xin chao (pronounced seen-chow) + given name + title, as it demonstrates an interest in the Vietnamese culture.
Corruption is widespread in Vietnam and may result in extra costs and delays. This results in gifts being scrutinized as bribery by some businesses. However, gifts in Vietnamese business culture are still seen as polite. Whisky or a souvenir from your hometown is a great gift for business negotiation, but it’s recommended that you avoid presenting gifts in an office setting so it isn’t taken as a bribe.
You must register with the Department of Planning and Investment (DPI) if you wish to import goods from Vietnam. In addition, you must provide a custom declarations form for export goods, a detailed packaging list, an export permit (for goods that require it) and a purchase and sale contract or receipt.
Some Vietnamese regulations ban certain goods from being imported to, or exported from, Vietnam. For example, petroleum oil cannot be exported from Vietnam and foreign suppliers cannot import cigars, tobacco, petroleum oil, newspapers, journals or aircraft to Vietnam.
Certain goods require specific import/export permits as well, including chemicals, explosives, and goods that are exported within quotas set by foreign countries.
Imports and exports that move across the Vietnamese border are usually subject to duties, with the exceptions of goods that are in transit and goods exported abroad from a non-tariffed zone.
Duties on Vietnamese imports and exports can vary based on Vietnam’s trade conditions with the respective country, as well as the types of goods being imported or exported. Export duties can range from 0% to 45% and must be paid within 30 days of registration of customs declaration. You can learn about the duties specific to your business and country by visiting the Vietnam Customs website.
Most Vietnamese exports are subject to a Value-Added Tax (VAT), which ranges from 0% to 10%, but some are exempt from tax. These include goods that are only temporarily leaving Vietnam before returning, usually for processing purposes
To calculate the import/export tax amount on your goods, you must multiply the product’s unit volume (noted in customs declaration) by the tax calculation price and the product’s tax rate (noted in tariff).
Vietnam’s undeveloped infrastructure, bureaucracy and corruption pose significant problems for foreign importers.
Nineteen years ago, half of Vietnam had no electricity. The nation’s infrastructure has improved since then, but issues still remain. Like the fact that only 20% of the country’s national roads being paved. It’s recommended that your business be aware of this infrastructure gap, and choose a Vietnamese supplier that is located in one of the major cities like Hanoi or Ho Chi Minh City.
Corruption is everywhere in Vietnam, affecting the justice system, police and Vietnamese businesses. Lawyers bribing judges to look the other way is common, leading to one in five Vietnamese business clients admitting that they try to avoid the Vietnamese courts because of bribery concerns.
Although Vietnam follows the World Trade Organization Customs Valuation Agreement, which aims to improve its customs process, US businesses still have concerns about Vietnam’s customs, listing corruption and bureaucracy as their biggest complaints.
Vietnam’s banking system has been a disaster for the last decade as well, owning $6.4 billion USD in non-performing loans (mostly from state-owned businesses) in 2015. One way that you can avoid corruption in Vietnam is to work through a Vietnamese local distributor when trying to secure a deal with a supply partner, as it will significantly speed up the bureaucratic process. In addition, avoiding Vietnamese banks when transferring payments is highly recommended. If your Vietnamese supply partner uses Veem, you can send them global wire transfers that are simple, secure and don’t go through the Vietnamese banking system.
Vietnam is one of the most cash-dependent economies in the world, with over 90% of all domestic transactions being done in cash. This is caused by a lack of ATMs and trustworthy cashless systems, as well as an overall distrust felt toward corrupt Vietnamese banks.
Vietnam is one of the most cash-dependent economies in the world, with over 90% of all domestic transactions being done in cash.
Being entirely dependent on cash can have an adverse affect on the economy. A study in 2014 found that the average American spent 5.6 hours a year traveling to an ATM, causing a $31 billion USD loss in wages. Not only that, businesses that deal strictly in cash are vulnerable to theft.
In January 2017, Vietnam’s deputy prime minister Vuong Dinh Hue signed a policy that aims to make Vietnam “cashless by 2020.” This plan would provide the necessary infrastructure for cashless systems, increase the fees on cash payments and decrease the ones associated with electronic payment methods.
Most Vietnamese businesses use wire transfers to send funds, as letters of credit are more expensive and usually require collateral.
Similar to other Asian business cultures, the principle of “losing face” and the personal relationships you can make with potential Vietnamese supply partners are crucial to your business’ success.
There are plenty of investment and trade opportunities in Vietnam due to its weaker currency and growing infrastructure. Having a local Vietnamese representative or distributor for your business would greatly benefit your potential supply deals, as the Vietnamese tend to deal through referrals and recommendations. In addition, having a Vietnamese employee provides a casual method of interpreting and translating, and can make a significant difference in the bureaucratic process.
Similar to other Asian business cultures, the principle of 'losing face' and the personal relationships you can make with potential Vietnamese supply partners are crucial to your business' success.
Vietnam is working to become a cashless economy by 2020. This benefits foreign companies by opening the business market that previously dealt in cash, to international business. Vietnam’s mission to fund cashless systems and incentivize online purchasing will have a positive impact on ecommerce.
When Vietnam begins to regularly send large sums of money globally, the security and convenience of these transactions will become vital. Veem can offer this stability, allowing businesses to track their payments as they happen and providing a simple way to transfer funds. Paying your Vietnamese supply partners through Veem lets you skip the Vietnamese bureaucracy and corrupt banks. You will also receive all of the cashless-pay-system incentives promised by the Vietnamese government.
Here is a list of resources that can provide more information on doing business in Brazil:
US Embassy and Consulate in Vietnam
Business Customs in Vietnam
Online Shopping Trend in Vietnam
Vietnam’s Coffee Culture
2017 Vietnam trade deal with US
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