Vietnam has had an impressive economic growth over the last two decades and continues to grow rapidly. Over a short period of time Vietnam has gone from a starving country to a major exporter of agricultural goods. Today Vietnam is considered one of the most open economies in the world, with total import and export value corresponding to roughly 160 percent of GDP. In 2007 Vietnam joined WTO and since then numerous reforms have helped the investment climate improve significantly, resulting in a growing inflow of foreign investments and companies.
For foreign investors Vietnam has mainly been, and continues to be, an attractive choice for establishing labour intensive, low-technology production. However, as the income levels increase and the consumer behaviour changes, it has become more common to establish businesses oriented towards selling goods on the Vietnamese market. Many companies describe Vietnam as a good complement to the home market, with growing potentials offered by a very young, dynamic population. It is described as cheap to establish new brands and commercialism is still relatively young.
Advice for starting a business in Vietnam.
One of the main problems for businesses in Vietnam is difficulties with predictability, transparency and clarity in terms of regulations and relations with public authorities. The gaps between legislation, implementation and enforcement are big in Vietnam. Starting a company is associated with some administration (several forms and procedures) and also associated with strategic considerations in terms of the legal form of the company (e.g. joint stock company, representative office etc). So, the first advice is Be prepared to spend a lot of time taking care of administrative procedures (e.g. different forms, contracts and licenses), it means: * Try to get a good overview of the different ministries, authorities and departments you are likely to be in touch with within your business area. * Make sure to have someone with good networks on the relevant state administration level, whom you can consult on these issues The second advice: Do a throughout research on Human Resource in Viet Nam.
Human resource issues are often described as the most difficult area when doing business in Vietnam. This is mainly because of different cultures. The employee turnover is generally high in Vietnam. It is therefore important to provide the employees with reasons to stay in the company. Most companies stress the importance of investing in the employees. One of the keys to business success in Vietnam is understanding that local customs and behaviours have a significant effect on business relationships, which means paying more money do not keep your employees, understand and being friend with them do. The third advice related to Export/Import matter.
The Vietnamese government has shown itself committed to implement the WTO commitments. As a result, trade regulations are softening up slowly. However, when inexperienced, trading can be a difficult area in Vietnam. As there are no extensive guides or manuals to trading and no complaining mechanisms at the custom offices. Efficient trading (import/export) is often a matter of learning-by-doing. Problems can to large extent be avoided by doing thorough research on regulations, in order to ensure that all documents are in order and all laws are followed.