Doing Business with Vietnam
|Religion||no religion (74%), Buddhism (15%), Christianity (9%)|
|Head of State||Nguyen Xuan Phuc|
|Head of government||Pham Minh Chinh|
|Currency name||Vietnamese dong (VND)|
|Time shift||+6 hours (in summer +5)|
|Ambassador||PhDr. Vítězslav Grepl|
|Economic section||Ing. David Jarkulisch|
|Consular section||Martina Saitlová, MA|
|PaulSourcing||M.Sc. Ivan Nikl|
|Nominal GDP (billion USD)||892|
|Economic growth (%)||2.7|
Vietnam is a republic with a political system of one-party rule. According to the Constitution, the Communist Party of Vietnam has a leading role in the state and society. The head of state is the president, executive power rests with the government elected once every five years. In terms of the economic system, Vietnam is a socialist-oriented market economy with a high share of the state sector, which still accounts for almost one third of the Vietnamese economy.
Vietnam is the sixteenth most populous country in the world, with a population approaching one hundred million, and the thirty-eighth largest economy in the world. However, in terms of economic performance per capita, it is still a middle-income developing country. In the last thirty years, the Vietnamese economy grew at an average rate of 6-7 percent per year, and its impressive growth slowed down significantly only in the crisis years of 2020-2021. The rate of average GDP growth per capita makes Vietnam the second fastest growing country in the world after China. Vietnam has ambitions to become an advanced industrial country within twenty years. Vietnam’s economic success is based on the influx of foreign investment and the building of an export industry using cheap labor. However, in recent years, an influx of investments with higher added value can be observed, and the Vietnamese government is striving for a gradual transformation of the growth model towards advanced technologies and Industry 4.0. Vietnam is a member of the ASEAN free trade zone comprising 10 countries with more than 600 million consumers. Vietnam is one of the most attractive countries for foreign investors in the Southeast Asian region (it attracts up to USD 20 billion of foreign direct investment annually).
In terms of mutual trade turnover, Vietnam is our second largest trading partner within the ASEAN countries (behind Malaysia) and, in a global comparison, the twenty-sixth largest trading partner after India. With the gradual transformation of the structure of Vietnamese industry, the structure of mutual trade with the Czech Republic is also changing. Until a few years ago, Vietnam was primarily a source of cheap footwear and textiles for the Czech Republic. Today, thanks to the growing inflow of foreign investments into sectors with higher added value, electronics and computer components dominate Vietnam’s exports to the Czech Republic. Czech companies are establishing themselves on the Vietnamese market, for example, in the defense industry, in the supply of engineering products and industrial equipment, or in the energy industry. Czech glass, beer, malt, hops and milk powder are also traditionally successful Czech export items to Vietnam. Czech environmental technologies, manufacturers of medical supplies and equipment for hospitals or service providers in the field of ICT are also doing well on the Vietnamese market. A positive role in mutual trade relations is played by the long tradition of cooperation between the two countries, supported by a large Vietnamese community in the Czech Republic and a number of Vietnamese who lived in the Czech Republic, maintained a very positive relationship with our country and today hold important positions in the Vietnamese state administration or state enterprises.
Practical telephone numbers (emergency services, police, firemen, information lines, etc.)
First aid: 115
Information: 116, 1080
Hanoi Family Medical Practice: +84 24 3843 0748, +84 903 401 919 (mobile)
Vietnam-French Hospital: +84-24 3574 1111
SOS International: +84 24 3718 6390
Ho Chi Minh City:
HCMC Family Medical Practice: +84 28 3822 7848, +84 913 234 911 (mobile)
HCMC International Hospital: +84 28 6280 3333
Franco-Vietnamese Hospital: +84 28 54 11 33 33
Important web links and contacts
www.mofa.gov.vn (Ministry of Foreign Affairs)
www.mpi.gov.vn (Ministry of Planning and Investment)
www.moit.gov.vn (Ministry of Industry and Trade)
www.mt.gov.vn (Ministry of Transport)
www.mard.gov.vn (Ministry of Agriculture)
www.mof.gov.vn (Ministry of Finance)
www.sbv.gov.vn (State Bank of Vietnam)
www.gso.gov.vn (General Statistics Office)
www.quochoi.vn (National Assembly of VSR)
www.vcci.com.vn (Vietnam Chamber of Commerce and Industry)
www.evn.com.vn (Vietnam Energy Company)
www.vietrade.gov.vn (Vietrade Agency)
www.vietnamtradeportal.gov.vn (Vietnamtrade Internet Portal)
www.vir.com.vn (Vietnam Investment Review)
www.vbf.org.vn (Vietnam Business Forum)
www.vneconomy.com.vn (Vietnam Economic Times)
www.vietnamlaws.com (Phillips Fox Vietnam Laws Online)
http://vietnamlawmagazine.vn/ (Vietnam Law & Legal Forum )
www.worldbank.org/vn (World Bank in Vietnam)
www.delvnm.ec.europa.eu (Representation of the European Commission in Vietnam)
www.eurochamvn.org (European Chamber of Commerce EuroCham in Vietnam)
www.aseansec.org (ASEAN )
The Ten Commandments for Doing Business with Vietnam
The PaulSourcing agency has prepared ten recommendations for doing business with Vietnam for Czech entrepreneurs interested in business relations with Vietnam. In 2020, it was supplemented with 4 current tips.
4 recommendations for entering the Vietnamese market during the coronavirus pandemic situation:
- Market research The first step for expanding into Vietnam is market research. It is necessary to find out whether the product or service has potential in the local market. Vietnam is developing rapidly and there are regular changes in the economic environment, which also changes opportunities and market situations. The current pandemic has affected a number of industries, like all over the world, knocking several players out of the market and creating a number of new opportunities.Getting an up-to-date market research in Vietnam is difficult and very costly. In this case, it is possible to use the services of PaulSourcing’s foreign office in Ho Chi Minh City (ZK Ho Chi Minh City), which tries to monitor current events through local business organizations and its own research. For more detailed information, just contact the foreign office with your ideas and ideally with the HS codes of the products.
- Cooperation with a local business partner In case of first contact with the business environment in Vietnam, it is necessary to cooperate with a local distributor or business partner, because the locals do not let anyone into their distribution networks and the individual processes are complicated. Databases are rare in Vietnam. When they do exist, they are very often unavailable or expensive. It is possible to search for contacts independently on the Internet or through acquaintances. However, much of the important information is in Vietnamese and making contacts will often require the Vietnamese language as well. Therefore, we strongly recommend using the services of ZK Ho Chi Minh City, which will find relevant contacts and help establish contact.
- Selection of business partners The Foreign Office will create a list of potential contacts and supporting information, on the basis of which the preferred entities will be selected. We recommend choosing those entities that already have experience with a European or American business partner. Choosing a business partner is a fundamental part of a successful market entry.
- Approaching business partners The next step is to approach selected entities. ZK Ho Chi Minh City recommends contacting the foreign office for the first time, ideally by email. If the potential of the selected partners is great, he recommends companies to go to Vietnam right from the start and the foreign office arrange meetings. Planning meeting programs is very demanding and often unstable. Ideally, therefore, expect that a specific program of meetings will be drawn up upon arrival and will largely be meetings directly with business partners. Prepare a brief, simple and concise presentation. Even larger companies use translators, so it is pointless to unnecessarily complicate presentations.
The Ten Commandments for Doing Business with Vietnam
- A little mistrust does no harm You mustn’t take the untrustworthiness of Vietnamese people personally, because in Vietnam only family members are trusted and to some extent even long-term and closest friends. The same mistrust is in place on your part.
- Yes can mean no Don’t expect the honest truth that is uncomfortable for you. Instead of telling you that your product is expensive or uninteresting, the Vietnamese partner is more likely to avoid the meeting or not answer the call. When negotiating, it is necessary to take into account the fact that Vietnamese people not only do not like to admit that they do not understand something, but also do not like to say no. Therefore, answers like “probably yes” should be interpreted as “rather no” and “maybe” as “definitely not”. Vietnamese very rarely show their disapproval through confrontation. A question like “Is that clear?” or “Do you understand?” is useless, because the answer will always be “Yes!”.
- Words don’t carry much weight Be prepared for the fact that Vietnamese businessmen often revel in non-binding promises and decisions. Therefore, add the word “maybe” after each statement to be sure. Do not interpret the sentence “When you are in Hanoi, visit me” only as a polite phrase. If you make an appointment more than one day in advance, the date must be confirmed shortly before the meeting, otherwise the appointment may be considered cancelled.
- Be independent The basic conditions for success include not only obtaining a good partner, but above all firm management by the Czech company. The dependence of foreign businessmen on Vietnamese who speak their language is the most common cause of problems. In Vietnam, successful Korean and Japanese companies manage and organize their projects from A to Z essentially by themselves.
- Keep your emotions under control Be aware that the Vietnamese do not show their emotions too much and do not reveal their feelings. Any excessive raising of the voice is perceived as a loss of self-control.
- Take care of your image Take care of your image. Especially when meeting for the first time, your partner will pay attention to your age, social status, what you wear, the brand of your phone, etc. At the same time, do not rely too much on your first impression and make sure that your Vietnamese counterpart does not get into an embarrassing situation and lose face. Image – face is very important.
- Business as a struggle Western businessmen assume that in business it is necessary to achieve a “win-win” result, i.e. satisfaction on both sides. For most Vietnamese people, business is always a tough game. There is a winner and there is a loser. In particular, a foreign partner is expected to make zero, if not negative, profit when doing business or investing in Vietnam.
- Put up with corruption in the state sphere You will encounter the commission system often in Vietnam. While this problem is common in a state-owned company or office, fortunately it does not affect private companies.
- Do not underestimate the “adversary” Little knowledge and unrealistic ideas of some Czech entrepreneurs about Vietnamese society and the business climate are unfortunately very common.
- Avoid criticism Patriotism is very strong in Vietnam. It is therefore not appropriate to search for political topics, or to point out some of the shortcomings of contemporary Vietnam, or to express opposition to some specialties of Vietnamese cuisine. Vietnamese tradition and culture is highly valued and adaptability, on the contrary, is very low, which is evident in the community way of life of Vietnamese people abroad.