Doing Business in Vietnam
Vietnam is an attractive destination for entrepreneurs looking to set up their own businesses. Vietnam has a relatively robust economy which has experienced steady growth since the 1990s. While it did feel the effects of the global economic downturn, Vietnam made a rapid recovery and continues to offer a lot of potential for foreign investors.
In recent years, the country has seen an influx of business people moving to Vietnam to diversify their operations away from China. Vietnam’s population of over 97 million people also boasts a large, young and increasingly educated workforce, which serves to make it an even more attractive location for businesses.
While the Vietnamese government has taken steps to amend legislation to encourage foreign business owners to set up enterprises in the country, there are still a number of barriers that entrepreneurs will have to overcome in order to successfully set up and manage a business in Vietnam.
Vietnam ranks 69th out of 190 countries analysed in The World Bank’s Ease of Doing Business Survey for 2019. The country ranked particularly highly in dealing with construction permits (21st) and getting credit (32nd).
Vietnamese is the official language of business. While English is spoken in most business circles, it is worth hiring an interpreter to assist in dealing with government departments and other service providers
Hours of business
Monday to Friday, 8am to 5pm and Saturday, 8am to 11.30am.
Business attire should be formal and conservative. It is best to stick to dark-coloured suits and modesty is key.
Handshakes are used when meeting business associates. Handshakes usually only take place between members of the same gender. Some Vietnamese people use a two-handed shake, with the left hand on top of the right wrist. When male expats greet a woman they should wait for her to extend her hand first. If she does not, he should bow his head slightly.
Business gift-giving is fairly common at the end of a business deal or during a meal in honour of a business partnership. Gifts should be small but not overly expensive. Ideal gifts include something with an expat’s company logo on or something typical of the expat’s home country.
While there have been strides taken towards gender equality in Vietnam, women remain underrepresented in Vietnamese business circles. It is very rare to see women occupying senior positions in a company.
Business culture in Vietnam
Vietnamese business culture is very hierarchical. Respect should be shown towards elders and senior figures at all times. When addressing business colleagues it is important to use appropriate titles followed by the person’s first name, rather than surname. When greeting older colleagues it is best to bow slightly; younger businesspeople will greet each other with a firm handshake.
Relationships and networking
Personal relationships are considered to be critically important to successful business partnerships, so expats should expect to invest a considerable amount of time getting to know colleagues. In fact, it is not uncommon for no actual business to be discussed at initial meetings.
Business cards are exchanged at initial meetings and should be presented with both hands. When receiving a business card expats should show proper respect to it and not simply glance at it and put it in a pocket.
Networking is incredibly important in Vietnam. Vietnamese businesspeople prefer to work with those recommended by a friend or business contact rather than be approached directly. Expats doing business in Vietnam will soon find that a broad social network does wonders for their business success.
Business negotiations in Vietnam can sometimes be slow. It is important to bear in mind that there is often a lot of red tape that has to be contended with when doing business in Vietnam. Furthermore, group consultation can also delay final decisions. Patience is therefore important when conducting business in the country.
The concept of maintaining face is important in Vietnamese business circles. Vietnamese people will go to great lengths to avoid embarrassing themselves and colleagues during business proceedings. Usually, when one person disagrees with another they will remain quiet so as to not cause a loss of face. Silence is, therefore, a common means of communication in business.
Trust is also important in Vietnam. Business people take each other at their word and therefore expats should never make promises they cannot keep. Backtracking on an agreement will impact negatively on one’s reputation and create difficulty when it comes to future business proceedings.
The Vietnamese value punctuality. Arriving late or being unprepared for a scheduled meeting is seen as disrespectful.
Expat entrepreneurs should be sure to plan ahead when doing business in Vietnam. The Vietnamese expect people to make appointments several weeks in advance to schedule any sort of business meeting.
Dos and don’ts of business in Vietnam
Do arrive at business meetings on time. The Vietnamese value punctuality.
Don’t expect to get down to business at the first meeting. The Vietnamese value getting to know their associates on a personal level before moving on with business proceedings.
Do dress conservatively and modestly. Despite the hot weather, Vietnamese businesspeople still wear formal business suits.
Don’t assume business associates will speak English. While English is widely spoken in business circles, it is recommended that expats hire an interpreter to assist them, especially at initial meetings.
Do present Vietnamese business associates with a small gift at the end of a successful business deal
Don’t backtrack on the terms of a business agreement. Trust is an important element of business relationships in Vietnam.