Starting up a business in Vietnam opens a big opportunity with the market of 90 million people. So, how to start up in the capacity of foreigners in Vietnam successful and steadily.
Starting up a business in Vietnam
I/ Starting up a business in Vietnam - an attractive destination to invest for business activities.
In recent years, Vietnam is emerging as a developing country in the most dynamic economic region of Southeast Asia with potentials in the world.
1. An advantageous geographical location to start up in Vietnam.
Vietnam has a 3.600 kilometer coastline, is close to main transportation lines in the world. On the other hand, Vietnam is the center of Southeast Asia, it’s a gateway to penetrate developed economics in the western area of the Eastern Peninsula. Therefore, with the advantageous geographical location, it will serve the international trade process in Vietam more easily.
Population: 90 million people.
Economic center: Ho Chi Minh City, Da Nang city, and Hanoi.
Stable politics to start up in Vietnam for foreigners.
Just 30 years ago, Vietnam’s economy was one of the poorest in the world, and growth in this centrally planned economy was rather dim – per capita GDP was stuck between $200 and $300
The stable politics is considered the top factor of Vietnam to attract foreign investors starting up the new business in Vietnam. This will ensure consistency in Vietnam’s economic development policy, legal system, necessary documents to start up transparently and clearly in Vietnam. The investors could be assured of investing in starting up with Vietnam without fear of secure, political and legal issues.
Stable and dynamic economic.
- In recent years, Vietnam has ranked among the fastest growing economisc in Asia. The average GDP reached 223 billion USD and the growth rate reached 6.8% in 2017. . Vietnam proudly names itself in the list of countries with the most dynamic economies in the world.
- The average working age: According to the latest statistics of the Institute of Workers and Trade Unions, the average age of workers in enterprises is only 31.2 years old (down 4,1 years old campared to 2 years ago).
- Average expenditure of people for the sectors:
Gloabbly, Southeast Asian consumers are still leading in savings and this intention has not changed in the last two years. But compared to last year, consumers had more positive changes, though they spent most of their income on savings (raise 6% compared to 3rd quarter in 2017), but they gradually enjoyed life more by going shopping for new clothes or upgrading homes or spending time on outside entertainment (raise 7%, 10%, 3% compared to 2nd quarter in 2018, corresponding to each category). Besides, compared to the previous quarter, the spending on hig-grade medical insurance packages did not change, but it’s still at a high level compared to last year (raise 13%). And that means the consumers cared about their health and their family’s health more, they calculated carefully their monthly costs. Therefore, Vietnam is the potential market for foreign enterprises investing in starting up in Vietnam
- Export in 2018 reached 243.48 billion USD, increasing 13.2% compared to 2017.
- Import turnover reached 236.69 billion USD, increasing 11.1% compared to 2017.
Production advantages are available to optimize starting up costs in Vietnam:
- Agriculture: fruits, vegetables, dried nuts, coffee, pepper, cashew …
- Fashion: clothes, shoes.
- Handcraft goods: Crafts and fine arts.
- Fuel materials: coconut shell charcoal
- Interior decorations.
- Take care of garden and exterior: (Garden and outdoor living) coconut fiber, plant pots made of coconut fiber.
Economic Unions taking part in:
- ASEAN (Association of South-East Asian Nations)
- ASEM ( Asia-Europe Meeting)
- APEC ( Asia-Pacific Economic Cooperation)
- WTO (World Trade Organization)
In the last years, with the efforts of Vietnamese Government to move closer to the major economy in the world. By joining coalition organizations, participating in signing of trade agreements opening big opportunities for foreign investors and business starting up and reaching the market with 90 million people in Vietnam, specifically:
- AFTA: ASEAN Free Trade Area
- ACFTA: ASEAN-China Free Trade Area
- AKFTA: ASEAN-Korean Free Trade Area.
- AJCEP: ASEAN-Japan Free Trade Area.
- VJEPA: Vietnam – Japan Economic Partnership Agreement
- AIFTA: ASEAN-India Free Trade Area.
- AANZFTA: ASEAN Australia- New Zealand Free Trade Area.
- VCFTA: Vietnam – Chile Free Trade Area.
- VKFTA: Vietnam – Korea Free Trade Area.
- VN – EAEU FTA: : Vietnam- Eurasian Economic Union Free Trade Area.
- AHKFTA: : ASEAN-HongKong Free Trade Area.
- CPTPP: Comprehensive and Progressive Agreement for Trans-Pacific Partnership
- EVFTA: EU-Vietnam Free Trade Area
With a commitment to apply preferential tax rates on imported goods, opening up great opportunities for producers, exporters reach the potential market to optimize start-up costs in Vietnam.
Foreign Corporations that have been invested on starting up the new business in Vietnam.
- Samsung Corporation (Korea)
- Lotte Corporation
- Intel Corporation
- Cargill Corporation
- KUMHO Tire (Vietnam) Co.,Ltd;
- Vinacapital Vietnam co., ltd
- POUYUEN VIETNAM
- Kumho Asiana Plaza Saigon and more….
The Vietnamese government always has open-door policies and encourages foreign investors to inject investment capital. Vietnam gives many attractive preferential policies to attract foreign investors such as: exemption import tax for some special goods sectors, corporate income tax, land rent-use. Since 2018, the law supporting start-up business was issued, and concurrently Vietnamese Government has proposed a series of preferential policies to attract foreign investors to start up the new business in Vietnam so that they could start up in Vietnam in the capacity of foregners.
You can see that with population size current growth momentum, Vietnam promises to be an attractive potential market to start up business in Vietnam.
How to start up in vietnam?
To enter the Vietnamese market, foreign enterprises need to learn about models that can be applied to business in Vietnam and legal procedures for each model. This is really necessary to establish a business in accordance with the law and avoid future risks, contributing to optimizing costs to start up a business in Vietnam.
It will contain the folowing models:
Trade representative: A form of manufacturers choosing Vietnamese company as a partner. Authorize to perform works in Vietnamese market under the management of the foreign companies, suitable for the company that start up a small business in Vietnam.
See more: Commercial representative service of VNT
Representative office: The manufacturer directly opens an office and recruits personnel to find customers in the market.
See more: Package office setting services at VNT
Invest in Vietnamese companies, purchase sharesholding to cooperate to operate business: is a form of the foreign investors and manufacturers choosing a company to purchase shareholding to run the business together.
See more: Finding Vietnamese partners service to purchase shareholding.
Company with 100% foreign capital: is a forrm of foreign manufacturers carrying out procedures for investment registration in Vietnam with the Ministry of Planning and Investment and establishing a new company in Vietnam.
See more: Procedures for registration of a business with 100% foreign capital.
Costs to start up a businesss in Vietnam.
“How much costs to start a business in Vietnam?” is a question made by startup foreigners in Vietnam.
+ About choosing a partner to represent in Vietnam to look for and work with customers.
The advantages: Partners will help you to do the first task of setting up the market. Partner are usually people who are familiar with the market, have experience in selling and building markets. With low investment costs, it’s consistent with the first phase exploring the market when initally starting up in Vietnam.
The advantage is optimizing costs of starting up in Vietnam, no need of investment costs for facilities and personnel. All resources are focused on market and customers development.
The disadvantages: Have to spend much time looking for reputable service pproviders consistent with the purpose and requirements of the business.
+ About investing in opening representative office in Vietnam.
The advantages: easy management, fully reporting from personnel.
The disadvantages: High investment capital costs, relating to recruitment and state policy for personnel.
In the first phase, they need to a bigger investment costs.
The representative office just function to look for customers. It can’t set up online & offline retail system.
+ About form of investing in purchasing companies in Vietnam.
The advantages: The manufacturers could choose their appropriate business, make investment, operate based on what is available rather than building it from the beginning. This form saves time and finance than establishing the new company.
The disadvantages: They need partners to seek businesses that match their needs.
+ About form of investing 100% foreign capital to establish the new company in Vietnam.
This is the form of FDI investment with large scale, need specific business plans and commit to implement registering investment capital. So, the form is used by large corporation to invest in establishing factories in Vietnam.
Necessary documents to start up a business in Vietnam
In order to qualify for foreigners to start a business in Vietnam establishing a business, foreign investors must meet the following conditions:
- Notarized passport of foreign citizens
- Having sufficient financial capacity to implement the projec, including confirmation of the bank account balance or personal savings book in accordance with the corresponding amount of investment in Vietnam.
- Investors must commit to having the location to implement the investment project. It means having an office lease contract in Vietnam to register head office.
See also: Investors’ dossier submitted to the investment registry.
Tasks in the next phase for starting a business in Vietnam.
When starting up in Vietnam as a foreigner, you have to face enormous workload. It takes much time, costs and even you need money to repair if you choose wrong partners. Those tasks are:
1. Finding location for head office, making repairs, and construction.
See more: Business premise finding services.
2. Preparing product documents, profile, brochure, designed images in Vietnamese.
See more: Marketing documents design services.
Product information and company profile translation services.
Product Photography, Video making services.
3. Personnel recruitment, personnel interview, and procurement work.
See more: Personnel recruitment services.
Contract and text editing preparation services.
4. If you are a foreign manufaturer, you have to import goods, complete procedures of import and circulation of commodities papers in Vietnamese market.
See more: Seagoing vessel cargo transit services.
Aviation cargo transit services
Road cargo transportation services.
Customs procedures services.
Certificated of Product circulation services.
5. Setting up online channel to start a business.
See more: Website creating services.
Website managing services.
Product Public Relations writing services.
Sales channel setting up in e-commerce services.
Google advertising services.
6. Setting up B2B partners for the sales.
See more: Offer services in Modern Trade and general traditional trade channel.
Marketing, brand activation and exhibition services.
With VNT, we have much experience of setting up businesses and we supply for you package services of business network.
The network of partners in Vietnam will help you complete tasks effectively most. We will seek and choose reputable and trustworthy partners for you to work directly as your requirements. This will save time and costs for seeking, selecting and ensuring to complete tasks on shcedule for you.
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