E46: Vietnam market entry updates: 6 tips CEOs must know to avoid failure
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So the Vietnam government, they have updates like most of the months. But what is the important update this quarter? So one important update is that now the company cannot...

Welcome to You Don't Know Vietnam, the show that demystifies Vietnam for global audiences by talking to the creatives, trendsetters and business owners who are taking on the market. Forget what you thought you knew about Vietnam. You guessed it. It's no longer that, as you're about to find out. I'm Ian Paynton, co-founder of We Create Content, a content marketing agency that helps global brands connect with Vietnamese consumers.

We make global brands relevant on a daily basis with always-on hyper-local content. On this episode of You Don't Know Vietnam, I'm talking to Jenny Nguyen, a market entry consultant at Incorp Vietnam, a provider of corporate solutions and business advisory. Jenny and the team help global businesses and brands with all things compliance when it comes to entering the Vietnam market. In her words, not mine, she's got your ass covered.

Today, Jenny tells me what CEOs need to do before really jumping into Vietnam to do business and gives six tips to avoid market entry failure. She tells me about 2025 Q1 tax updates that you should be on top of and also reveals what the biggest challenges are and unexpected costs for companies and brands when landing in Vietnam to get a piece of the action.

Jenny Oi. Hey, what's up? What's up? Thanks for joining me on You Don't Know Vietnam. We made it. Yeah, thank you very much for inviting me. Yeah. Well, I'm always down to speak to people like yourself who help other businesses and brands enter Vietnam because that's what we do as well here at We Create Content. We help brands with

with their market entry, but in terms of their positioning, their messaging, their content marketing, their audience building. You help businesses and brands in a completely different way, right? Yeah. So we help companies enter Vietnam and we support them about the legal, about tax compliance, about HR compliance. So basically we have their ass covered. Yes, absolutely.

Which is really, really important, right? Yeah. In terms of market readiness, Vietnam is giving off all these signals. GDP growth year on year is really strong. FDI is at record highs. But what should a CEO be thinking about themselves as to whether or not they're ready to enter Vietnam, do you think? I see all the hype.

There's a load of action to be getting involved with. But what are the things they've got to be asking themselves to check that they're really ready to enter the Vietnam market? So if you look at the Vietnam news, you see that all the good things about Vietnam, right? Vietnam is growing, Vietnam is booming, etc. Those indicators is one thing. It's a general thing.

It is not industry specific. So what you need to do is you need to fact check and you need to compare it with the reality. So I would suggest before you open a company in Vietnam, you come to Vietnam and see how things go here, how the people are acting, how the culture is here. So after you understand it, then you slowly make your way into it. So don't rush it or you lose your money.

Everyone says that. Everyone says, come here and spend time first. I think it's really important, isn't it? And I think that's what this podcast is about a little bit as well, because I always say that no matter what you think about Vietnam from the outside, it's probably out of date because the country's moving so quickly and it really needs on the ground insight. You know, it can only be learned by actually being here, meeting people, seeing how things work.

Yeah, I agree. So in Vietnam, we have a business chamber of different countries. Let's say you come from Germany, we have here German business associations. You've come from Singapore, we have Singapore Chamber of Vietnam. So I would suggest you get to know the chamber in Vietnam of your country and you go to the meetings of those.

And then you'll find people from different aspects of life, different industries. And you talk to them, you have coffee meetings with them to understand what is the picture here in Vietnam. You should do thorough market research about your industry and at least have clients before you come here.

Because I do have clients that come to Vietnam to set up a company and do not have any contract or potential client yet. They think that Vietnam is easy. I'll just go set up first and then I find clients later. But the economics is a bit difficult right now. So it's slow sales and it costs to maintain the office, maintain the employee. So finally, they have to close down the business and go back to the country.

Have you seen that happen? Yeah, I have seen that happen. Some of my clients, unfortunately, they do not make it. Yeah, because I think it's easy to come to Vietnam and go, yeah, I'll make the sales. But it can take a bit longer, can't it? To build relationships, build trust, get a sale across the line. You know, I remember speaking to someone recently and they'd come to Vietnam and they said, oh, yeah, the deal's done. You know, it's going to be done in the next month. And I'm thinking,

It's so not, you know, like I tried to say in the nicest possible way. I said, I think it's probably going to take a bit longer. There'll be twists, there'll be turns, there'll be U-turns. So try and get that stuff sorted out before launching. Is that what you're saying? Yeah. So you know Vietnam well when you say that.

What Vietnamese people say is one thing, but you need to double or triple check it. And you need to see them in person for multiple times to see what they talk in the first time or second time or the third time. Is it contradict to each other? Is it a lie? And then you make your decisions. Please do not make decisions on the first impressions. Yeah.

Because you need to see what the Vietnamese do rather than what the Vietnamese talk. All right. Ah, okay. Tell me more about that. So I'm a Vietnamese. I was born and raised here. I travel a little bit. I travel to 13 countries because I love traveling. Yeah. So I see different countries have different culture. And Vietnam, we are also different. In Vietnam...

We usually say that we can do it, but in fact, we cannot do it.

So my advice to you is that you need to talk to that person or that business partner that you think is potential. You need to talk to him or her two, three, four times, as many times as possible. And to see if you have an aligned impressions on that. Yeah. And then you make your decisions because people may promise a lot to you. And then when you come, it's turned out different and it will cost you time and money.

So, yeah, make your research first and get to know the people before you do your business here. I mean, that's coming from a place of hunger and fire, isn't it? Like when the Vietnamese say, yeah, we can do this. It's not coming from a place of inauthenticity or deception. I think people like genuinely think they can and want to do it. They might not have figured out how to do it yet, but they don't like to say no. Yeah. So in Vietnam, we're quite hustling.

We love that opportunity, so we just say yes to it. And we are also flexible. So we also believe in our ability to make it work. But sometimes it does not work. And that's a normal thing here. So yeah, do your homework about the Vietnam culture. Or you can come to Vietnam, find me and I show you how Vietnam do. So get on the ground, spend time meeting people. Ideally get some sales information.

confirmed first. Have a little bit of patience, understand that things may go wrong. Things may take a few different steps to the right or the left or go backwards. And ideally find some partners on the ground that can help you understand the landscape, right? Yeah, that's right. If we went in now to what are the five fastest ways to fail with your market entry? Do you think there's different answers there?

So the five tips that I would give to a CEO or CFO or anyone that is looking to enter Vietnam is that first thing you need to learn the culture first because in Vietnam is relationship driven. So everyone know everyone and if you don't have relationship, you're not going to make the business here. So first is learn the culture first. And the second one is find the right local partner.

In Vietnam, if you find the right local partner, then that person will lead you further. They will know the way to do the business here and they will save you time and money. But first, you need to invest your time in finding the right person. Do not make decisions fast and tie yourself with the wrong partner. And the third one is be ready for bureaucracy.

So the government here still have a lot of paperwork for you to do. And there's a lot of paperwork. There's a lot of waiting time. Even when you apply for your company, the government may ask you to supplement more documents. And in CorpVietnam, we are here to help you with that.

We have our legal expert here who is very patiently dealing with the government on your behalf. And number four is that don't expand too fast. Just start small and have a lean operations. And then when the market is good, you scaled up your business. Don't put all eggs in one basket. And the last thing is that Vietnam move fast, so you need to adapt quickly.

So one of the things that I love about Vietnam is the flexibility. Yeah, we keep changing and we aim for the good. So yeah, we flexible and ready for the change. You are not coming with one business model and expect that it will success. If it does not work, you need to make change quickly or else your business die. I think they're really, really good insights. And just to summarize, right? So learning the culture first. Mm-hmm.

It's all about building relationships. I mean, wouldn't most countries say that, do you think? Or is Vietnam particularly different when it comes to relationships? So Vietnam and China is kind of similar. Relationships are different. So if you know the right person, you get to the right path easier, faster. Yeah, that's what I'm saying. But it is important to take time, which is your second point, to find that right person, isn't it?

I want to tell you about an interesting issue that our clients usually face. So they are a foreign company, they enter Vietnam and by the Vietnam regulations, you need at least one legal representative who stays in Vietnam more than six months per year. So at that time, the foreign company, they do not have anyone in Vietnam and they

currently do not want to assign any of their foreign staff to come to Vietnam, right? Because that's, yeah, that's difficult to me. So they try to find a local business partner in Vietnam to be the legal representative. But, you know, the legal rep one day can change their mind.

It says, "No, I don't want to be a legal rep anymore. Remove me." Or if everything turns sour, that person can mess up with your bank account or they can sign a contract that is harmful for your business. So at that time, it will cause you a lot of trouble. We have solutions that help you with it. It's called Nominee Legal Representatives. So let's say we assign one of our staff to be your legal representative.

And we limit their rights and responsibilities within the company to limit the risk of your company. And we'll make sure that if things turn sour, then your business is not affected. So that is one of our strong points in doing business in Vietnam. We provide a person that you can trust.

In what ways do you see things turn sour when people trust a local partner? Why does it turn sour? And is it fair to say that it's quite tricky to do business in Vietnam?

You know, when you first enter Vietnam, you put this amount of money and then the company grows so fast, it becomes this amount of money. And people have creeds, right? I want to have some part of it, give me that. So they try to do something that helps them to get that money. All right. So at that time, a strict contract or a person that you know well will help your business grow sustainably.

or else you put your efforts, your time, your money into it and later on you got scammed or you got tricked by the legal rep that you just found on the street. Is it worth it? So it comes from a place of desire to get ahead, earn more, take a piece of the pie. That's why I was saying that you should talk with the local partner multiple times to see if the impressions align with each other. Yeah.

Just like CIA or FBI, like, interrogations, but every casual way. Yeah, just check the impressions. And I guess you've got more peace of mind if you're working with a global corporation with global reputation. And I like how you said as well that, you know, you have people patiently waiting to do the paperwork, deal with the bureaucracy, because that can be quite heavy, can't it, for someone that's unfamiliar with Vietnamese politics?

red tape or paperwork or admin, it can be quite long-winded and frustrating, that process. So to have someone patiently waiting on your behalf that understands it and accepts it, I think that's going to take a lot of stress away. Yeah, that's right. Even for normal Vietnamese, when we go to the government office to do paperwork, it takes a lot of time as well. So for you as a foreigner, you said,

Oh, I want to set up this company on my own. I'm going to do the paperwork on my own. So yeah, let's go to the office and wait. And sometimes they say, today we close early. You come back home. Tomorrow you come here and light up and wait. And for example, when you submit your applications, there are 10 doses needed.

So let's say you come to the officer, you give them the dossier. They said, you lack document A. Come back home, bring it to me. So you come back home, you prepare, bring document A to them. They said, you lack document B. They do not say it at one time. They say it every single time, every single item. That's what the Vietnamese government works. So be prepared for it.

Why does it work in that way, do you think? Wouldn't it be more efficient to be tightening that up and giving people information at once and being clearer about what contents that document needs to have? So these questions of you will tie to the Vietnam history. It's a style to queue up, get your number and wait for the officer to approve you. I know that Vietnam is opening up, is growing, but we came from that route.

And now we are making process, but it's still that route and need a bit more time. We are not initially built for efficiency. We are built for rules by the government. We're not built like Singapore. We're just different.

And those rules can quickly change as well, right? Like quite unpredictably? Yeah, the rules in Vietnam can be changed. But for example, Vietnam may enter a trade agreement with countries. But let's say that the decrees came out, governments name it.

But the real implementation takes more time because the officers in other cities or provinces need to be trained about it. And I was speaking to a business transaction lawyer as well on You Don't Know Vietnam, and he was saying as well, often...

these rules and regulations are sometimes subject to interpretation in different areas of the country. So it depends on how people are interpreting them differently in different regions can also change how it gets executed. Yeah, that's true. In terms of unpredictability, I was having a conversation with an associate recently and she was saying, oh, so all of a sudden Hua Bin province is now

been turned into Futar province up in the north. And now that the land I own in Hua Bing is no longer in Hua Bing, it's in Futar. And I think the value of it's going to drop. Like she never predicted that. It just kind of happened. And it feels like you never really know what's going to happen. And there's something unsettling about that, I think. That's why it's important to have someone on the ground

kind of walking you through it that's used to these changes, that's used to adapting to the change in Vietnam. I think it's really, really important because sometimes it does feel like

As a foreigner, the rug can just kind of get pulled from beneath your feet without any warning. Yeah, you're right. So when I say that Vietnam is relationship driven, it's actually, this is a good example. So let's say your friend doesn't know about the change and see it as a sudden change, right? But if you know the right person, then that right person knows about the change before it's implemented.

So, yeah, if you go through the right path, you will have the right planning and not put yourself in a passive position. Right. But it's a lot of networking. It's a lot of coffees. It's a lot of iced tea. It's a lot of food. It's a lot of rice liquor. It's a lot of karaoke. Remember to take exercise. Your fourth point was take it slow.

be small and lean first and then scale it up. So what's that? Is that a case of

dipping your toes in the water, getting your product market fit, making sure that there's a market for whatever it is you're selling and then start scaling. Don't just jump in head first with everything you've got. Yeah. Yeah. That's what I'm saying. And your fifth point was adapt quickly, be flexible because things are going to change, which I think we've talked a little bit as well about things changing quite quickly and being a bit unpredictable. But is there something there about the mindset needed, you know, to be open to change? Yeah.

expect to pivot and kind of not get wound up by it perhaps so for people from the first world when everything is in order they think a is a and a is going to work so in vietnam we are one of the people say to me that vietnam is uh organized chaotic so everything seems on over the place but it's going to work anyway

So be flexible. If you see that your business plan is not working, then make some change and adapt to the change and see the feedback and have a constant loop of improvement to change your business. If you need to have a new business partner or merge or acquisitions, then do it. Just to summarize those points one last time for our audience, your five tips are

for solid market entry would be learn the culture first, build relationships, find a local partner, take time doing it, be ready for bureaucracy, paperwork, waiting for things to happen. It will happen when it's ready. Take it slow and small. Be lean at first, get your product market fit, make sure things work and then start scaling it slowly and be adaptable, be flexible and

Act quickly and pivot should you need to. I want to add one more thing. This is the six tips. Care about your compliance. So if you set up your company, then care about bookkeeping, the tax report on time. If you have employees, then care about the labor contract, the regulations. You don't want to get yourself into penalties, right? If you late your reports for one time, you have a red mark on your profile.

And next time the government, if they do inspections, they will do you first. So make sure that you keep a clean record on yourself.

And for the employee, if you have an employee, then make sure the labour contract is very well written with terms and conditions and responsibility. Because we have seen cases of employees shooing the company and the company has got to pay a huge amount of money in time, in the court time, in court fee, etc. I think that's a great sixth point. Compliance, compliance, compliance.

We're heading into the end of quarter one of 2025 already. Are there any market entry compliance updates that you think audiences should be on top of right now? So the Vietnam government, they have updates like most of the months. But what is the important update this quarter? So one important update is that now the company cannot submit additional tax declarations while they get inspections.

So let me get this straight. Foreign company when set up in Vietnam, then the government will do inspections every five years or maybe six years, seven years. So your company is running as usual. And after five years, you will receive a notice from the tax government. They said, tomorrow we'll come visit you. And we want to check all your documents for the last five years.

all the contract you have, all the invoices you need to have, and the contract need to have signed and stamped with the red stamp of the company. So we'll check all of that. And if your company lacks any of those things, then that revenue or expense is considered not reasonable and will be removed. So that means that you pay more corporate income tax.

or penalties. Yeah. So every time the government do inspections, it makes the company nervous. So you better set up everything right at the start. And what this update means? This update means that before when they do inspections, you can still amend your tax report. Let's say you put the number wrong, you can still update it at that time. But now when they do inspection, you cannot.

amend those. Yeah. So if there's any mistake whatsoever, it's going to get flagged and it's going to mean you can't amend it and you're going to end up paying more corporation tax. Yeah. That's quite a big one, isn't it? You've got to get that right early on from the start. So the government gives you 10 years from the date of the report to amend it if you figure out any error by yourself. But

If the government figures that out before you and they inspect you, then you cannot change anymore.

Vietnam's booming. FDI is at record highs. Dispersed FDI capital was estimated to reach 25.35 billion in 2024, which was almost a 9.5 increase on 2023. Mainly in, correct me if I'm wrong, sectors like manufacturing, processing, energy, electronics. What is it that makes...

Vietnam is such an attractive place for foreign direct investment right now compared to say Singapore, Thailand or Indonesia. What's its competitive edge would you say? Because those countries have developed already and they have reached this certain stage when the growth is not very high anymore. So now you have Vietnam. Vietnam is still growing and it's a good place for you to invest.

So what I have said so far, you may feel like Vietnam is quite difficult to handle, right? Right now, it's kind of a difficult economy state. But it's a good time for you to do your research and learn about Vietnam. So if you learn about it now and when the economy gets better, you can start right away rather than start now.

When everyone is talking about it and you start and you're already late, right? So you better start now. Start learning. That's a really great shout. Like, don't wait for it to pick up. Get in there now. Do all of the groundwork that you were talking about. Build the relationships. Do the research. I mean, I was here doing business in 2012. And I must admit, it's taken a lot, lot longer than I thought. You know, I thought Vietnam was kind of going to blow up.

Like then, you know, and it's still kind of going. I thought me coming to Vietnam in 2012 was like the equivalent of having Bitcoin at like 50 cents, you know? Yeah, I know.

I think it probably was, but it's taking much, much longer than I anticipated. And I think that's a common theme that people say. It takes a lot longer here. So why wait? Get in here now, even if the market isn't at its strongest, to do the research, get on the ground, build the relationships and start making some sales potentially. Yeah. Yeah. You're right.

What's all this talk about China plus one? Is that a load of hype that's dying down now? Or would you say that's still very much a thing? Currently, Vietnam is benefiting from the China-US relationship.

economics war. And I've seen companies move their manufacturing from China to Vietnam. We receive a lot of inquiries. And we also bring clients to check the industrial zone in the south or in the north. So yeah, we have seen the shift and Vietnam is benefiting from it. So if you are working in manufacturing, you may consider Vietnam because we do have better tax. Yeah.

And right now, the U.S.-China is a little bit fragile. So better consider other options right now rather than wait for it to be too late. Do you think Vietnam is moving in the same trajectory as China in terms of its growth? I think Vietnam is moving in the same path as other Asian countries.

Other Asian countries have growth like China, like Thailand. They have faced this growing state before. And now Vietnam is just doing the same. History repeats. So if the multinational company, they have invested in other Asian countries, then now it's time for them to expand to Vietnam. And you talked about Vietnam's competitive edge. What would you say are the things that are holding it back?

make it most difficult? I would say the bureaucracy. Yeah, and the instant change of the market. That is the difficulty. So yeah, do your research before you enter and find the right people. Can you recall any examples of companies that have come here, completely flopped it and then left the market? Yeah, we do have clients in HR industry.

So they came to Vietnam and they spent a lot of time and money to get the license. And later on, they do not have any clients. So they have to make their decisions finally to close down the company and end it there. How long did that take? It takes two years. And how much money spent? I cannot say.

Quite a lot, I imagine. Yeah. Do you think there are any other unexpected costs that companies should budget for or watch out for when entering Vietnam? Regarding the unexpected costs, it can be from the penalties of the compliance or if you operate in a business and you do not have the registered business line for it. Let's say you are selling online.

but you do not register your company to sell online. And then all the revenue from selling online when get tax inspected will be withdraw. Let's say the government will say that all of that revenue is not right. So you do not have the rights to keep it. We'll take it. So they will take all the revenue

from that not registered business. Yeah. And what you are in Vietnam for, you work very hard to get those money, but you do not comply, maybe because you do not know about. So your revenue got revoked. And that could be a shock, a big shock for you. So let's say when you enter Vietnam, you...

sit down with a consultancy company and they have you to go through all of that. If you do business A, then you need to register this business code. Yeah. And have a list of business code that your company will register. Yeah, that will align with the government.

And let's say you need to pivot, like you said, things change and maybe you start doing something that isn't registered as a business line. You would then have to register that, right, before actually doing it. We do have clients when they have inquiry to open their company, we'll ask, what is your plan for the next three years? What are the business activities that you think you'll

We'll do in the first year or in the third year. Then we'll just register all of that even before they have revenue for that. And can you add business lines as you go? Let's say six months in, I need to do something different. Can you then add that in? Yeah. And you need to amend your company certificates. It will take you around one month to add in.

And if that is a conditional business line or a WTO non-committed business line, and it takes more time. So let's say all of a sudden you see that tourism is growing. So you want to do tourism business as well. And that is a conditional business. You need 1% Vietnamese shareholder.

And you need the head of travel to have the travel certificate as well. So those are the conditions that you need to satisfy when you add in those business lines.

You mentioned about some industries needing a 1% Vietnamese shareholder. Are there other sectors or industries that might need 51% Vietnamese shareholder or more? There are businesses that are sensitive and the government don't want the foreign to have 100% owned. So they will put the limit. The reason for this is because the Vietnam government wants to protect the local company from the foreign competitors.

or they want to protect the Vietnamese national security. So a business like travel or advertising will have a limit of 99% foreign-owned only, and the remaining 1% need to be a foreign Vietnam company. And some other business like transportations or container handling, those would require transportation.

just up to 49% for now. You can't have the majority in foreign business in those sectors. Yeah. So in those cases, you need to find a bit of local partners. Yeah. Got it.

I like to end the episodes by asking you, what are you most excited about for Vietnam? So I strongly believe that Vietnam is going to be growing very hard in the next couple of years. I'm a Vietnamese born and raised, so I've seen the country growing with developments. And recently we have the metro coming.

It's been built for so long and now it's finally finished. We finally have a metro. And we're going to have a new airport, a long-term airport in a couple of years. And those are very exciting developments. Because when the logistics get improved, then the economics will go up.

And I strongly believe that in the next couple of years, when the world economics is getting back, then Vietnam will be growing fast. So yeah, if you want to invest into Vietnam, then now is the time for you to come to Vietnam and learn Vietnam culture, learn the Vietnam people and start your research from now on.

You've been listening to You Don't Know Vietnam. I'm Ian Paynton from We Create Content. I'd like to thank DJ Jace from The Beat Saigon for their epic soundtrack and a massive thank you to you for making it all the way to the end.