☑ Discover an indian can starting a business in Vietnam ? Best business in Vietnam and more ....
Start-up in Vietnam: what are the most promising INDIAN CAN start-up companies and feasible businesses/industries in the next 2-4 years? (not to mention tech). Vietnam is one of the fastest-growing countries, hence, the promised land for many entrepreneurs and business owners worldwide.
1. Strategic location
Located in the center of ASEAN, Vietnam has a strategic location. It is close to other major markets in Asia, the most notable neighbor of them being China.
Its long coastline, direct access to the South China Sea and proximity to the world’s main shipping routes give perfect conditions for trading.
Two major cities in Vietnam are Hanoi and Ho Chi Minh City. Hanoi, the capital, is located in the north and has extremely convenient trading opportunities. Ho Chi Minh City, the largest by population, is situated in the south and is the industrial mecca of Vietnam.
2. Doing business is getting easier every year
Vietnam has made numerous amendments to their regulations to make investing in Vietnam more transparent.
In terms of ease of doing business, Vietnam ranked 82 out of 190 countries in 2016. Compared to the previous year, the ranking improved by 9 positions.
This rise was the result of improvements in some processes of doing business. For example, the government made the procedures of getting electricity and paying taxes easier, according to the World Bank report.
Based on their economic models, Trading Economics predicts Vietnam to rank 60 by 2020. Hence, the future prospects of ease of doing business in Vietnam are very promising.
3. Trade agreements
Another indication of openness to the global economy are the numerous trade agreements Vietnam has signed to make the market more liberal.
Some of the memberships and agreements:
Member of ASEAN and ASEAN Free Trade Area (AFTA)
Member of World Trade Organisation (WTO)
Bilateral Trade Agreement (BTA) with the US
Free Trade Agreement with the European Union (effect on June, 30th 2019)
All these treaties show that Vietnam is eager to promote the country’s economic growth and will continue its commitment towards trading with other countries.
4. Stable GDP growth
Over the last few decades, Vietnam’s economic growth has been one of the fastest in the world. This rapid development started due to economic reforms launched in 1986 and the rise has been continuous ever since.
According to the World Bank, the GDP rate in Vietnam has experienced a stable growth, averaging 6.46 % a year since 2000.
5. Openness to foreign investment
Geographical advantages and growing economy are not the only attractive features for investors. Vietnam has always been welcoming to foreign direct investment (FDI) and encourages it by constantly renewing regulations and providing FDI incentives.
The government of Vietnam offers several incentives to foreign investors who invest in certain geographical areas or sectors of special interest. For example, in high-tech or healthcare businesses. These tax benefits include:
Lower corporate income tax rate or exemption from the tax
Exemption from import duty, e.g on raw materials. Reduction of or exemption from land rental or land use tax
6. Growing population
With over 95 million residents, Vietnam ranks as the 14th largest population in the world. By 2030, the population will grow to 105 million, as forecasted by Worldometers.
Together with a growing population, the middle class of Vietnam is increasing faster than of any other Southeast Asian nation. This will support consumerism making Vietnam a profitable target for foreign investors.
7. Young demographics
Unlike in China where the population is ageing rapidly, the demographics of Vietnam is young.
According to Worldometers, the median age in Vietnam is 30.8 years in contrast to 37.3 years in China. Nielsen has also estimated that 60% of Vietnamese are under the age of 35.
The workforce is young and large and shows no sign of decrease. In addition, the country also invests more money in education than other developing countries. Thus, besides being vigorous, the labor force in Vietnam is skilled as well.
Vietnam is one of the largest exporters to America and many other major countries. There is a high demand for many goods sourced and manufactured in Vietnam such as coffee, rice, rubber, leather, wood, electronics, and textiles. Vietnam also has low value in production in terms of labour and land costs, as well as tax incentives.
There are several ideas within the heading of export, especially for starting a small business in Vietnam as a foreigner, such as product sourcing consultant (becoming the middleman for foreign buyers and local sellers), or importing international goods to the Vietnamese customer.
Vietnam is in fact the second biggest exporter of coffee in the world, and here are some other top export products.
Electrical machinery, equipment (44.1% of total exports)
Machinery including computers (6.9%)
Clothing, accessories (4.5%)
Furniture, bedding, lighting, signs, prefab buildings (4.4%)
Knitted or crochet clothing, accessories (4.4%)
Optical, technical, medical apparatus (1.6%)
Plastics, plastic articles (1.6%)
Sea Food: $5.1 billion (1.5%)
Rubber, rubber articles (1.3%)
However, there are also many other products to export with high-profit margins. For example leather, fruit, vegetables, nuts, and tea. The list goes on, with some research, there are some great products to export that would be perfect for a lucrative small business in Vietnam.
Vietnam has a population of approximately 98 million people, a large majority of people have computers and the majority of these people will not be computer savvy relying on the slow process of technical support taking up many precious working hours without the use of their computer.
Setting up a small business in Vietnam as an IT consultant has the potential to become a lucrative business because there are low overheads especially if you are working from home and visiting clients.
Vietnam’s information technology sector is experiencing high growth, driven by low costs and high-quality labour. Vietnam has also recently become the eighth largest provider of IT services globally. A lot of the IT industry is supported by the government with tax and labour incentives, further pushing its growth.
An example of a tax incentive in practice, you can take a look at the Da Nang High Tech Park which provides corporate income tax exemption for the first four years, and five percent of the next nine years, followed by 10 percent for the ensuing two years.
We have seen many of our clients and acquaintances build lucrative and sustainable small IT businesses in Vietnam for example web development, blockchain projects, augmented reality, software development, and many more. Many of them outsource their services to overseas clients.
A trending idea and lucrative small business in Vietnam is definitely outsourcing IT services. For many overseas foreign companies, software outsourcing from Vietnam is regarded as an effective software development solution due to its cost-effectiveness and high quality. When compared to developing software in the United States, companies can save up to 90% of costs by outsourcing to Vietnam.
The F&B industry is very competitive, however, there have been many foreign-owned successful restaurants and bars set up in Vietnam. The key is to understand the market segments and how big those are in any given area/city. The lack of market research can result in an early exit for this kind of small business in Vietnam.
Ha Noi and Ho Chi Minh have many foreign-owned restaurants and bars, often catering to tourists, ex-pats, and locals. Operational costs are relatively low and the food cost percentage can be easily kept below 30%. Usually, the main challenge with F&B will be marketing and sales.
Exercise and fitness are an essential part of everyday life in Vietnamese culture, there is an increasing need for more variety of fitness and wellness options. Personal trainers, yoga, and dance teachers have all increased in popularity within Vietnam.
Becoming qualified in one of these areas and either going from home to home or gym to gym to teach classes all have a low overhead cost and so has the option of becoming a lucrative business especially if you offer something different and an expert charging higher fees.
Therapy sessions are also becoming more popular, again having very little overhead costs this also has the potential to become a good small business in Vietnam.
While Vietnamese startup companies go to other countries for starting their businesses, there are also various people from many different countries, choosing different types of businesses that have successfully established their businesses in Vietnam. However, how to start a business in Vietnam as a foreigner is still a big question for many startup companies.
Language, culture and legal are the first factors should be aware when foreigners start their businesses in Vietnam. This article will help you understand some of these important factors as the answer for the question “how to start a business in vietnam as a foreigner”
A foreign investor (just like a local investor) may select one of the following Vietnamese legal entities to carry out a project:
A limited liability company (“LLC”), in the form of either a single-member LLC (“SLLC”) or an LLC with two or more (up to a maximum of 50) members (“MLLC”).
A shareholding or joint stock company (“JSC”) which is a company with at least three shareholders but no maximum number of shareholders.
A general partnership or a limited liability partnership.
A private enterprise (akin to a sole proprietorship).
Learning business culture in Vietnam is the way of how to start a business in Vietnam as a foreigner
It can be said that business culture is the soul of an enterprise, because it influences, even dominates production activities, business decisions, internal and external relationships. Here, it is possible to understand the business culture of a business as perceptions, objectives and cultural values that must be included in every activity.
Vietnam is located in the Eastern cultural region of the Southeast corner of the world; therefore, there is a typical agricultural culture that is full of characteristics of eastern culture.
- With a businessman when he meets up with a Vietnamese partner: Let’s start the story by introducing yourself. Don't be surprised if they want to know your age. It is a way for Vietnamese people to choose their roles when they talk, due to the abundance of personal pronouns in Vietnamese.
- Gift is an extremely popular cultural expression in Vietnam. In particular, on the occasion Tet holiday of Vietnamese people, do not forget to give gifts and greeting cards to your partners and relationships here!
- Eating and drinking is an essential part of community activities and business activities in Vietnam. Dinner with local representatives or customers to help develop relationships and make your local partner
- The way Vietnamese people drinking in a party is also different. If you drink alone, it is impolite. Everyone's habit is to drink only after toasting
- During the work, the Vietnamese side often said, "we will consider", "we will answer". So if you need to decide early, it's best to send all the necessary documents before the meeting. If it is a document sent to state agencies, please write it in Vietnamese!
- At the beginning of the negotiation will always be the story which do not relate to your main discussion. Don't be impatient, that's called 'creating atmosphere'! You should not mention about your lawyer because the Vietnamese people do not want to see him when negotiating and also dislike the subject from the legal aspect.
- Sometimes Vietnamese entrepreneurs are always slow to catch business situations. It can be said that the slow attitude of rubber hours is a daily attitude in modern Vietnamese people.
You need to update on the Law on investment and the Law on enterprises in Vietnam when you have a plan to start a business in Vietnam as a foreigner
With the enactment of the Law on investment and the Law on enterprises 2020, Vietnam has established a legal framework to regulate investment participation and business establishment of foreign investors in Vietnam.
Thereby, it will improve the investment environment in the direction of creating a fair competitive environment while protecting national security. Based on the current law, foreign investors looking for investment opportunities in Vietnam can choose one of two options for how to start a business in Vietnam as a foreigner with foreign elements as follows:
Each of the above options has certain advantages and disadvantages related to the conditions, administrative procedures and governance issues when you implement investment projects in Vietnam.
Hopefully, this article will help you know thoroughly about how to start a business in Vietnam as a foreigner. The above is two factors, in our opinion, it is also the two main difficulties of foreign businesses when they start their businesses in Vietnam. However, about corporate culture, you can gradually get used to but the law must be clear from the beginning. Therefore, if you want to be more clear about business laws when you start a business in Vietnam, you can contact with LHD Law Firm (Free Quotation and legal advise)