Starting a business may sound exciting for those who are having enough confidence in their experiences in a certain industry. However there could be a ton of questions before you can hand-in running the business that might include: What can I invest in? When should I start the first step? And Where is the most suitable place for me to set up the business?
Vietnam is a promising destination for startups to invest in. There is important information regarding How to start a business in Vietnam that you may not be aware of.
Vietnam shifted to a market-oriented economy after its Doi Moi policy in the late 1980s and is now known as one of the fastest-growing economies in Asia. Foreign direct investment (FDI) now forms the basis of Vietnam’s economy. Since 2013, record-high levels of FDI have been pouring into Vietnam as investors consistently find the country to be a vibrant and attractive destination for business operations.
About business culture, employees work approximately eight hours per day for five days a week. There are now 11 public holidays in the Vietnamese calendar, the most important one is the Lunar New Year, which lasts five days.
In general, there are two standard legal classifications for businesses in Vietnam:
100% is the percentage of Foreign ownership allowed by the Vietnam government in most industries which include Education, trading, IT, Manufacturing. However there are some industries that are in need of a Vietnamese joint venture partner, for example: advertising, logistics and tourism.
Your industry needs to be regulated by local law or WTO agreement otherwise you will need approval from the ministry involved in that industry.
Foreign investors must register foreign investments. The provincial Department of Planning and Investment or the board of management of the relevant industrial zone or park with jurisdiction over the location of the project has the power to approve foreign investment projects. However, larger scale projects and projects in certain sectors also require a “decision on in-principle investment” approval from higher-level government bodies, such as the National Assembly, the Prime Minister, or the provincial People’s Committee, prior to submission to the local investment authorities.
As mentioned, there is no requirement to regulate the minimum capital for establishing a company in Vietnam. On the other hand, The Vietnamese government requires a new enterprise to have “adequate money.” This means you’ll need enough cash to cover your expenses until the company is self-sufficient.
For service-based companies like consultant business, graphic design or financial advisor: You can use a virtual office address. “The virtual office is not a traditional office, but a service available to foreign and local businessmen and companies seeking to have a contact point in a country or one or more cities. In Vietnam, a virtual office can be used to keep in contact with existing clients and business partners or to carry out research activities and prospect the market for potential customers.”
For manufacturing, restaurants, and retail trading: These business lines require physical location or office.
The Department of Planning and Investment may check the address during the incorporation process. You can submit documents to serve as proof of your address. It must say that you will use the location for your business after incorporation.
All companies in Vietnam must have at least one resident director. He or she doesn’t need to have residency status at the time of incorporation. However, they will need a residential address in Vietnam.
Note that if the director is also a founder, he or she will not need a work permit. Instead, he or she will have to apply for a work permit exemption. A director who is a foreign national and not a founder of the company will need a work permit in Vietnam.
Clarify the goals for your market penetration strategy: What do you aim to achieve? Revenue you want to earn? Quantity of customers, Market share after a period of time.
Having a goal, you will know how to allocate the resources properly and evaluate the effectiveness of the strategy.
Market research empowers you to “test the waters” before taking the plunge. them.The most successful business is not the one who has the best product but the one who has the most understanding about the market in order to serve customers what they need in the way that they want.
Knowing about your competitor is extremely important for all businesses to compete in the new market. In this step you need to know who they are and what the differences are between you and them. Notice these question:
After having an overview of the market and competitor , it’s time for you to look at your product or service to see what “strengths, weaknesses, opportunities and threats” you’re having. SWOT is a famous business analysis model for all businesses who want to improve their business situation.
It depends on your industry to determine the place to operate the business. If you’re starting a service-based business, maybe you won’t need retail, commercial or industrial space. But if you’re launching a physical store, food and beverage outlet, or any business requiring more space, you’ll need to lease or buy a location to use.
The destinations that foreign companies usually choose to invest in VietNam are Ho Chi Minh City, Ha Noi, Da Nang, Bac Ninh Province, Long An Province.
If you are ready enough to hand-in building the business in Vietnam, It’s time for you to register the company and ready to start. Here are some requirements for starting a business in Vietnam.
You’ll need to open a bank account for your business. There are many local and international banks for you to choose from, such as: Vietcombank, VPBank, BIDV, OCB…
The documents you’ll need to open an account will vary depending on what form of business you’ve registered. There are two types of business bank account for foreign company in Vietnam:
Investment Capital Account : for investment amount sending and receiving
Transaction Account : for daily transaction in Vietnam
Here are the documents you must prepare to register one:
After completing the registration, the rest is up to you to build your team, management process, working process, online platform, development strategy and facility… to have everything under control and start earning from the business.
We hope that this article has provided you with the information you need to prepare for starting a business in Vietnam.