Vietnam Business Guide

Vietnam Business Guide GETTING STARTED IN TOMORROW'S MARKET TODAY

Kimberly and Brian Vierra have written the most useful guide I have seen for foreigners who want to do business in Vietnam. I've spent years in the country, but I learned a lot from this book. It's full of practical information about unique aspects of Vietnam's business culture; registration, legal and tax issues; working with local business partners; living conditions in Vietnam and industry-specific opportunities. Interviews with experienced expatriates bring the issues to life. The Vierras are very frank about tough problems such as corruption, but they also convey a real affection for and understanding of this wonderful country. Raymond Burghardt Former US Ambassador to Vietnam; Director, Indochina Capital Corporation

Vietnam Business Guide is the book that every seasoned Southeast Asia hand, bellied up to a Saigon bar, says he ought to write. Be thankful the Vierras made good on this common boast. Unstinting, pragmatic, penetrating and incredibly accessible, this highly readable volume may not keep you from the suffering the pain of starting up, but—if read closely, with a yellow highlighter—may very well spare you the agony of undue blood-letting. There will be blood, but Vietnam Business Guide will mitigate the flow. James Sullivan Managing Director, Mandarin Media; Author, National Geographic Vietnam and Over the Moat

Vietnam Business Guide provides practical and balanced information about Vietnam for foreigners to plan their first steps to enter the market. What separate this book from others are its reality and practicality, brought about by both the authors who themselves are entrepreneurs having walked the same journey and the experts who contributed their experiences on different topics throughout the book. The business landscape in Vietnam is speedily changing. Some facts, by the time you read the book, may need updating but still it serves best in providing newcomers essential starting points—a should-read book for those who consider doing business in Vietnam! Vu Minh Tri General Director, Yahoo! Vietnam Co. Ltd.

I believe that Vietnam Business Guide has been very objective and true to its purpose. It covers almost all relevant business and personal challenges that one would face in Vietnam, with the authors' firsthand experience shining through in their handling of culture issues and the Vietnamese mindset. Despite the constraints on size, it has sufficient details and a wealth of references to guide entrepreneurs and business executives in the right direction. Crisply written with interviews and real-life anecdotes, it makes for a very interesting read. A must-read book and an invaluable tool kit for anyone looking to Vietnam for business. Manish Dhawan Vice President — Coffee Division, Olam International Limited

Preface xiii

Introduction xvii

Structure of the Book xix

Part 1: Considering Vietnam—Get Ready! xix

Part 2: Starting up in Vietnam—Get Set! xx

Part 3: The Daily Challenges—Go! xxi

Part 1 Considering Vietnam—Get Ready! 1

Chapter 1 Why Vietnam? 3

A Snapshot of Vietnam’s Economy 3

Economic Overview 4

Summary 7

Web Resources 8

Endnotes 8

Chapter 2 Living in Vietnam—It isn’t for Everyone 9

Part 2 Starting up in Vietnam—Get Set! 13

Roadmap to Starting your Business in Vietnam 13

Chapter 3 Establishing Your Presence 17

Getting Started: A Vietnamese Perspective 18

Legal Structure 21

Work Permits 23

Work Permit Exemptions 23

Outline for Process of Obtaining a Work Permit 24

Renting Office Space 26

Exit Strategy 28

Summary 30

Endnotes 31

Chapter 4 Navigating the Business Landscape 32

Business Protocol 33

Meetings 33

Business Attire 34

Business Entertaining 34

Time Sensitivity 34

Corruption 35

Negotiating with the Vietnamese 39

Dealing with the Different Government Departments 41

Import and Export Considerations 44

Banking and Money Matters 44

Banking 45

Repatriating Profits 46

Exchange Rate 47

Interest Rates 48

Pricing and Naming Considerations 49

Summary 50

Endnotes 50

Chapter 5 The Labor of Labor 51

Overview of the Labor Landscape 51

What to Expect: Local Candidates 51

Summary 54

Skill Set Gaps 54

What to Expect: The Viet Kieu Candidate 56

What to Expect: Working Regulations 58

Wages 59

Working Hours 61

Overtime 61

Annual Leave 62

Other Leave 62

Sick Leave 63

Child Care Leave 63

Maternity Leave and Special Benefits 64

Marriage and Death Leave 64

Working Age 65

Recruiting Procedure 65

Labor Contracts 65

Compulsory Insurances 67

Employment of Expatriates 68

Summary 69

Endnotes 69

Chapter 6 Working with Local Business Partners 71

Why Do You Need a Partner? 72

Finding a Partner 75

Protecting Yourself 76

How to Approach and Structure a Partnership 79

Managing Your Business from Abroad 80

Summary 81

Endnotes 82

Chapter 7 Legal and Other Administrative Hurdles 83

Permitting 84

Regulation and Overall Ease of Doing Business 86

The Post Office Metaphor 87

Laws You Have Probably Already Broken 88

Endnotes 90

Part 3 The Daily Challenges—Go! 91

Chapter 8 Manufacturing, Outsourcing, and Agricultural Production 93

Manufacturing in Vietnam 94

Quality Concerns 96

Strikes 97

Tax Incentives 99

Outsourcing to Vietnam 99

Quality Concerns 100

Education and Literacy 101

Agricultural Production 103

Summary 106

Endnotes 106

Chapter 9 Selling into the Vietnamese Market 108

What the Vietnamese Want 109

Branding and Name Recognition 112

Local Competition 113

Distribution 118

Managing a Local Sales Force 119

Advertising 122

Pirated Products and Copies: How They are Viewed 124

Summary 125

Endnotes 126

Chapter 10 Intellectual Property Rights 127

IPR Challenges and Realities in Vietnam 127

The Path to Protection 131

Patents 131

Copyrights 133

Trade Secrets 135

Trademarks 135

Intellectual Property Rights Resources 137

Legal Counsel and IPR Advice in Vietnam 138

Endnotes 139

Chapter 11 Tax 140

Taxation Overview 140

Business Taxation 141

Calculating Business Taxable Income 143

Deductions 144

Depreciation 146

Losses 147

Capital Gains Taxation 147

Withholding Tax 147

Dividends 147

Interest 148

Royalties 148

Foreign Income and Tax Treaties 148

Transactions Between Related Parties 148

Transfer Pricing 148

Debt to Equity Proportion Requirements 151

Consolidated Returns 151

Indirect Taxes and Duties 151

Value-added Tax (VAT) 151

Special Consumption Tax (SCT) 153

Accounting Standards 153

Corporate Tax Administration 155

Personal Taxation 156

Determination of Taxable Income Prior to 2009 158

Personal Income Taxes from January 1, 2009 159

Inheritance Tax 160

Gift Tax 161

Tax-related Resources 161

Endnotes 163

Epilogue—Can you Handle the Truth? 165

Appendix A Industrial and Economic Sector Overview 167

Export Production 167

Agricultural Sector 168

Power Generation and Related Services/Products 168

Construction 169

Telecommunications Equipment and Services 170

Oil and Gas Services/Machinery 171

Airport Support Services and Equipment 175

Environmental Services 177

Health Care 178

Education and Training 180

Franchising 181

Information Technology 181

Endnotes 182

Appendix B Vietnam Living Conditions 183

Severe Climate 183

Pollution, Sanitation Issues and Disease 184

Vaccination Schedule for Shorter Stays (Less than Four Weeks) 184

Hepatitis A 185

Typhoid 185

Hepatitis B 185

Vaccination Schedule for Longer Stays (More than Four Weeks) 186

Japanese Encephalitis 186

Rabies 186

Tuberculosis (TB) 186

Other Diseases 187

Inadequate Medical Facilities/Questionable Pharmaceutical Products 187

Crime 188

Traffic and Transportation Concerns 189

Social, Cultural and Recreation Outlets 190

Hanoi 190

Ho Chi Minh City 191

Schooling 191

Ho Chi Minh City 192

Hanoi 192

Infrastructure Concerns 192

Religious Matters 193

Housing 194

Ho Chi Minh City 194

Hanoi 194

Goods and Services 195

Air Travel from Vietnam 195

Endnotes 196

Index 197

Brian Vierra graduated from Whitman College with a B.A. degree in Economics and went on to complete a Master’s degree in International Management at Portland State University. Prior to founding two successful
businesses in Vietnam, he was the import manager for the New York branch of a global logistics firm. Before this, he served as a Peace Corps Volunteer in Tanzania, East Africa, working as a university economics instructor. Brian is currently the director of Embers Asia Ltd. and the managing director of Phat Tire Ventures. Both companies have operated successfully in Vietnam for more than seven years.

Kimberly Vierra graduated with a Bachelor’s degree in Economics (honors) from Lewis and Clark College, and a Master’s degree in International Management from Portland State University. Kimberly has been a Senior Consultant with ORC Worldwide’s Singapore office since March 2007, after relocating from Dalat, Vietnam where she was the co-founder of Embers Asia. Previously, she was a consultant in ORC’s New York headquarters where she consulted with Fortune 500 companies on their international assignments programs. Prior to ORC, Kimberly worked in the International Assignment Solutions Technology Group of PricewaterhouseCoopers in New York City, and before this worked in the International Human Resources department at Nike, Inc.’s world headquarters.

Vietnam Business Guide is meant to serve as a practical guide to preparing for a business venture in Vietnam and then setting it up and dealing with the daily challenges that will be encountered. The book is structured to provide valuable information on the current state of the Vietnamese business environment in two ways: 1) by providing facts and raw information, 2) by citing examples and stories of what real individuals and companies have encountered and what they have done to overcome these obstacles. The two approaches are meant to support and provide context for each other. Instead of just presenting the relevant information, the book outlines the reality of their application, which is critically important for newcomers to the country.

This guide is broken into three parts comprising of “Considering Vietnam,” “Starting Up in Vietnam,” and “The Daily Challenges.” Addressing these three phases makes it relevant for businessmen at all stages of their business ventures in the country, as well as individuals going to the country on political assignments and graduate students studying the country’s business environment.

Vietnam Business Guide GETTING STARTED IN TOMORROW'S MARKET TODAY

Kimberly and Brian Vierra have written the most useful guide I have seen for foreigners who want to do business in Vietnam. I've spent years in the country, but I learned a lot from this book. It's full of practical information about unique aspects of Vietnam's business culture; registration, legal and tax issues; working with local business partners; living conditions in Vietnam and industry-specific opportunities. Interviews with experienced expatriates bring the issues to life. The Vierras are very frank about tough problems such as corruption, but they also convey a real affection for and understanding of this wonderful country. Raymond Burghardt Former US Ambassador to Vietnam; Director, Indochina Capital Corporation

Vietnam Business Guide is the book that every seasoned Southeast Asia hand, bellied up to a Saigon bar, says he ought to write. Be thankful the Vierras made good on this common boast. Unstinting, pragmatic, penetrating and incredibly accessible, this highly readable volume may not keep you from the suffering the pain of starting up, but—if read closely, with a yellow highlighter—may very well spare you the agony of undue blood-letting. There will be blood, but Vietnam Business Guide will mitigate the flow. James Sullivan Managing Director, Mandarin Media; Author, National Geographic Vietnam and Over the Moat

Vietnam Business Guide provides practical and balanced information about Vietnam for foreigners to plan their first steps to enter the market. What separate this book from others are its reality and practicality, brought about by both the authors who themselves are entrepreneurs having walked the same journey and the experts who contributed their experiences on different topics throughout the book. The business landscape in Vietnam is speedily changing. Some facts, by the time you read the book, may need updating but still it serves best in providing newcomers essential starting points—a should-read book for those who consider doing business in Vietnam! Vu Minh Tri General Director, Yahoo! Vietnam Co. Ltd.

I believe that Vietnam Business Guide has been very objective and true to its purpose. It covers almost all relevant business and personal challenges that one would face in Vietnam, with the authors' firsthand experience shining through in their handling of culture issues and the Vietnamese mindset. Despite the constraints on size, it has sufficient details and a wealth of references to guide entrepreneurs and business executives in the right direction. Crisply written with interviews and real-life anecdotes, it makes for a very interesting read. A must-read book and an invaluable tool kit for anyone looking to Vietnam for business. Manish Dhawan Vice President — Coffee Division, Olam International Limited