Country Report
Toan Cao Minh
An Giang University — Vo Thi Sau, Long Xuyen, Vietnam
Email: cmtoan@agu.edu.vn
Country Report | 2
Summary
Located in Southeast Asia, Vietnam is a culturally rich country whose distinct history played a role in the
development of the modern day state. Having been under Chinese rule, traces of Chinese culture in Vietnam still
linger even after their 1000 year rule. Vietnamese practices of Confucianism and showing reverence towards
ancestors are evidence of China’s historical influence on Vietnamese society. Vietnam became an independent state
in the tenth century but was colonised by the French in the mid 1800s. Vietnam gained independence in the mid
twentieth century but still retains traces of French culture which are visible in the way people communicate verbally
and nonverbally. Though Vietnam has struggled over the past century through colonial rule, the Vietnam War and
recent economic upheavals, it is now rebuilding itself to be able to compete on a global scale. Having a
comprehensive understanding of Vietnam’s unique cultural values and traditions is essential if you want to develop
strong and successful business relationships with Vietnamese counterparts.
With the advent of the policy of renovation (doi moi) in 1986, Vietnam has been able to achieve a consistently high
level of GDP growth in the past decade (8.4 percent in 2005) and effectively address the problem of poverty. Much of
this explosive economic growth is a direct result of the government’s practical economic reforms to encourage
private sector growth. Since the implementation of the Enterprise Law in 2000, Vietnam has registered more than
120,000 formal private companies, six times the number registered in the nine years before the law’s enactment.
Yet, the benefits of Vietnam’s rapid economic growth have not been spread evenly across the country. Private sector
activity remains concentrated in a handful of the nation’s 64 provinces those whose leaders have established a
regulatory environment that encourages intelligent risk taking by private entrepreneurs. In response, The Asia
Foundation’s economic programs in Vietnam have focused on improving the environment for private sector
competitiveness and economic growth, as the country continues its ongoing decentralization process
CONTENTS
Summary
2
Geography & People
3
Government & Administrations
4
The Economic Indicators
5
Major Business Sectors
6
Vietnamese Culture – Key Concepts and Values tradition
11
Doing Business in Vietnam
11
Country Report | 3
Geography & People
Area
329,560 sq km
Border countries
Laos, Cambodia and China
Population (2010)
86.930.000 [ Urban: 29.9 %]
Population growth rate
1.2 %
Sex ratio (2010)
Men: 49.4 % - Women: 50.6 %
Language
Vietnamese (official), English (second language),
France, China, Japan, Germany, Russia..
Ethnic group
Vietnamese (more than 80 %), Chinese, Khmer, Cham,.
Religions
Buddhist, Christian (Romance Catholic, some
Protestant), Hoa Hao, Cao Dai
Head of State (president)
Truong Tan Sang
Head of Government (prime-minister)
Nguyen Tan Dung
Monetary unit
Dong (VND)
Country Report | 4
Government & Administrations
Country name
Socialist Republic of Vietnam (SRV)
Capital
Hanoi
Administrations Divisions
60 provinces and 3 municipabilities (Hanoi -covered Ha Tay
since 01.Aug.2008, Hai Phong, Hochiminh City) - An Giang, Bac
Giang, Bac Kan, Bac Lieu, Bac Ninh, Ba Ria-Vung Tau, Ben Tre,
Binh Dinh, Binh Duong, Binh Phuoc, Binh Thuan, Ca Mau, Can
Tho, Hau Giang, Cao Bang, Dac Lak, DakNong, Da Nang, Dong
Nai, Dong Thap, Gia Lai, Ha Giang, Hai Duong, Hai Phong, Ha
Nam, Ha Noi, Ha Tinh, Hoa Binh, Ho Chi Minh (former is Saigon),
Hung Yen, Khanh Hoa, Kien Giang, Kon Tum, Lai Chau, Dien Bien,
Lam Dong, Lang Son, Lao Cai, Long An, Nam Dinh, Nghe An, Ninh
Binh, Ninh Thuan, Phu Tho, Phu Yen, Quang Binh, Quang Nam,
Quang Ngai, Quang Ninh, Quang Tri, Soc Trang, Son La, Tay Ninh,
Thai Binh, Thai Nguyen, Thanh Hoa, Thua Thien-Hue, Tien Giang,
Tra Vinh, Tuyen Quang, Vinh Long, Vinh Phuc, Yen Bai
Independence day
02 September 1945
International organization
participation
APEC, ADB, ASEAN, FAO, G-77, IMF, ISO, UN, UNESCO, WHO,
WTO,…..
National Holidays
•
•
•
•
•
New Year Day: 1/Jan
3 days in Lunar New Year (TET - 17/Feb/2007)
Victory Day: 30/Apr
Int. Labor Day: 01/May
Independence Day: 02/Sep
Country Report | 5
The Economic Indicators
Country Report | 6
Major Business Sectors
Overview and trends
Vietnam has started to carry out reforms since 1986, focusing on market economic
management. The reforms are based on three pillars: 1) restructuring to build a multi-sector
economy; 2) financial, monetary and administration reforms and 3) the development of
external economic relations.
Vietnam has created an ever more competitive and dynamic economic environment. The multisector economy has been encouraged to develop, thus mobilizing effectively all social
resources for economic growth. External economic relations have been expanded and the flow
of foreign direct investment increased. Export of goods and labour, tourism industry and
remittances from overseas Vietnamese have been strongly promoted to generate increasing
foreign earnings for Vietnam. Along with improvement of the business environment, market
economy institutions have also been established. It is the Government policy to eliminate the
central planning mechanism, emphasize monetary - market relations, focus on economic
management measures and establish an array of financial institutions, banks and basic
markets for money, labour, goods and land, etc. The administrative reform was promoted so
as to improve economic competitiveness and to mobilize all resources for the country’s
development.
Domestic / Principal economic sectors
Period: Jan-Dec 2009
Agriculture-Forestry-Fisheries
Vietnam is an agriculture country with 70% of the
population living in rural areas. Although the sector
contributes slightly more than 20% only to the GDP, but
plays an important role in the country’s exportation. The
amount of agricultural products exported in 2010 such as
seafood, cashew nut, coffee, rice, rubber and wood- en
products was valued at US$ 16.85 mil., accounts for
25.26% of the total exports of Vietnam, excluding crude
oil. Vietnam is the world’s largest exporter of black pepper
and second largest rice and coffee exporter. The sector has contributed to the maintenance of
socio-economic stability, hunger eradication and poverty alleviation.
Country Report | 7
Rice: Vietnam exported around 6.8 mill tones of rice in 2010 with revenues of 3.2 bill USD.
Main destination markets for rice of Vietnam are Asia and Africa.
Coffee: Vietnam is the world’s second largest coffee exporter, after Brazil. The sector exports
95% of its production, earning USD 1.8 billion in 2010, up from USD 660 mill in 2000. Main
importing markets are EU, US.
Seafood: Vietnam is among the top ten world exporters of seafood. The sector grows with a
rate of 10-12% per year for the past 20 years. It generated in 2010 an export revenue of
nearly USD 5.0 bill, ranking third in term of export income, behind textiles and shoes. Key
importers are Japan and US.
Pepper: Vietnam is the world largest exporter of black pepper, having 5% of the world market
share. The export value was USD 425 million in 2010, mainly to the US, India, EU and Middle
East.
Industry - Construction
Textiles and apparel: remain important pillars of the
manufacturing sector and for the country’s export. Since
Vietnam becomes a WTO member, there are no longer
quotas on these products and the Government set no
restrictions/conditions for foreign companies in setting up
production sites in Vietnam. The sector has over than 2
million workers, equivalent to 25% of all industrial
employment. The industry gained USD 11.2 bill from export
in 2010 with an average growth of 20% per year in the
period 2000-2010. The most important markets are the US,
Japan and Europe.
Shoes and leather products: Exports of footwear and leather products have experienced a
dramatic increase since 1990s. Within less than one decade, the industry has nearly tripled its
value in exports, from USD 1.46 bil in 2000 to USD 5.1 bil in 2010, becoming the as one of the
Vietnam’s most important export industries.
Furniture and wood products: Vietnam has currently about 1500 wood processing
enterprises, mainly in Ho Chi Minh city, Binh Duong and Dong Nai. Many woodwork items
made from materials imported from the US, EU and South Africa. Over the past five years,
wooden products have become one of the key export products of the country. Their export
value amounted from USD 1 bill in 2004 to USD 3.4 bill. in 2010. The main markets of the
industry are the US, Japan, and Korea.
Electronics and computer components: Vietnam is a small but fast-growing manufacturer
of electronics and computer components. The industry grows with a rate of 27% per year,
reaching an export revenue of USD 3.6 bill. in 2010, from USD 782 mill in 2000. The industry’s
export accounts for 4.4% of Vietnam’s total export value. Thailand and Japan are the major
markets of the industry.
Services
Tourism: Vietnam has emerged as a popular new destination for tourists in recent years. The
combinations of unique landscapes and rich culture, from high mountains to extensive
coastline, from modern cities to hundred year-old handicraft villages become known to both
domestic and overseas tourists. Vietnam attracted more than 5 million foreign visitors in
Country Report | 8
2010, mainly from China, South Korea, and Japan. With a
growth rate of 25% per year, the local tourist number
recorded to 28 million in 2010. While Vietnam’s
reputation as one of the safest places for travel, the
country still facing many challenges, including a poor and
disjointed market image, relative high transportation costs
and limited infrastructure. However, Vietnam has seen
steady investment in hotel and resorts in the past few
years. Several premier resorts are expanding their
facilities to meeting the growing demand for luxury accommodations in new tourist
destinations. The central and all local governments are encouraging investments from
domestic and foreign firms. This will lead to opportunities such as manage- ment consulting for
development of tourism master plan and strategies, investing, developing and upgrading
tourism infrastructure facilities.
The Government authority is the Vietnam Tourism Administration www.vietnamtourism.gov.vn
and www.vietnamtourism.com
Imports
Exports
Promotion opportunities
1. Attractive sectors
Electricity: Power generation, transmission and distribution are controlled by the Electricity of
Vietnam EVN, a state owned. There are 24 locally owned medium-large power plants that have
a joint capacity of MW10’000. Currently, generation relies on hydro (40%), with thermal and
Country Report | 9
gas accounting for the rest. Obviously, drought and natural disasters could threatens the water
supply. The Government estimates predict demand growing by 10-15% per year. Economic
expansion, further industrialization and increase of rural electrification rate from 75% to 100%
by 2010 will fuel this growth. To meet this demand, Vietnam power industry needs around US$
15 billion to upgrade existing generation plants, transmission and distribution facilities. Both
domestic and foreign investors are encouraged to build 75 more power plants through
commercializing its operations. Electricity is a rapid evolving sector and participation of foreign
and non-EVN domestic investors will present new opportunities for suppliers. They are
consulting and supply of machinery and equipment (particularly turbines). Focus areas will be
hydro dam rehabilitation, rural electrification and high-voltage transmission. Equipment
required will rely on import and technology transfer.
Government authority: Electricity of Vietnam EVN: www.evn.com.vn (under the Ministry of
Industry www.moi.gov.vn.
Bio-Industry: Biotechnology in Vietnam is a high priority of the government and efforts are
mainly target at the agriculture and health sector. Research activities are focused at
government institutes in molecular biology and generic engineering, microbial biotechnology
for production of bioactive compounds, bio-fertilizers, environmental protection and plant
technology. However, these research activities are heavily dependent on funding from the
government international donors. So far, little commercial interest has been committed in this
field, which appears to be waiting for foreign investment. The government is developing
standards on bio-safety, with a focus on regulations on GMO to control. Besides import of
hybrid seeds (potatoes, rice, ornamental trees), opportunities in the form of technology
transfer and sales of services and equipment are expect to grow in the area of plant tissue
culture and molecular biology. Recently, Hanoi-s authority officially support a project by
Ireland’s Pacific Land to develop a large scale biology park in the capital city. The park, to be
name Habiotech, will cover 200 hectares in the first stage and up to 500 hec. in the 2nd stage.
Habiotech park will be developed into a cluster of biotechnology facilities including a biology
nursery section, a section of high-tech laboratories to support research and development &
training activities in the industry.
Railways Vietnam Railways Corporation: Vietnam has a railway network of about 3000
km, many of it constructed at the beginning of 20th century with a track width of 1.0 meter
when the population was just 20 million. While the population has increased to 83 million, the
train system has not changed significantly. The industry only takes a 9% market share in
passengers and 4% of cargo transport. Realising that transportation reflects the development
of each country and a breakthrough is needed for investment in the railways system, the VN
government decided and approved in April for a key project “Hanoi-Ho Chi Minh City Express
Railway”. The Express Railway will have a length of 1630 km and a track of 1.435 m wide and
a gauge of 4.3 metres and a speed of 300-350 km per hour. This speed will reduce the travel
time between Hanoi and HCMC from the current time of 38 hours to 10 hours. A 25’000 V- 5060 Hz electricity line will be used for the route, mostly supplied by the national electricity grid.
The project needs an estimated investment of US$ 33 billion (US$ 23 bill. for infrastructure
and US$ 10 bill. for locomotives, cars and equipment). The VN government said that they will
rely 70% of this investment on the Japan’s ODA. The project now is in the investment
preparation until 2010.
The Government authority: Vietnam Railways Corporation: www.vr.gov.vn
Ministry of Transport www.mt.gov.vn).
(under the
Country Report | 10
Shipping / Forwarding Economists predict that Vietnam’s export and import could come to
USD 200 billion by 2017 and the freight forwarding service for import-export could generate
a value of USD 30 billion since it accounts for about 15% of the import and export total value.
There are almost 1000 forwarding companies in Vietnam, 80% of which are of Vietnamese
private SMEs. Given the limited infrastructure such as railways, roads, holding yards,
warehouses, ports and changing regulations keep foreign firms in this profitable sector from
instant successes.
Useful links are Vietnam Freight Forwarders Association: www.viffas.org.vn and the Ministry of
Transportation www.mt.gov.vn
Software outsourcing: Although the software industry (SI) in Vietnam is a young sector
whose turnover does not appear impressive, the software industry (SI) might make other
industries in Vietnam envy them for the level of attention it receives from the government. B
involved in software production and services, both local and foreign invested, are exempt from
corporate income tax (28%) for four years from the date they generate their first taxable
income. Software products will receive a 0% Value Added Tax (VAT) and be free from export
tax. Currently, most software companies in Vietnam are small-sized, with exception of three
mid-sized enterprises with more than 500 programmers: FPT, TMA Solutions and FCG Vietnam.
Despite this, Vietnam has been quite successful in attracting numerous major big corporate
names to outsource software projects to Vietnam. Among the names that have done so are
IBM, Bayer, BP, Fuji, Nortel Networks, NTT and Sony. All have outsourced software projects to
Vietnam either directly or through third-party subcontracts. Although the SI’s revenue in 2005
of $200 million was far from expectations, the steady growth rate in the last five years of 25%,
which is forecasted to continue through 2010, certainly unveils the Vietnamese government’s
ambition and aspiration for technology advance in this industry.
Useful websites:
- the Ministry of Posts and Telematics: www.mpt.gov.vn;
- Vietnam Software Association www.vinasa.com
2. Trade fairs
Information on trade fairs/exhibitions can be download from the websites:
Vietnam Chamber of Commerce and Industry:
http://vibforum.vcci.com.vn/category.asp?cate_id=22
Vietnam Trade Promotion Agency:
http://www.vietrade.gov.vn/index.php?option=com_content&task=view&id=4168&Itemid=484
3. Trade and business opportunities
Vietnam Chamber of Commerce and Industry:
http://vibforum.vcci.com.vn/opport.asp
Vietnam Trade Promotion Agency/English/Trade Leads: http://www.vietrade.gov.vn/
Further information and links
Vietnam Trade Promotion Agency
www.vietrade.gov.vn
Ministry of Foreign Affairs
www.mofa.gov.vn
Vietnam Economic News
www.ven.vn
Vietnam General Department of Customs
www.customs.gov.vn
Country Report | 11
Vietnamese Culture – Key Concepts and Values tradition
Confucianism- Based on the teachings of the early
Chinese philosopher Confucius in the 6th
century BC, Confucian teachings emphasise the
importance of relationships, responsibility
and obligation. This philosophy is still a vital
component of Vietnamese society and is
prevalent in Vietnamese business culture in
conserving the harmony of the collective good.
Face- The idea of saving face is an important concept in Vietnamese society. The Vietnamese
will do anything to prevent loss of face, even if it means to avoid confrontation or telling
others what they want to hear rather than dealing with immediate issues. Criticizing
someone in public and not staying true to promises are various ways that people may lose
face.
Collectivism- Vietnam is a collectivist society in which the needs of the group are often
placed over the individual. Family and community concerns will almost always come before
business or individual needs. Family in particular plays an important role in Vietnamese
society. You will notice that close ties between extended families and communities can have
a major influence on individual behaviour and oftentimes there are multiple generations
living under one roof.
Doing Business in Vietnam
Vietnamese Business Part 1 - Working in Vietnam (Pre-departure)
Working practices in Vietnam
•
•
•
Business hours are predominantly from 8 am to 5 pm Monday through Friday, with
about an hour set aside for lunch.
Vietnamese prefer to schedule all meetings ahead of time, usually several weeks in
advance. You should always aim to arrive at the stated time and if running late, let
them know as soon as you can.
Business attire tends to be professional and conservative.
Structure and hierarchy in Vietnamese companies
•
Business organisations in Vietnam tend to be hierarchical. Decisions and ideas are
generated at the top, and more often than not, the eldest person has the most
influence over the decision.
Country Report | 12
•
•
•
Status is important in Vietnamese society and respect should be given to supervisors
and work colleagues. Status is obtained with age and education. Titles are very
important in Vietnamese business culture.
In Vietnamese culture it is very important to respect more senior individuals, whether
by education, job position or age. In business meetings, it is usually the eldest
member of the group who enters the room first.
The Vietnamese business world is dominated by men. Though things are changing, the
majority of Vietnamese women work as secretaries, assistants or other similar
administrative roles. Men are accustomed to working with foreign women in more
senior roles in a business context and will treat them equally.
Working relationships in Vietnam
•
•
Business relationships in Vietnam are relatively formal and tend to take time to develop
as Vietnamese like to get to know their foreign counterparts before conducting
business. Vietnamese may be suspicious of those they don’t know well at first, so be
sure to spend the time during the first few meetings getting acquainted.
Vietnamese names start with the surname followed by the middle and lastly the first
name. It is important to use titles whenever possible. When referring to one another,
Vietnamese people will use the appropriate title followed by the first name not the
surname.
Vietnamese Business Part 2 - Doing Business in Vietnam
Business practices
•
•
•
•
•
•
•
International business in Vietnam is mainly conducted in English. It is however polite
and appreciated when foreigners use the native language when possible.
It is advisable to have all written documents translated into Vietnamese as your
business counterparts in Vietnam will not necessarily indicate that they do not
understand. It is also wise to hire a translator. A working knowledge of French is also
beneficial. English will hardly be spoken in rural areas.
Business cards are a common practice in Vietnam. It is polite to have your business
cards printed in both English and Vietnamese. When offering your card for the first
time, give it using both hands with the Vietnamese side facing up.
Negotiations can be quite lengthy and time-consuming as the Vietnamese want to
examine everything as well as consult the group before reaching an agreement. Doing
business in Vietnam can also be quite slow as there is often a lot of bureaucracy to go
through before any deal can be made.
Don’t be surprised if there are long periods of silence during negotiations as Vietnamese
tend to wait a while before responding. Your Vietnamese counterparts may also remain
silent if there is a disagreement in order to save face.
Initial introductions in Vietnamese business are formal. A handshake while maintaining
direct eye contact is the normal greeting and should also be exchanged upon leaving.
Handshakes usually take place only between members of the same sex. Occasionally a
slight bow will accompany the handshake.
Gift giving is a common practice in Vietnam. Gifts do not need to be expensive and
should be a simple token of appreciation. Common gifts include fruit and flowers.
Business Etiquette (Do’s and Don’ts)
DO maintain a soft voice while conducting business, as loud voices and excessive hand
gestures are often perceived as rude and make Vietnamese uncomfortable.
Country Report | 13
DO hand out business cards as they are a must in business dealings. Although there
are some Vietnamese that have a working knowledge of English, it is considered polite
business practices to print the cards in Vietnamese and use the language if possible.
DO wrap gifts in colourful paper.
DO arrive on time to meetings as Vietnamese are very punctual. Being late is
considered impolite and timeliness is expected.
DON’T refuse tea or food when offered by your Vietnamese counterpart. It is
considered impolite.
DON’T stand with your hands on your hips or with your arms crossed or use your finger
to point; instead use your whole hand.
DON’T publicly criticise others as it would cause the loss of face for both parties.
Vietnamese are status conscious and appreciate the value of a good reputation.
DON’T touch someone’s head as it is considered to be the spiritual centre of the
person.
Vietnamese Business Part 3 - Hints for your first successful business trip to
Vietnam
THE FIRST THING TO THINK
Vietnam has become official member of WTO in last 11th January 2007. Complying with
commitments of Vietnam in WTO, there will be many coming changes in laws and regulations
in Vietnam. As the result, it has made Vietnam economy turning to be a very attractive market
for investment and business growth. There are more companies listed in stock market, more
states companies are privatized. The economy mechanism has gradually changed into market
and dynamic economy. Information from government is nowadays updated and more
transparent.
1. Ministry of Industry & Trade : http://www.moit.gov.vn where you can find updated
information, law and regulation, new policies about import/export and commerce
2. Ministry of Planning and Investment http://www.mpi.gov.vn/ where you can find
updated information, legal issues and guides showing you how to invest into Vietnam,
how to apply and get investment license, which project Vietnam calling foreign direct
investment...
3. Hochiminh City website: http://www.hochiminhcity.gov.vn - Hochiminh City is an
economic hub of Vietnam, a dynamic city. It's very good if you can get more
information about this city, where your first business trip may come here.
4. Hanoi Capital website: http://www.hanoi.gov.vn - Hanoi is the capital of Vietnam. It's a
wonderful city.
LET START YOUR BUSINESS IN VIETNAM
As last research on Foreign Companies with the best chances of succeeding in Vietnam, there
are some common conditions:
1. have a proven track record on the export market and are very adaptable to difficult
market conditions
2. are prepared to invest in the medium term without expecting an immediate return
3. in partnership with national companies, position themselves to become involved in
infrastructure restoration; (*)
4. and know how to make use of multilateral aid funds (World Bank and Asian
Development Bank) and untied bilateral funds (in particular loans from the Overseas
Economic Cooperation Fund of Japan (OECF)
Country Report | 14
Some advantages help your business more successful in Vietnam:
1. Keep closed contact with official agencies (*)
2. Your documents should be presented in French or English - or even better in
Vietnamese(*)
3. The negotiation is long sometime, so do not become discourage too quickly
4. Individual exploratory missions are the most effective method because they enable
companies to better target stakeholders, and direct contact is greatly appreciated. (*)
5. Companies should not try to close deals too quickly. The Vietnamese prefer to meet
regularly with a company before signing a contract. Once the contract is signed,
companies should maintain regular contact with their partner in order to ensure that
they remain involved over the long term.
(*) You could find them all in http://www.vietpartners.com
GET YOUR MONEY - THE PAYMENT METHOD
Exchange regulations in Vietnam involve specific measures preventing the Dong from being
freely convertible into foreign currency. Most exchange operations must be authorized by the
central bank. The best currency for billing, or at least the most commonly used, is the US
dollar. The best payment method remains an irrevocable letter of credit at sight
YOUR MONEY THERE - THE BANKING SYSTEM
As part of the reform, the most of the commercial banks were established and authorized to
perform foreign currency operations. Some major banks like: Industrial and Commercial Bank
of Vietnam (ICBV), Agricultural Bank of Vietnam (Agribank), Foreign Trade Bank
(Vietcombank), Bank for Investment and Development of Vietnam (BIDV), Saigonbank and
Eximbank. .. Vietcombank has been financing most international trade activities since 1963.
1. Read more
Reviews)
2. Read more
3. Read more
4. Read more
WTO)
about Vietnamese Banking System (Source: Economy Development
about Foreign Banks in Vietnam (Source: Vietnam Economic News)
about Vietnam Cash Economy (Source: Vietnam NET)
about Preparation of Vietnam's Banking Sector for WTO Accession(Source:
ADVICE ON BUSINESS PRACTICES
Contacting the right partner is essential for successful business in Vietnam. Traditionally, many
foreign investors were advised to go through a well-connected local partner to contact the
right person or and set up a meeting with influential people. However, according to Henrik
Andersen, CEO of Carlsberg in Vietnam, this is not necessarily the case any more, many
intermediates will just confuse the process especially those who either do not know the contact
directly or complicate the issue to gain credit. Government officials are generally bureaucratic
but friendly to foreigners, thus they are always willing to meet when one present a decent
request. Moreover, as Vietnam is competing with its neighboring countries to lure foreign
capital and aims to present an attractive investment climate, officials would generally be
pleased to receive potential investors. Trade associations and embassies are generally very
helpful and provide advice on business practices, including frank comments on the business
culture.
Country Report | 15
Managing cultural differences: Advice from the Danish Embassy
Even though private businesses in Vietnam have dramatically increased in recent years, a
great part of Vietnamese businesses are still owned and controlled by the government or
local authorities. In the state owned enterprises conservatism is prevalent, and the top
management often consist of political appointees with limited commercial experience.
The private business community constitutes a broad range – from creative ‘amateurs’ to
highly professional business managers.
As elsewhere a personal network is essential for doing business in Vietnam. Danish
exporters and investors are advised to give high priority to establishing networks with
Vietnamese counterparts. In the initial phase of market penetration it will in most cases
be necessary with frequent visits to the partner (s). Apart from potential partners the
network will in most cases include key persons in the public administration. Therefore, it
is useful to pay courtesy calls and maintain contact to local authorities and business
organisations from the very beginning.
English language is becoming more common among business people and public officials.
Even if they fully understand English, at formal meetings they will prefer to speak
Vietnamese. In general the Vietnamese counterparts are informal and helpful towards
foreigners. They are also tolerant towards visitors, who are not familiar with Vietnamese
customs. However, a polite manner towards Vietnamese counterparts is strongly advised.
It is considered rude and embarrassing to show anger or even impatience.
In situations where disagreements occur the Vietnamese will often present their views in
an indirect non-confrontational manner. However, it is extremely important to ensure
that contracts or other commercial agreements do not contain unclear wording that may
be subject to interpretation. It is often very time consuming and expensive to resolve
situations, if they merge into an open conflict, involving arbitration.
Source: website of the Embassy of Denmark (accessed Jan 1st, 2005).