Tips on Starting a Business in Vietnam

By: City Pass Guide

Whether you want to start an LLC, JSC, franchise or any other sort of local entity in HCMC, there are myriad problems – from cultural precautions to transparency to taxes – that ultimately drive away the uninitiated.

How do you even begin to enter this exciting, yet wild territory?

LLC or JSC?

For the purposes of brevity, we’ll look at two particular local entities: the jointly-owned foreign-Vietnamese LLC, and the JSC. The following information has been gathered with the aid of the Healy Consultants PLC website.

Joint-venture LLC – There are two shareholders in a joint-venture limited liability company: a foreigner and a local. This entity allows entry into many industries and foreign ownership can range from a maximum of 49% to 99%. These companies are required to have an appointed local legal representative, a capital account at a local bank, and a Foreign Investment Certificate (FIC).

Also required is a registered local address, a certificate of deposit from a local bank for the share capital ($50,000), and yearly audited financial statements.

This entity is best for foreign business owners who want access to partially restricted industries, and when the business owner has a local partner they trust. It takes about three months to set up.

JSC – For a joint stock company, there must be three shareholders of any nationality, although one of them must be appointed as the legal representative of the business. If that representative is a foreigner, they will be required to get a work permit and show proof of at least one year of management experience.

In addition, requirements include a bank certificate as proof of the funds available for investment ($10,000), the opening of a capital account with a local bank, an FIC, and annual submission of audited financial statements.

A JSC is a useful entity for anyone looking to start a business with more than two partners. The lower investment requirements are also a plus. It takes about two months to set up.

Labour and Tax

Kenneth Atkinson, the Executive Chairman at Grant Thornton Vietnam, pointed out two big factors to keep in mind:

The tax regime and labour laws are the two most important things to keep in mind. Both are quite complex. In the context of taxes, structuring your investments from a tax-planning perspective is very important. You have to ask yourself questions like, are you investing from your personal name? Are you investing through a corporate structure? What double tax treaties exist that make it beneficial to invest from, say, Singapore, instead of Hong Kong or the U.K. What is the impact of those regulations if you exit the business through a sale?

A thorough read of the Labour Code (vietnamlegal.com.vn is a useful resource) is a must, and when it comes to local taxes, Grant Thornton’s 2016 Doing Business in Vietnam report has a great overview of tax requirements.

 

Cultural Mindfulness

If you’re coming from an Asian country, you’re likely to understand the cultural ways here better than Westerners. Gone are brash negotiations, rapid-fire contracts and cutting to the chase. Vietnam in general is a long-term game that requires patience above all else.

The client meetings at karaoke bars (now slowly being overtaken by beer club meetings), the formal business cards exchange, the contract-over-drinks approach, the sheer politeness of it all – it’s all part of getting to know you as a person. People do business with whom they trust, and foreigners here seem to like these practices enough to uphold the local business culture. As Mr. Atkinson points out: “I actually prefer being handed a business card rather than some American guy flicking it across a table at me.” A final story from Mr. Atkinson:

In 1999, we had a fairly big project with the Asian Development Bank and the Ministry of Finance. I first went to dinner with these guys at the introduction of a Vietnamese friend. We had an enjoyable dinner and a few bottles of wine. Once it ended, my friend said they liked me, but they didn’t know Grant Thornton. So I said to one of the guys, What football team do you support? He said, Manchester United. I said, That’s great because we’re the auditors to Manchester United. Then two bottles of brandy appeared on the table and we stay there for another hour and a half. In the end we actually got the job.


Choosing the Right Web Design for Your Business

By: City Pass Guide

A website is the base for all online activities of your business. However, having a badly designed website can be worse than having no site at all. To maintain a successful online presence in Vietnam’s competitive environment, you need to adhere to the one and only commandment of design:

Form Follows Function

The online environment in Vietnam is often colourful, confusing, cluttered and chaotic. Don’t fall into that trap. To set up a profitable website for your business, you need to think about the purpose first. What do you want to use your website for? Or rather, what will your customers want to do on your website?

Case 1: My customers just want my contact information.

In theory, a Facebook profile is enough for this purpose, but your own digital business card looks more professional. And when you own your own domain name, you can and should use it for your email address.

 

Case 2: My customers want some information about my company and our products/services.

A small website with a short introduction and one page per service or product, held together by an easy-to-use navigation system, should be enough.

 

Case 3: I want to keep my customers up to date with promotions, events and company news.

This calls for a small content management system, or CMS. A CMS is where you log in and change pages or add new posts. Usually people have a section of fixed pages on their website and an extra “blog” section, where customers can follow their updates. This is the best option for restaurants.

Case 4: I want to sell my products online.

Shop plugins are available for every major CMS. These are easy to use, cheap and versatile. However, often it is not exactly what you imagine, remember that you can hire a developer to customise the product. Be careful! Customers are entering sensitive data like credit card information, so make sure the security is top-notch. Nothing ruins your online reputation faster than a security leak.

Case 5: I want to be Number One and dominate the search results.

Now we’re talking! The design still follows the function of your project, but create a code as slim as possible to make the pages load quickly and efficiently. It is also imperative to follow the prime online commandment here: Content is King. Effective SEO is necessary as well, to keep on top of Google.

In the past it was easy to fool search engines into ranking your site higher – all you had to do was list your keywords a hundred times per page. Nowadays, programs like Google are much smarter and spamming will harm your business beyond repair. Your only chance is to create content your visitors love to read and pass on to others. For quality content creation, you either have to be multi-talented, hire somebody, or buy content from a third party. But beware, many companies are still stuck in 2005 and will sell you generic content that gets you nowhere. Choose wisely!

 


How Employee Wellness Can Boost Your Business

By: Mason Cobb

A healthy workforce is a productive workforce. In the USA, some 80 percent of companies have employee wellness plans and an incredible 92 percent of businesses with over 200 employees have such programs. This is sensible: return on investment (ROI) on wellness programmes is about 3:1 because of reductions in absenteeism, staff turnover and stress reduction.

For example, Johnson & Johnson’s wellness and prevention programs implemented over three decades ago have resulted in tangibly better productivity, employee health outcomes and savings of millions of dollars. With these kinds of numbers, the verdict is in: good health is good for business.

Traditionally, businesses in Vietnam haven’t paid much attention to employee health, but the shifting economic landscape is likely to change this. As Vietnam’s businesses start to engage in increasingly high value-added activities, the reliance on low-cost, unskilled labour shifts to a more skilled and productive workforce.

It is more disruptive and expensive when highly skilled employees leave or are out of commission: satisfaction, retention and health go hand in hand.

Types of Wellness Programs

What exactly does an employee wellness program entail? Anything you want, really, as long as it results in healthier employees. One of the major misconceptions about wellness programs, and perhaps one of the reasons they haven’t been widely adopted in Vietnam, is that they’re expensive to maintain and take up valuable working time. In reality, every company can create its own programme, investing as much time and money as they see fit.

Do you employ a lot of smokers (48 percent of Vietnamese men smoke)? Then provide information about quitting and offer cessation courses. Do your workers spend their lunch break at McDonald’s or go for other unhealthy, greasy street food? Encourage them to try healthier alternatives. Access to exercise and fitness outlets or at least information is also important.

Anything helps, as long as the employer encourages healthier habits for their workers. Investing in an employee’s health today will reduce health insurance payments and other costs down the line.

Protect Your Valuable Assets

At the moment, Vietnam’s government mandates that companies must have yearly health check-ups. Typically, that is the limit of HR concern for employee health, although lack of attention leads to less-than-optimal workplace productivity. So, it falls to C-level and senior leadership to examine and exploit the link between employee wellness and productivity.

So far, a few employee wellness programmes have been offered sporadically. Teambuilding and event management provider Top Team has offered its managerial employees a wellness programme, for example, as have safety training consultancy Integrated Safety Solutions, FV Hospital and Victoria Healthcare international clinics. Check their websites to learn more.

Credit: hoangteambuilding

Each company must carefully weigh the costs and benefits of a workforce that is more productive, has less absenteeism, feels cared for and thus stays loyal (something that may help the high rate of turnover that plagues many companies).

If our workers are not commodities but a valuable asset for our success, they must be cared for. And nothing is more basic than safety and health.

See you at the gym!


Building Your Brand in Vietnam

By: City Pass Guide

An effective brand strategy is one of the most important aspects of any business, large or small, retail or B2B. Especially here in Vietnam you need strong branding to compete in a tough market. Let us shed some light on what makes the Vietnamese market different from other regions and why it can be a tough nut to crack.

Business in Vietnam

One of the youngest, fastest and most active markets in the world, Vietnam offers political stability and steady expansion. People in Vietnam are about to rise from relative poverty to become strong, well-funded consumers.

To set up a successful branding strategy in Vietnam, it is necessary not only to understand the quirks of an emerging market, but also Vietnamese culture. Let us look at the demographics first.

Women

Like everywhere else, women are drawn towards fashion and promises of beauty, although the independent lady in red is not too popular here yet. Vietnamese women tend to be drawn to cute and feminine designs. Family and children are still a major focus, and with the growing awareness of environmental issues, so are health and safety.

Men

Like everywhere else again, men are attracted to branding that speaks of strength and success. However, the Vietnamese also are drawn quite strongly towards technology. Maybe that’s because there are so many graduates in the banking, business and IT sectors, or because of the central role of technology in an emerging market.

Elderly

Elderly people are still very traditional and family is even more important to them. Growth, safety and other promises that support the concept of family as a safe haven are most effective for this group of people.

Youth

Young people love Western influences, from skateboards and graffiti to shirts with prints in English that sometimes even make sense. But however much they are into Captain America, they still are deeply rooted in Vietnamese culture and for a variety of reasons prefer local brands to cover their daily needs.

What all generations have in common is that family is usually more important than the individual. Together with their amazing optimism, the will always to put the family first is the greatest strength of the Vietnamese people and a big opportunity for brand management.

Family in Vietnam

The Use of Language

The fact that Vietnam uses the Roman alphabet may fool the aspiring brand developer into thinking the choice of their brand name is easier than in China. Not really. The Vietnamese language is monosyllabic and that is how people read a brand name. Long, foreign words look complicated and are often too hard to get one’s head around in order to generate affinity.

The shorter the better. Nestle and its water is a good example. In Vietnam it is branded La Vie, “life” in French. Very easy for Vietnamese speakers to read, comprehend and memorise.

Foreign Brand Name or Vietnamese?

English names work well in Vietnam as long as they sound “nice”. Just take a look at some of the top native brands in the country: Vinamilk, Highlands Coffee, Vietnam Airlines, MBBank, Mobifone, Viettel and so on. Of course, except for the first two, many brands are targeted not solely at local consumers and also have their eyes on international or at least ASEAN expansion.

Successful big brands with pure Vietnamese branding would be Trung Nguyen or Phuc Long, for example. Other brand names are short and “nice”, even if they (seemingly) possess no meaning.

The language in which the brand is named doesn’t matter that much. What matters is that people can grasp the meaning of the word(s) and in case it’s foreign, that it’s easy to follow. Exceptions are brands that are mainly targeted at foreigners or Vietnamese with “foreign” aspirations. Travel agencies for example work much better with international names.

Colours

When it comes to colours, the approach in Vietnam is the same as in China. Red is the colour of strength, luck and success. Yellow is gold and means prosperity. Black and white, though the traditional colours of death, are nowadays symbols of minimalism and focus. Blue is clean and green is natural.

Target Categories

In Europe, we can decide to look cheap if we want to draw the customer’s eyes to our low prices. In Vietnam, that doesn’t work at the moment because if you want cheap products you head for the local market and street vendor stalls on Nguyen Trai. No brand is meant to look cheap. Developing a brand in Vietnam means communicating that something has value, no matter what pricing scheme you use.

The relatively new Trung Nguyen Legend concept that pops up on every corner is a good example. The product, though better than street coffee, is not really high-end. But the branding appeals because it communicates high standards.Black and gold, together with the word “Legend” – talk about posh stuff.

Brands that appeal to the increasingly affluent group of customers will communicate quality with a stylish and simplistic design as well as colour palate. The aforementioned black and white are increasingly popular among many brands all over the country, even if it is just to be different from the colourful clutter that makes the ad landscape in Southeast Asia as lovely as it is complicated. Sometimes it’s better to whisper than to shout.

Market Trinity in Vietnam

Vietnam is actually not one market but three. The applicable strategies may differ strongly between the North, the South and the Centre.

The North

Hanoi and the Northern provinces are very traditional and judge a brand or product on the high value it exudes. Status symbols and quality presentation matter more than in the other regions.

The Centre

Even more traditional than the North, people are strongly rooted in the old ways. Hue is the imperial centre of the Nguyen dynasty, after all. You can communicate high value, safety and family orientation, but innovation is not yet a part of people’s daily lives.

The South

Much more open to innovation, Ho Chi Minh City, Da Lat and other urban areas of the Southern provinces drive the country to new heights. Many brands start here and once they are established, begin the arduous journey northwards. Saigon is where you try your new concept and see whether it leads to roaring success or dire loss.

Status Symbols

And here we enter the world of status symbols and their position in an emerging market like Vietnam. One of the first things you notice upon coming to Asia may be the high number of luxury cars. As soon as somebody can afford a Bentley, they will drive one. Of course exceptions define the rule, and some successful business people drive their Mercedes to meetings while they use their good old Honda Wave motorbike to buy groceries.

Communicating value, success and quality is a part of brand development in Vietnam as much as in other emerging Asian economies. Contrary to Europe, where a puritan mentality is ingrained by tradition, in Asia a person is judged by what they show off. If you have wealth to present to the world, you must be successful because people must be buying your product or service. Hence, it must be good.

Credit: Autogespot

Protect Your Brand

One important consideration: if you create your brand in Vietnam, consult a specialised lawyer who can help you register and protect it. Success draws in copycats, and without legal protection it may be hard to stand your ground.

Unlike patents or copyrights, where you generally only need to claim ownership once on the basis of a novel product or service, a trademark must be actively and continually asserted. Vietnam has made progress in these areas, but there is still some way to go.

For more information on this, be sure to read our article on Protecting Your Assets.


How to obtain a temporary resident card in Vietnam?

By: City Pass Guide

What are the cases in which a foreigner can obtain a temporary resident card in Vietnam?

- He/she is member of diplomatic missions, consular offices, representative offices of international organisations of the UN, intergovernmental organisations in Vietnam, or the spouse, child under 18 years of age, housemaid that comes along during his/her term of office. In this case, he/she will be issued with a temporary resident card NG3.

- He/she has a visa of type LV1, LV2, ĐT, NN1, NN2, DH, PV1, LĐ or TT. In these cases, he/she will be issued a temporary residence card NG3.

What do the codes of common visa types in Vietnam mean?

NG3: Issued to members of diplomatic missions, consular offices, representative offices of international organisations affiliated with the UN, representative offices of intergovernmental organisations and their spouses, children under 18 years of age, and housemaids during their term of office.

LV1: Issued to people who come to work with units affiliated with Vietnam’s Communist Party; the National Assembly, the government, Central Committee of Vietnamese Fatherland Front, the People’s Supreme Court, the People’s Supreme Procuracy, State Audit Agency, ministries, ministerial agencies, governmental agencies, the People’s Councils, the People’s Committees of provinces.

LV2: Issued to people who come to work with socio-political organisations, social organisations, Vietnam Chamber of Commerce and Industry.

ĐT: Issued to foreign investors in Vietnam and foreign lawyers practising in Vietnam.

DH: Issued to people who come to study or serve internships.

V1: Issued to journalists who have permanent residency in Vietnam.

: Issued to people who come to work.

TT: Issued to foreigners who are parents, spouses or children under 18 years of age of foreigners issued with LV1, LV2, ĐT, NN1, NN2, DH, PV1, LĐ visas, or foreigners who are parents, spouses or children of Vietnamese citizens.

What are the documents needed to obtain a temporary resident card in Vietnam?

The main required documents needed for the temporary resident card are:

- A written request from the inviting entity
- A declaration bearing a picture
- The passport
- Papers proving your status (such as: Proof of residence registration with ward police where the applicant lives; Work permit (if applicable); Certificate, business registration certificate, licence of establishment of representative office, company branch (including announcement of activation), certificate of seal registration. In the case of family members, proof of relation can include a marriage certificate, birth certificate, or family book).

Note that any papers that are not in Vietnamese must be translated and notarised or legalised according to Vietnamese regulations.

Where can you apply for a temporary residence card?

According to the 2015 Immigration Law, an application for the NG3 temporary residence card must be made to the competent authority of the Ministry of Affairs while applications for other types of temporary residence card must be made at the immigration authority in the same administrative division in which the inviting entity is based or residing.

Therefore, for other temporary residence cards than NG3, your documents need to be filed with the Immigration Department. The government fee varies according to the duration of the temporary resident card, such as: one year: US$80; one to two years: US$100; two to three years: US$120.

How long does it take to obtain a temporary resident card in Vietnam?

Theoretically, the time frame for processing is between five and seven working days.

What is the address of public authority that you need to know to obtain immigration papers?

Immigration Department
Office of the Ministry of Public Security
254 Nguyễn Trãi, D1; +84 28 3920 2300

Immigration Department
Office of the HCMC Public Security
196 Nguyễn Thị Minh Khai, D3; +84 28 3829 9398


Tourism in Vietnam: The Past and Future

By: Mark Gwyther

American presidents usually give a “State of the Union” speech to the legislature around this time, discussing the past year and what their goals for the future are. While I don’t have orange skin, here is my address about the state of tourism in Vietnam and a few predictions for 2017.

travel in vietnam

Looking Back at the Monkey

Chinese and Koreans All Around...

By any measurement, last year was an excellent year for tourism in Vietnam. Out of 29 countries, only Cambodia showed a drop in international visitors to Vietnam. In fact, the number of inbound foreigners increased by nearly 50 percent in the last four years.

Those of you in Saigon reading this English-language newspaper and working in the hospitality or tourism industry may be surprised or sceptical about the numbers. That is because Vietnam has been experiencing a tremendous shift in markets. Nearly 70 percent of this growth has come from China and South Korea alone, the two largest and fastest-growing inbound markets in 2016.

This shift accelerated in 2016 at a staggering rate. Between 2012 and 2016, the number of international arrivals to Vietnam grew by 3,165,000 people. Of that increase in visitors, 2,230,000 came from China and South Korea.

The reason for the increase is pretty simple: China and South Korea have large populations with a rising average income which is creating a larger middle class. People typically begin travelling internationally when their family income reaches about $1,500 per month. The first trip is usually to a country nearby with a familiar culture. Vietnam is a close, warm-weather destination with a familiar Asian culture.

 

growth in arrivals

 

… and Also More Westerners

You might think all this growth is great, but not really relevant to your business if you rely on American, European and Australian tourists. Sorry, those markets haven’t grown significantly. That is why on 1 July 2015, Vietnam’s government waived visa fees for five European countries for a 15-day visit.

So, did it work? Apparently it did.

Granting a few months for word to spread, from November 2015 through the end of 2016 each month saw a significant improvement over the same month the year before.

However, while the chart may look fantastic, the actual increase in 2016 for these five countries averaged about 9,700 more tourists per month. Even if the fee exemption was expanded to North America and Oceania, a similar jump in tourists would result in only an average monthly increase of about 25,000 visitors this year. China and South Korea combined to grow an average of 119,000 visitors per month in 2016 and this coming year will see an even larger increase.

Just how much larger, you ask?

foreign visitors

Looking to the Rooster

Here are a few predictions for 2017:

  1. The new electronic visa system will grow eligible markets by over 50 percent.

At this time, it is not clear who will be eligible, but this may have a greater positive effect on tourism than waiving the visa fee. It seems more likely that the current system of travellers sending their passport to a Vietnamese consulate is a greater barrier than the visa fee.

  1. The number of Russians travelling to Vietnam will double in the second half of 2017.

The number of Russian travellers to Vietnam increased by 28 percent this year from last year, though the number is only up 19 percent over a two-year period. However, with U.S. sanctions likely to be lifted, the Russian currency will rise in value. Political problems in Egypt and Turkey make Vietnam a safe choice for chasing the sun.

  1. The number of Chinese tourists will grow faster than in 2016.

Chinese citizens embarked on an estimated 60 million outbound trips last year, yet only

2.6 million were to its southern neighbour. Despite China already being far and away Vietnam’s largest market, there is plenty of room to grow.

  1. Total number of international visitors to Vietnam will surpass 13 million.

See #1, #2, and #3 above.

  1. A domestic Vietjet flight will leave Ho Chi Minh City on time.

Just joking!

Let’s not get too crazy with these predictions.


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