The Vietnamese market is on an upward trajectory and it is owed to its ever-expanding middle-class and increased manufacturing and exports. The nation’s market is shifting constantly in flux with the changing consumer purchasing power and behavior. With the rise in income, the middle class is inclining towards a modern consumer-driven lifestyle, setting up the stage for foreign investors to invest in Vietnam’s market. Knowing how to do so with a full understanding of the market and a corresponding strategy is essential.
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In this article, we will talk about how as a foreign investor you can make the best of Vietnam’s lucrative market through a successful Market Entry Strategy.
Market Research – Starting Right
Strategically speaking, to enter a new market, anywhere in the world, market research is the essential first step. It can assist investors to gain insight into the country’s constantly shifting market and devise business strategies accordingly. It helps a business remain competitive in the market while reaping maximum yields.
Market Research, as valuable as it is, should not be dealt with leniency or compromise. Professionals can do a much better job at market research and analysis than novices.
After choosing the right market research partner for a company, it comes down to the initial investment and company incorporation in Vietnam.
Company Setup in Vietnam:
Vietnam makes it lucrative to invest in its market, however, it comes with drawbacks, expected of any developing economy. It is necessary to have a thorough grasp of the corporate environment as well as legal procedures.
For setting up a business in Vietnam, foreign investors can choose any of the following entity structures:
- Company Registration
Incorporating a business in Vietnam may be done via the following entities, with Joint-Stock Company and Limited Liability Company being the most popular options among international investors. Read More.
- Business Partner & Selection
Collaborating with a local Vietnamese business partner will help you get closer to your company objectives. Companies importing and distributing goods in the nation should seek assistance from a local agent. Read More.
- Virtual Office
A virtual office is becoming increasingly popular among modern enterprises and startups. A virtual office may be provided with facilities and services to meet the company’s needs, depending on the supplier. Read more.
- Shelf Company
A shelf company has been formed and registered but is kept “on the shelf” after the incorporation procedure is completed. You simply buy the shelf company, after due diligence has been completed, with all necessary paperwork in place. As a result, a shelf company is a great alternative for firms looking to enter a new market quickly. Read More.
Government Incentives for Foreign Firms in Vietnam:
The tax incentives listed below are offered to businesses and organizations in Vietnam, which has one of the most competitive tax regimes in Southeast Asia:
- Incentives on Corporate Income Taxes (CIT)
According to their location, sector, and size, new investment projects will receive favorable tax rates and tax benefits.
- Import Tax Exemption – High-Priority Areas
For projects classified as authorized sectors/located in encouraging regions as well as for items imported under specific circumstances, import duty waivers are possible.
- Land Rental Fee Exemptions
A variety of investment projects are eligible for a land rental charge exemption if they meet certain criteria, such as investing in supporting industries or business areas, and/or in encouraging geographic regions. This is usually only valid for a short period of time.
What to Know About Free Trade Zones
Investing in Vietnam’s free trade industrial zones is the optimal way for foreign investors (looking to establish production and distribute their products globally) to enjoy various government incentives and investment perks. The incentives include: only 10% payable CIT for 15 years; 50% tax reduction on Personal Income; and tariff cuts on goods among ASEAN regions have lured investors from all over the world. The following are the notable Free Trade Zones in Vietnam, among the total of 250 industrial zones spread across the country:
- Northern Vietnam Key Economic Region (NVKER)
- Southern Key Economic Zone (SKEZ)
- Central Vietnam Key Economic Region (CVKER)
- Mekong River Delta Economic Zone (MeKEZ)
Strategy for Hiring Staff in Vietnam
The employment of employees, who form the foundation of a business, is the next component of the market strategy for investment in Vietnam. To help organizations understand recruiting personnel in Vietnam better, the following tactics have been developed:
Understand the Market
Vietnam’s workforce is young and increasingly well-educated. However, there is still a big lack of skills across many aspects of the workforce due to an education system that lags behind the actual rate of economic development of the private sector. For a full article on High demand skills in Vietnam’s workforce and advice for businesses read this article.
Outsource your Entire HR, Recruitment & Payroll Processes
Entering a new market and setting up your brand-new workforce is no easy task. Working with established providers of HR, Recruitment, Payroll & EOR services can bring valuable benefits to your Vietnam Strategy. An established HR services company knows the market well, knows how to find talented workers, and can navigate the local labor rules effectively while keeping your company legally compliant.
Cekindo is a leading provider of global market entry services in Southeast Asia. We are part of InCorp group, a regional leader in corporate solutions, that encompasses 8 countries in Asia, headquartered in Singapore. With over 1,100 legal experts serving over 15,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup and advice based on local requirements to make your business perfectly fit into the market with healthy growth.
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Setting up in Vietnam is hard. We can make it easy.
Cekindo is a leading provider of global market entry services in Southeast Asia. We cover business setup, business process outsourcing, product import & registration, and immigration services.
Our mission is to make your market entry process that much easier by assisting you at every stage of your company’s growth. We want to make a positive impact on not only your business performance but also the business landscape of Vietnam. This is reflected directly in our commitment to InCorp Global, the partner of choice for corporate solutions.
None of the stress, all the success.