Vietnam has emerged as a dynamic business hub in the ASEAN region, undergoing a remarkable transformation from a low-cost manufacturing center to a diversified and thriving economy. With a population of over 96 million and a growing middle class, Vietnam presents a significant market for foreign investors. The country’s strategic location, robust economic growth, and favorable business environment have attracted businesses from around the globe.

Understanding Vietnamese Business Culture

Relationships and Trust

In Vietnam, personal relationships play a crucial role in business dealings. Building and nurturing connections with both new and potential customers is essential. This allows businesses to offer a personalized and engaging customer experience, a factor that greatly influences long-term business success. According to a recent study, 86% of customers consider their experiences as important as the actual product or service they purchase. This underscores the importance of delivering an exceptional end-to-end experience across all touchpoints.

Establishing personal relationships holds immense value due to its profound impact on trust and loyalty. When you cultivate a genuine connection with a customer or client, it fosters a sense of confidence in you and your enterprise. This foundation of trust has the potential to result in heightened loyalty, a higher likelihood of repeat business, and an increased likelihood of referrals. For small businesses, where success often hinges on a more limited customer base, the significance of trust and loyalty cannot be overstated. It forms the bedrock of enduring customer relationships and contributes significantly to sustained success.

Communication Style

Effective communication requires a nuanced approach, where both verbal and non-verbal cues are considered. It is advisable to be attentive and perceptive to ensure clear and respectful communication.

Direct communication is like a clear path, where words are straightforward and to the point. On the other hand, indirect communication is a subtle dance, relying on context and nuanced cues.
These styles are influenced by a variety of factors, like our cultural background, personal preferences, and the specific dynamics of a relationship or situation. It’s fascinating how something as seemingly simple as how we communicate can hold such power.

When it comes to relationships and social interactions, communication style plays a starring role. Direct communication builds trust and authenticity, creating a space where efficiency thrives. However, it’s worth noting that it can also be seen as assertive or even confrontational. On the flip side, indirect communication weaves a tapestry of harmony, empathy, and cultural sensitivity. Yet, it’s not without its potential pitfalls, as it can sometimes lead to misunderstandings or unresolved conflicts.

In essence, the way we choose to communicate is a fascinating dance that can either pave the way for strong, clear connections or add layers of depth and understanding to our interactions. It’s a tool that, when wielded with awareness, can truly enhance our relationships and interactions.

Business Etiquette

Observing proper business etiquette is crucial when conducting business in Vietnam. The following points are essential to keep in mind:

  • Greetings. While English is gaining popularity, Vietnamese remains the dominant language. Making an effort to learn simple phrases like “xin chao” (hello) is appreciated. Greetings typically involve a handshake and a slight bow of the head. Vietnamese names are presented in the order of last name, middle name, and first name.
  • Dress Code. Business attire should be selected based on the location of the meeting. Hanoi leans towards a white-collar environment, while Ho Chi Minh City is more business casual. Modesty in dress is advised, with bright colors to be avoided.
  • Gift Giving. When invited to a Vietnamese home, consider bringing fruit, sweets, flowers, or incense as a gesture of goodwill. Some items, such as handkerchiefs or yellow flowers, are best avoided. Wait for the host’s signal to begin the meal and ensure all food on your plate is finished. Tipping is appreciated, though not customary, and ranges from five to ten percent.
  • Business Meetings. It is advisable to have a translator present for meetings, and in-person discussions are preferred over online communication. Avoid scheduling meetings on major public holidays like Tet (Vietnamese New Year). Business cards should be exchanged with both hands, and it is polite to take time to read the name on the card. Silence during meetings is common and signifies thoughtful consideration.

Legal and Regulatory Landscape

Business Entities

When entering the Vietnamese market, investors can choose from six different types of business entities:

  • Representative Office
  • Limited Liability Company
  • Joint-Stock Company
  • Branch Office
  • Joint Venture
  • Public-Private Partnership

Each type has its own set of characteristics and legal requirements, offering flexibility to suit various business models.

Labor Laws

Vietnam’s labor laws govern employment practices, contracts, and worker rights. It is important to note the following regarding labor contracts:

  • Indefinite term. This contract does not specify a fixed term for termination.
  • Definite term. This contract is for a specified period, not exceeding 36 months, and can be renewed once.
  • E-contracts are officially recognized, and verbal contracts are valid for durations of less than one month. Seasonal contracts are not permitted. Worker rights include various allowances and benefits, some of which are non-taxable.

Taxation

Corporate Tax Rates. Vietnam’s standard corporate tax rate is 20% for most business types. Corporate Income Tax (CIT) is levied on the profits earned by companies or organizations. This tax applies to entities in all economic sectors, professional organizations, and foreign corporations with activities in Vietnam. Personal Income Tax (PIT) also applies to individuals and families engaged in business activities.

Value Added Tax (VAT). VAT is imposed at rates of 0%, 5%, and 10%. It applies to most goods and services bought and sold for use in Vietnam. VAT is an indirect consumption tax and is collected at every stage of the production and distribution chain.

Tax Incentives. Tax incentives are a prominent feature of the Vietnamese business landscape. These incentives apply to investment projects in specific sectors, areas with different socio-economic conditions, high-tech zones, and economic zones. They are designed to stimulate economic development, technology, and education in these regions.

Intellectual Property

Vietnam has three main intellectual property protection offices overseeing different areas:

  • Copyright and related rights are administered by the Copyright Office of Vietnam.
  • Industrial property rights fall under the jurisdiction of the National Office of Intellectual Property (NOIP).
  • Rights to plant varieties are managed by the Plant Variety Protection Office.

The National Office of Intellectual Property (NOIP) serves as the chief coordinator in this system and operates under the Ministry of Science and Technology. Its responsibilities include overseeing the registration of industrial designs, trademarks, brand names, and other industrial property rights. Additionally, the NOIP conducts essential legal assessments to resolve intellectual property disputes.

Registering copyrights, patents, and trademarks in Vietnam can be facilitated by the “priority rights” outlined in the Paris Convention. This provision allows previously registered rights from other jurisdictions to be recognized in Vietnam, provided it is done within specific time limits.

Here are the mechanisms for registering different types of intellectual property:

Copyrights. Governed by the Berne Convention on copyright. Protection duration varies depending on the type of work, ranging from 50 years after the author’s death to 75 years for specific categories like cinematographic works.

Patents. Individual patent registrations, including industrial designs and inventions, must occur at the National Office of Intellectual Property. Vietnam operates under the “first to file” principle. Different types of patents have varying protection periods, such as 20 years for invention patents, 10 years for utility patents, and 5 years for industrial designs (renewable for two consecutive periods of five years).

Trademarks. Protects symbols, three-dimensional objects, colors, and other visual devices used to identify products or services. Trade name rights are established through use rather than formal registration. Trademarks initially last for 10 years and can be renewed indefinitely for further ten-year periods.

Enforcing intellectual property rights in Vietnam can be pursued through administrative action, civil court action, or criminal prosecution. Administrative action, involving warnings, fines, and confiscation of counterfeit goods, is the most common approach. However, it’s worth noting that government agencies in Vietnam may face challenges in keeping up with evolving laws. Therefore, a proactive strategy for IP protection is crucial, which may include clear IP-related clauses in employment contracts, monitoring for potential production overruns, knowledge-sharing with foreign businesses, and registering your intellectual property.

A successful story

In the rich tapestry of Vietnamese cuisine, staples like pho and banh mi hold a special place, woven with national pride. However, as Vietnam opens its arms to global influences, a wave of restaurants offering international flavors has emerged in major cities, marking a stride towards globalization.

One compelling narrative comes from Kane Ho, a Vietnamese American whose venture transcends a mere restaurant. For him, crafting an American-style barbecue establishment was a poignant homage to his childhood and a means to share a distinct experience rooted in quality and impeccable service. In 2015, Kane and his wife unveiled a deli-style cafe in Nha Trang, later introducing the barbecue concept in 2016. What emerged as LIVIN Barbecue is a sanctuary where beef brisket, ribs, pulled pork, chicken, and sausages undergo a meticulous smoking process, extracting their innate flavors over two to twelve hours on a woodfire.

This culinary haven has struck a chord with expatriates and foreign visitors alike, drawn to the tender, juicy meats. However, Kane emphasizes that their unwavering focus remains on the Vietnamese clientele. In the wake of the pandemic, this dedication has borne fruit, with Vietnamese patrons now constituting a substantial 60-70% of their daily clientele in Nha Trang.

Kane keenly observes the evolving culinary landscape, noting that a youthful demographic, a burgeoning economy, and the pervasive influence of social media have cultivated a heightened openness among the Vietnamese towards diverse cuisines. Additionally, the commonalities in the use of herbs, sauces, and accompanying vegetables in both Vietnamese and American-style barbecues provide a familiar thread that bridges the culinary traditions.

Above all, Kane and his team aspire for their patrons to discern the meticulous care invested in each dish. They stand poised to continue their journey of growth and refinement, a testament to the thriving amalgamation of Vietnamese tradition and global culinary excellence.

Clear legal hurdles with us – your trusted legal partner in Vietnam

Navigating the legal landscape in a foreign country can be a daunting task, but with our expertise and experience, we are your reliable legal partner in Vietnam. Here’s how we can assist you in overcoming legal challenges and unlocking the full potential that Vietnam has to offer:

In-depth knowledge of Vietnamese Law. Our team boasts a comprehensive understanding of Vietnamese legal intricacies. We are well-versed in the nuances of business regulations, intellectual property rights, labor laws, and more. This expertise ensures that you receive accurate, timely, and actionable legal advice tailored to your specific needs.

Tailored Legal Solutions. We understand that every business venture is unique. Our approach is not one-size-fits-all; instead, we craft customized legal solutions that align with your business objectives. Whether you’re establishing a representative office, forming a joint venture, or seeking trademark protection, our team is equipped to provide the precise legal support required.

Regulatory Compliance Assurance. Staying compliant with local regulations is paramount for the success of any business in Vietnam. Our thorough knowledge of the legal framework enables us to guide you through the complexities of regulatory compliance. From business entity registration to tax obligations, we ensure that you operate within the bounds of Vietnamese law.

Mitigating Risks and Disputes. Identifying and mitigating potential legal risks is crucial for safeguarding your business interests. We conduct thorough risk assessments to preemptively address any legal challenges that may arise. In the event of disputes, our seasoned legal experts are adept at employing dispute resolution strategies to protect your rights and interests.

Seamless Communication and Translation. Effective communication is essential in any business endeavor. With our proficiency in both English and Vietnamese, we bridge potential language barriers, ensuring clear and accurate communication in all your legal dealings. This linguistic dexterity extends to the translation of crucial legal documents, providing you with the confidence that nothing is lost in translation.

Building Stronger Foundations for Success. Vietnam is a land of immense opportunities, and we are dedicated to helping you harness its potential. By providing steadfast legal support, we empower you to focus on what matters most – growing and thriving in the Vietnamese market.

If you have any inquiries or uncertainties regarding the process of starting a business in Vietnam, our team of skilled corporate attorneys can be reached at letran@corporatecounsels.vn. Feel free to contact us at any time for expert guidance and assistance.