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