How Do Business Activities in Vietnam Differ From Other Countries?

Doing business in Vietnam can be very different from what you’re used to in other countries. In this blog post, we’ll take a look at some of the key ways that business activities in Vietnam differ from those in other countries.

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Introduction

Doing business in Vietnam requires an understanding of the local business culture which can differ significantly from what is customary in other countries. Business practices in Vietnam are governed by the Communist Party, though the country has increasingly been opening up to foreign investment and influence in recent years. That said, it is still important to be aware of the following when doing business in Vietnam.

Historical context

Vietnam’s business activities have been shaped by its history, which is marked by periods of occupation, colonization, war, and Communist rule.
Since gaining independence from France in 1945, Vietnam has been through a lot of changes. After a period of instability and two wars with the US (the Vietnam War and the American War), Vietnam was united under Communist rule in 1976. Since then, it has slowly been opening up its economy and taking steps towards becoming a more modern nation while still maintaining its socialist roots.
One of the biggest ways that Vietnam’s business scene differs from other countries is the role of the state. The state still plays a big role in the economy, with many businesses being owned or partially owned by the government. The government also sets many of the regulations that businesses have to follow. This can make doing business in Vietnam quite different from other countries where the private sector dominates and there is less government intervention.

Economic overview

Vietnam is a densely populated, developing country that in recent decades has seen strong economic growth. Its location on the South China Sea and proximity to other fast-growing Southeast Asian economies has made it an attractive destination for foreign investment and trade.
The Vietnamese economy is fueled by exports of agricultural commodities, textiles, footwear, and seafood; and by remittances from Vietnamese working abroad, primarily in neighboring countries. The country has been successful in reducing poverty and inequality, but remains vulnerable to fluctuations in global commodity prices, the slowdown in neighboring economies, natural disasters, and high levels of public debt.

Business environment

The business environment in Vietnam is quite different from what you may be used to in other countries. For one thing, the government plays a much more active role in businesses here. The state still owns a large number of businesses, including many in strategic industries such as banking, energy, and telecommunications. However, the government has been slowly selling off its stake in some of these companies and opening up others to foreign investment.
There is also a lot of red tape to cut through when starting a business in Vietnam. The process can be time-consuming and confusing, especially for foreigners who are not familiar with the country’s laws and regulations.
That said, there are many opportunities for businesses to thrive in Vietnam. The economy is growing rapidly, and there is a large and increasingly affluent consumer base. With its strategic location and ambitious reform agenda, Vietnam is an attractive market for many foreign investors.

Infrastructure

The inadequate state of Vietnam’s infrastructure is a significant drag on the country’s economic development. The road network is particularly underdeveloped, with only 24 percent of the country’s nearly 200,000 kilometers (km) of roads paved as of mid-1994. Moreover, only about 2,300 km are classified as national highways, and only about 12 percent of these are paved. The condition of the country’s seaports and airports also limits their usefulness. Sixteen seaports serve oceangoing vessels, but most lack modern cargo-handling facilities. All ports except Hai Phong are located along the narrow southern coastline and are accessible only to small vessels; large ships must anchor offshore and use smaller craft for docking. As a result, Vietnam must import many goods that could be produced domestically if the necessary transportation infrastructure were available.

Business culture

In Vietnam, business culture values personal relationships, punctuality, and formality. Greetings are formal and always begin with the most senior person in the group. When first meeting someone, it is customary to shake hands while exchanging business cards. Business cards should be printed in both English and Vietnamese. You should take the time to read the card before placing it in your business card holder or wallet.
Punctuality is important in Vietnam and meetings will typically start on time. It is considered rude to keep someone waiting. During meetings, it is common for participants to take notes. Decisions are often made by consensus and may take time to reach.
It is important to be aware of Vietnamese cultural norms when doing business in the country. For example, avoid using terms like “deadline” or “final offer” as they can be interpreted as disrespectful. Likewise, be cautious when discussing sensitive topics such as religion or politics.

Language

Language is one of the most obvious ways that business activities in Vietnam differ from those in other countries. The official language of Vietnam is Vietnamese, which is spoken by the vast majority of the population. However, English is also widely spoken, especially in urban areas and among the educated elite. As a result, many business transactions are conducted in English.
Another key difference is the legal system. Vietnam operates under a civil law system, which is based on French law. This can make contract negotiation and enforcement more complicated than in common law countries such as the United States or Australia.
Vietnam also has a unique history that affects business activities today. The country was under Communist rule for many years, and only started to open up to foreign investment in the late 1980s. As a result, there are still significant restrictions on some types of businesses and investment activities. Foreign ownership of businesses is capped at 49%, for example, and there are restrictions on industries such as media and banking.

Education

Children in Vietnam typically attend school from grades 1-9, with grade 10 being optional. Students who attend grade 10 take an entrance exam at the end of the year in order to gain admittance into a high school. Private schools are becoming increasingly popular, but most children in Vietnam still attend public schools. The quality of education varies greatly between different types of schools.
After high school, students can either attend a two-year college or a three-year university. The vast majority of students choose to go to college, as it is significantly cheaper than attending a university. In recent years, the Vietnamese government has been working to improve the quality of education and has been investing more money into the education system.
There are a few differences between the educational systems in Vietnam and other countries. First, children in Vietnam do not have to attend school for as many years as they do in some other countries. Second, the quality of education varies greatly between different types of schools. Finally, most students in Vietnam choose to attend college instead of university.

Religion

There are many religions practiced in Vietnam, with the main ones being Buddhism, Taoism, Catholicism, Protestantism, Islam, and Hinduism. The vast majority of the population practice Mahayana Buddhism, which is a branch of Buddhism that emphasizes on the need for compassion and altruism. In terms of Taoism, this is more of a philosophical and moral system that upholds the need to live in balance with the forces of nature. As for Catholicism, there are around 6 million followers in Vietnam which make up around 7% of the total population. This religion was introduced by French missionaries back in the 16th and 17th centuries. As for Protestantism, it only arrived in Vietnam in the 19th century with American and British missionaries. There are around 1 million Protestants in Vietnam which make up around 1% of the total population. Lastly, there is a small minority of Muslims and Hindus living in Vietnam

Politics

In Vietnam, the government is trying to slowly transition the economy from a strictly planned one to a more market-based economy. However, the government still retains control over many aspects of the economy, including all businesses with foreign investment. The amount of foreign investment in a business is capped at 49%. The approval process for starting a business can be long and complicated, often taking months or years.
The current political situation in Vietnam is relatively stable, but there has been some recent tension between the country and China over maritime disputes. The Vietnamese government has been trying to attract more foreign investment in order to help boost the economy.