- What are the benefits for foreign enterprises when they buy goods in Vietnam?
Vietnam offers young workforce and the wages that are roughly half those in China. Therefore, it is reasonable for Vietnamese goods to be far cheaper than other nations in the world. Moreover, not only are the prices low, the quality of Vietnamese goods is considerably high. With several Free Trade Agreements signed, including the Trans-Pacific Partnership, Vietnam has been improving its goods’ quality in order to increase its competitiveness in the global market. As a result, Vietnamese goods should be attractive to foreign enterprises.
- What is special about Vietnamese companies and what makes them outstanding in comparison to other Asian companies?
In addition to young workforce and low wages as mentioned in the above answer, Vietnam also offers the long coastline from the North to the South of the country, which no other country in Asia has. This does not only provide the nation with excessive resources but also opportunities to promote the tourism industry. Moreover, unlike many developed countries in Asia such as China or Singapore, Vietnam is still at its developing stage. This also contributes to the attractiveness of the market here.
- What is special about the Vietnamese market and its structure?
Although Vietnam is an effervescent market, the production of some types of goods still does not meet the demand. If the investors study this market well and focus on investing into these sectors, it is likely that they will succeed.
- How can foreign companies get in contact with Vietnamese companies? Do you think it is necessary to use the support of a consultant company for example?
Foreign companies should search for contacts of Vietnamese ones online or via some reliable webpages such as https://dangkykinhdoanh.gov.vn/. Through this website, information regarding the founders, chief executive officers, their business lines and other information regarding companies in Vietnam could be found.
- What do Vietnamese companies expect from their foreign cooperation partner?
Vietnamese companies, like the majority, seek for profit. As long as the cooperation follows the contract and results in profit, the Vietnamese companies’ expectations should be fulfilled. In order to do this, foreign investors should be able to fully understand the Vietnamese market as well its culture, strictly follow the law and provide great business plans.
- If the right partner is found, the cooperation should be maintained in form of a contract or is a handshake enough?
It depends on the level of cooperation you wish to have. If you want to enter into a serious cooperation, for example, to do a business in Vietnam via an entity, although oral contracts are just as valid as written ones, a cooperation contract should be in writing, or that a contract be evidenced in writing (although the contract itself may be oral). Therefore, it is recommended that all cooperation should be signed under a legally binding contract.
- Of what value is a contract in Vietnam in general and what options are available to enforce the content legally?
According to Article 401 of the Civil Code, a contract legally entered into shall take effect from the time when it is entered into, unless otherwise agreed or otherwise provided by law. From the effective date of the contract, contracting parties must mutually exercise rights and perform obligations as agreed. A contract may be amended or terminated as agreed by the parties or prescribed by law.
To enforce your contract in Vietnam, you should start by contacting the other party to see if she intends to perform and fulfill her part of the agreement. If the other party has not substantially performed on the contract after being provided notice, you may institute legal action for breach of contract. Before taking legal action, check the terms of your contract to see if arbitration, mediation or court proceeding is required. Even if not required, you may opt to enter settlement negotiations with the other party or see if the problem can be settled through mediation or arbitration.
- Which place of jurisdiction should be included in the contract, should it be Vietnam or another country?
If one signing party is a foreign entity or partly owned by another foreign entity, the parties could opt to use foreign law as the governing law of the contract. In addition, regardless of whether one party is a foreign entity or not, the parties could decide to settle any dispute arising out of the contract by a foreign settling body. Having said that, implementation of the contract must still comply with Vietnam laws.
- The legal situation in Vietnam is somewhat obscure for a foreign investor. What do you recommend foreign investors in this matter, so that they can focus on their business content?
It is a must that foreign investors ask all consultants in Vietnam whether they have a professional liability insurance according to international standards. Most of Vietnamese law firms have not. Their professional liability insurance is capped at low levels and subject to Vietnamese courts, that’s useless because Vietnamese courts aren’t reliable.
Before you sign any services agreement with any legal advisor / law firm/ consulting firm in Vietnam, please do the following: COPY PASTE THIS REQUEST IN YOUR EMAIL TO THEM AND WAIT FOR THE REPLY:
“Dear Ms/Mr ….,
Please send us the valid evidence that your company has an international standard and enforceable offshore professional legal liability insurance with dispute resolution offshore Vietnam and not subject to Vietnamese court or Vietnamese arbitration.
We would be happy to cooperate and retain your services if you can prove that your company is professionally insured to provide legal services to international clients according to international standards.
Thank you very much
Best regards”
- Do you recommend an intercultural training to foreign entrepreneurs in advance?
Every market has its own distinctive features and the Vietnamese market is not an exception. Moreover, as the Vietnamese and foreign cultures are considerably distant, it can be expected that there may be several differences between the two markets. Therefore, familiarize oneself with the market before investing through intercultural training programs can always be a great solution to foreign entrepreneurs. In this way, not only will these people learn about the Vietnamese culture, but they will also learn about how to do business in this country.
- A good friend of you wants to produce in Vietnam and export Vietnamese products into the foreign market. What are your recommendations? Whatshould he consider in order to succeed?
First of all, it should be noted that the Vietnamese market is open to foreign investors. Also, although the free trade agreement between Vietnam and EU has not been signed, the negotiation has already been finalized. Therefore, this could be another advantage to foreign SMEs. However, as mentioned, the Vietnamese law could be considerably ambiguous. Consequently, it is recommended that these SMEs strictly follow the law and consult legal agencies for appropriate advices. Also, cultural features can either be an advantage or a disadvantage. If a company knows how to utilize the cultural differences appropriately, that company is likely to succeed in the Vietnamese market. Otherwise, these differences can become obstacles to them. As a result, intercultural training programs should also be considered.
Please contact Oliver Massmann under omassmann@duanemorris.com; in case you have questions on the above. Oliver Massmann is General Director of Duane Morris Vietnam LLC.