1. Why Vietnam?
The story of Vietnam
Since opening up to international investment in the late 1980s and early 1990s, Vietnam has enjoyed gigantic development (although from a low base). For investors, the previous ten years have presented substantial prospects and an intriguing tale. The statistics of the MSCI Frontier index show that Vietnam is the destination of 25% of total global investment, while only being one of 22 countries on this stock exchange (Vietnam Plus 2022).
Foreign Investment Focus
Based on practical results in foreign investment attraction activities, Mr. Phan Huu Thang, former director of the Foreign Investment Department (Ministry of Planning and Investment), believes that the investment environment in Vietnam in the near future. The new normal is still a long-term “dock” for foreign investors and has good prospects for new projects (Chinhphu.vn 2022). Particularly, the results of FDI attraction in the first two months of 2022 were also quite impressive when the realized capital reached US$2.69 billion, up 7.2% over the same period in 2021, representing the decision interest of foreign investors to increase investment in Vietnam. The number of new investment projects increased by 45%, showing the confidence of foreign investors in the Government’s safe and flexible adaptation to the COVID-19 epidemic. Therefore, exports of the FDI sector increased again in February, with a trade surplus of over 3.9 billion USD including crude oil.
The Government continues to improve the system of policies on FDI and improve the quality of FDI management via building a digital government that will ensure the achievement of the set targets for foreign investment in the country in 2022 as well as in the period to 2025 and 2030. Resolution 50-NQ/TW dated August 20, 2019 aims to perfect institutions and policies, and to improve the quality and efficiency of foreign investment cooperation until the end of the year. Vietnam will be the destination of choice for new FDI projects that Vietnam desires. Innovation-creation-development is the guiding principle of the economy, in which attracting FDI capital is always focused by the Ministry of Planning and Investment.
Resilience towards COVID-19 impacts
The global impact of COVID-19 in 2020 was enormous, and Vietnam was no exception; nonetheless, Vietnam suffered from less influences than most nations. From 2002 to 2020, GDP per capita increased 3.6 times, reaching nearly 3,700 USD. The poverty rate (according to the standard of 1.9 USD/day) dropped sharply from more than 32% in 2011 to less than 2%. Thanks to a solid foundation, Vietnam’s economy has shown remarkable resilience in times of crisis, most recently the COVID-19 pandemic. GDP growth slows to 2.58% in 2021 due to the arrival of the Delta variant but is expected to recover to 5.5% in 2022 (The World Bank 2022).
According to economic estimates provided by the General Statistics Office (GSO), Vietnam’s GDP increased by 5.03 percent in Q1 2022 (January-March) compared to the same period last year. However, growth was down from 5.22 percent in the fourth quarter of 2021. Nonetheless, the government agency indicated that Vietnam is on pace for economic recovery (General Statistics 2022).
International Trade Agreements
Vietnam has been proactive in participating into Free Trade Agreements as a basis for long-term economic stability, even when major domestic compromises have been demanded. Vietnam is now a signatory to the following agreement (International Trade Administration 2021; Center for WTO and Integration 2021):
- 150th member of the WTO in 2007
- Comprehensive and Progressive Agreement for Trans-Pacific (CPTPP) with 10 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore.
- ASEAN Economic Community,
- ASEAN Free Trade Agreements with Japan, South
- Korea, India, China, Hong Kong, Australia and New Zealand
- Bilateral Free Trade Agreements with Chile, South Korea, Japan and Israel,
- Vietnam – Eurasian Economic Union Free Trade Agreement
- Vietnam – EFTA States Free Trade Agreement
- Vietnam – UK Free Trade Agreement
- Regional Comprehensive Economic Partnership (RCEP)
- EU Vietnam Free Trade Agreement
Vietnam is also a signatory to more than 70 Double Tax Treaties, and along with the increasing Free Commerce Agreements, Vietnam sees itself as occupying a core and solid position within the bounds of international trade.
2. Vietnam Market Entry – Guideline 2022:
With highly skilled and experienced consultants in Vietnam, we are on the ground to listen and understand the local context, that’s why we can share a few points to help you understand the process and essential steps to successfully enter the Vietnamese market.
Market Entry Framework
Market research is the first step toward a successful market launch in Vietnam. It might help investors acquire insight into the country’s ever-changing market and develop business plans appropriately. It enables a company to remain competitive in the market while reaping optimum profits.
|Potential||Competitive Landscape||Company Capabilities||Financial Implications|
|Market Overview||Number of players||Minor capability gaps||Expected costs of entering the market|
|Market Size||Competitors Analysis||Significant capability gaps||Expected revenues of entering the market|
|Market Growth Rate||Market shares||Ability leverage synergies with existing capabilities||Expected profits from entering the market|
|Business Profitability||Competitive advantages from opponents||Relationship with distributors/suppliers||Duration for break even|
|Local Demographic||Differentiation/Unique Selling points||Company Maturity based on 6 factors:|
People: organizational process, leadership, cultureTechnology: Tools, data, ecosystem
|Expected return on investment|
|P.E.S.T.L.E Factors||Target Audience|
|Substitutes chances||Benchmarking||(Un)Favorable financial position to enter the market|
|Level of entry barriers||Industry Analysis and trends|
Strategic, core and foundational capabilities
|Niche Market trends|
|Sales and Traffic Sources|
Market Entry Process
The market entry plan requires a comprehensive understanding of options and structures existing in Vietnam, along with restrictions that can apply. Vietnamese enterprises are only authorized to activities for which they are licensed, and while foreign investors are permitted to engage in the bulk of commercial operations in Vietnam, there are limits. Care should be given to understand the needs or abilities to do desired actions. This will have an influence on the suitable structures and processes while entering Vietnam.
Ensure your market entry to Vietnam with Innovation Lab (InnoLab Asia)
Lucrative as it is to operate business in Vietnam, foreign investors/enterprises should be highly aware of every aspect of Vietnam’s market entry without any misinformation or insufficient steps. Company formation in Vietnam entails a number of time-consuming and unduly formal procedures. Having business registration professionals on your side may save you considerable time/efforts and offer you a smooth entry into the Vietnam market.
InnoLab Asia promotes Stakeholders Within The OPEN INNOVATION Ecosystem where we present ourselves as an intermediary between startups, corporates and government/NGOs. Therefore, we possess the ability to be flexible, relevant and understandable of your situation thanks to diverse perspectives. Moreover, our ecosystem is enriched with participation of different stakeholders that ensures qualified networking and support whenever in need. Notably, we run incubation and acceleration programs for enterprises in need of development or improvement in every aspect of their business. InnoLab Asia provides a resource-rich program designed to help startup founders and select entrepreneurs to pursue entrepreneurial ventures while diving deep into the world of innovation.
Regarding the above-mentioned capacities, InnoLab Asia can offer your enterprises a wide spectrum of services with existing resources and transparent guidance to enter the Vietnam market. Your success is our success, and thus we help your business GROW.
Let’s start by filling out the form below and talk to one of our professional counselors.