(Source: photo by Re’hahn)
In 1986, the Vietnamese Government launched a process of economic renovation, called Doi Moi. Since then, the country has made tremendous strides to become one of Asia’s high growth emerging markets. Although Vietnam’s economic growth decreased over the past years to 5-6%, investors remain positive about Vietnam’s opportunities due to its unique geographic position as a gateway to regional market, its growing domestic market and its young and hardworking population. In addition, Vietnam is a member of WTO and regional forums, such as the Association of Southeast Asian Nations (ASEAN) and is currently negotiating several Free Trade Agreements (FTAs), including an FTA with the EU and the Trans-Pacific Partnership (TPP).
But these are not the only reasons why the Netherlands is one of the biggest EU investors and trading partners in Vietnam. The similarities between our countries make us natural partners in many fields. Both our countries are world players in the export of agricultural products. We are both coastal states with a strategic location in regional markets making us natural partners in maritime affairs, transport and logistics. As delta countries we must both face the challenges and opportunities presented by water and climate change. But in other areas our countries have a lot to offer to each other as well, such as on oil and gas, renewable energy and chemistry.
Agriculture is one of the most important economic sectors in Vietnam. Besides production for an increasing domestic demand, Vietnam is a major exporter of agricultural products. Business opportunities are abundant at all levels of the value chain, as production levels continue to improve through the application of intensive farming and advanced technologies. Dominant crops include coffee, rubber, cashew and rice. In more recent years, aquaculture and fruit production have grown substantially and are export-oriented as well. Surging domestic consumption combined with increasing demand for high value products have also pushed imports of agricultural products into Vietnam, with meat and meat products enjoying the highest growth figures, followed by rubber, animal feed and feed grain, sugar and cotton. The Netherlands and Vietnam have been longstanding cooperation partners on agriculture.
Delta and water technology
Vietnam is one of the most vulnerable countries to climate change. The risks for the country’s industry and agriculture are substantial. The Netherlands and Vietnam have been longstanding cooperation partners on water and climate change. In 2010 the two countries signed a Strategic Partnership Arrangement (SPA). Under the SPA an integrated, long-term Mekong Delta Plan was developed to respond to climate change and to ensure the sustainable socio-economic development of Mekong delta. In addition, both countries are working together on the development plan called ‘Ho Chi Minh City moving towards the sea with climate change adaption’. The implementation of these plans do provide interesting business leads for Dutch companies with expertise on delta technology, food security, urban water management, water technology, governance, capacity building and on related sectors, such as the maritime industry, energy and agriculture.
With its long coastline, strategic location and low labour costs, Vietnam’s shipbuilding sector is an interesting location for Dutch shipbuilding companies producing for third markets and equipment suppliers. Several major Dutch companies are already active in Vietnam’s main areas for shipbuilding: Haiphong, Danang and/ or Ho Chi Minh City.
Vietnam is endowed with various energy resources, including oil and gas. In line with its remarkable economic growth, domestic energy demand in Vietnam continues to grow significantly. Expansion and maintenance of its energy infrastructure – including refineries, power plants, oil storages and LNG facilities – provide interesting business opportunities for Dutch companies active in the oil and gas sector and related areas.
Transport and logistics
Although Vietnam’s infrastructure is still poor, it is developing rapidly. The supply of equipment, engineering, dredging and consulting services are interesting. The logistics industry is one of the fastest growing industries in Vietnam, but poor infrastructure is increasing costs for logistics. The main logistics hubs are currently Hanoi, Danang and Ho Chi Minh City.
Do’s and don’ts in Vietnam
Before coming to Vietnam, good preparation is essential. Get to know about the country and its culture, as well as the economic and political climate. Make good use of the knowledge and services available from branch organizations and government authorities. Talk to entrepreneurs with experience of doing business in Vietnam.
Building and maintaining good relationships is essential for doing business in Vietnam. A reliable local partner can speed up the preparatory work considerably.
Understand business etiquette
- Do prepare some business cards, as they are important and widely used.
- Do call Vietnamese people by their first name; this usually appears as the last part of their full name (i.e. Mr. Nguyen Van Hai, so call him Mr. Hai).
- Do find reliable interpreters as English is not widely spoken in Vietnam.
- Do not be surprised if Vietnamese people are smiling or laughing, even if you feel that the circumstances do not warrant such behavior.
- Do show up exactly on the agreed time either for dinner or working meetings, especially at meetings with the authorities and introductory/first business meetings.
- Do avoid conflict (loss of face) and be patient. Very often things do not move at the same pace as in the West.
- Do follow-up immediately in writing any agreement you feel you may have reached. Yes, may not mean “yes”. It may mean “yes, I understand what you are saying”.
Know your challenges
Vietnam has a lot to offer, but there are undoubtedly many challenges in doing business here.
- Understand where to expect challenges: culture and language, laws and regulations, intellectual property rights, trade barriers, logistics, personnel and bureaucracy.
- Develop a solid business plan and do market research: set clear goals and ambitions, know your niche market and know about your competitors. Without this background knowledge, starting a successful business operation is most unlikely.
- Make sure you do due diligence prior to entering into contracts or other commercial arrangements and don’t underestimate the need for quality checks in Vietnam.
- Corruption can pose a serious barrier for doing business in Vietnam. The Embassy and Consulate General offer counseling to avoid corruption and reduce the risks of doing business in Vietnam.
- The Netherlands Government supports enterprises which implement Corporate Social Responsibility (CSR). Enterprises should put in place a process to integrate social, environmental, ethical and human rights concerns into their business operations and core strategy in close collaboration with their stakeholders.
How can we support your business?
Contact us for advices if your main services are as follows:
- Finding potential business partners;
- Providing information on sectors and rules and regulations;
- Supporting trade missions and visiting programs to Vietnam;
- Organizing meetings with relevant authorities at local, provincial or government level ;
- Monitoring business opportunities;
- Trouble shooting and assistance in conflict situations;
- Advising on available instruments and services;