Investing in Vietnam is a lucrative idea for foreign investors, who want to spread their businesses in Southeast Asia. The country has various advantages that easily attract foreign investors. For example, political stability and a young population make the country investment-worthy. On the other hand, trade openness also makes investors keen on investing in this country. However, investing in Vietnam is not a simple procedure. You must have a robust strategy in place for a seamless Vietnam market entry.
Firm Strategy and Firm Resources
Market entry strategy is not a straightforward thing since it includes various factors. There is no proven formula in this regard. Therefore, investors should plan their market entry strategies by analyzing the market conditions, present trends, political scenarios, and more. Hiring an expert for the Vietnam market entry can prove effective in developing robust strategies.
An investor looking forward to investing in Vietnam can embrace various market entry methods. The methods can be broadly divided into five categories, which are licenses and franchises, exports, wholly-owned subsidiaries, joint ventures, and alliances. Deciding between these options can be a challenging task, especially when you do not have an organizational structure in place.
Choosing the wrong organizational structure could prove costly for the investors at a later stage. Therefore, it is important to pick the right organizational structure to develop a stable and profitable business in Vietnam. Investors who are not sure about choosing the right organizational structures should consult a professional Vietnam market entry strategist.
Various Incorporation Options
Companies or investors interested in Vietnam market entry should be aware of various legal entities that they can form in this country. So, here is a detailed guide on the entities that investors can form in Vietnam.
- Limited Liability Company: A limited liability company is suitable for small and medium companies. This company incorporation is simple since it requires only one founder. So, individual investors can leverage the benefit of this type of company incorporation.
- Representative Office: A representative office in Vietnam is the most suitable option for foreign investors, who want to perform market research to access the local market. But, the problem with this structure is that it does not allow generating income.
- Branch Office: The branch office structure is a subsidiary of the parent company. You can perform all commercial activities that the parent company uses to perform. The biggest advantage is that you do not need to create separate legal businesses in Vietnam with this structure.
- Joint Stock Company: The medium and large businesses in Vietnam can choose the joint stock company structure. This particular company formation requires at least three founders or founding members.
The investors do not need a minimum capital to start a new business in Vietnam. However, the businesses must pay the charter capital within 90 days after receiving the business registration certificate.
Entity Incorporation in Vietnam
The government prioritizes foreign direct investment for a higher capital injection in Vietnam. The investors have to make formal applications in this regard. The application will be reviewed by the authority, and approval depends on a few factors. One of the major reasons behind the application rejection is low capital.
Vietnamese Government Incentives
The Vietnamese government has rolled out multiple incentive programs to support and encourage foreign investors and local businesses. Vietnam’s government has a serious outlook toward foreign direct investments since it improves the country’s overall economic growth. At the same time, Foreign Direct Investment (FDI) also addresses job creation since Vietnam has a high percentage of the youth population.
- Corporate Income Tax: The Vietnamese government has lucrative incentive programs for investors according to their investments. Moreover, further incentives are available according to the industry, location, and size.
- Import Duty Exemption: The import duty exemptions are provided to the projects that are part of the promoted sectors of the Vietnamese government. Businesses investing in these sectors will obviously fetch more incentives since the government prioritizes these projects.
- Land Fee Rental Exemption: Several investment projects in Vietnam feature the land rental fee exemption. Such incentives have been offered to promote businesses in certain geographic regions.
Final Words…
Vietnam draws the attention of foreign investors from various countries for many reasons. Firstly, the country has an amazing talent pool. Secondly, the country is developing quickly in the last few years. Lastly, government incentives are fetching the attention of the investors. Keeping these factors in mind, this is the ideal time to invest in Vietnam. Find a professional consultant to optimize your market entry strategies for Vietnam.
