Both local and a foreign country manager in Vietnam can draw many parallels between the ways of entering business. Why should you plan ahead opening a bank account or recruiting foreign staff?
This blog post lists most common pillars for both local and foreign country managers to follow prior and post company incorporation in Vietnam.
Before Registering a Company and Becoming a Country Manager in Vietnam
#1 Choosing Business Lines in Vietnam
One of the first difficulties arises when you must decide on choosing company’s business lines. You will come across with different aspects of business along the way but before anything, concentrate on what will be your main activities during the first 6-12 months.
How it works in Vietnam is you start off by indicating the activities your company will take upon in the first place. Then think of expanding and providing more services. If you are in a hurry with getting your company registered, note that you can add more complicated business lines after the incorporation. There are some fields of business activities that require an approval from Ministry level. For example, if your line of business is related to:
If you have done business in Vietnam before, this may not come to you as a surprise. Nevertheless, keep this in mind as this is one of the reasons for a longer registration process.
In some cases, it is possible to avoid a long company incorporation process. For example, if your company does not conduct all the activities as its overseas affiliate or will do some activities later, once the need occurs. In such conditions, you can apply only for the easiest business line available, avoiding long company set up and getting you on the market the quickest. It is possible to add business lines once the company is registered.
#2 Applying for a Work Permit in Vietnam
Will there be foreigners working in your company? If so, are you familiar with the budget, timelines and process of applying for their work permits? Note that if you yourself are a foreigner, becoming a country manager in Vietnam, you need to apply for it too.
If you are an investor as well as a board member, you do not need a work permit in Vietnam. However, not being an investor, you still need the permit.
Tip: You can not process your work permit before the company is registered. Meanwhile, you will win time by collecting all the necessary documents for submission.
Collection of the documents you need to start processing a work permit in Vietnam can take 3-5 weeks as some of them must be legalized beforehand.
As getting a work permit can be time-consuming, you might want to act sooner rather than later. Therefore, do not postpone getting familiar with the process and collecting documents. You will be asking yourself why after the incorporation is done, busy times have arrived and planning a visa run to a foreign country will be the last thing on your mind.
#3 Set Up Accounting System From Day One
Vietnam is using its own principles for accounting. Therefore, one of the most crucial points for a future country manager in Vietnam is to have a system in place for accounting from day one. Essentially, you must know your way around accounting documentation before your company starts handling bigger transactions.
The parent company/investor can authorize a country manager in Vietnam to make expenses on behalf of the company before it is registered. All your company expenses can therefore be recorded under accounting.
Only make sure you collect receipts and agree to receive VAT invoices after the company is registered.
#4 Opening a Business Bank Account in Vietnam
Has it already crossed your mind which bank you will trust to handle your company’s accounts? Think about banking and in which bank you want to open your bank account.
For the reader’s whose eyes are on an international bank, know that you should prepare a bit of extra time. There might be some delays and they mainly occur for two reasons:
- Process with international banks is usually lengthier as you need a reference letter from the parent company’s branch
- The communication between the bank in Vietnam and the bank abroad is not always as smooth as you would expect
Try to be ahead of time with choosing your banking partner and creating an account. Best is to get the processes started before receiving the business registration certificate.
After Company Incorporation in Vietnam
#1 Contracts Must Apply to Local Regulations
You might need more than your two hands to count down the countries you’ve been to and maybe even done business in. Your expertise will come in handy when being a country manager in Vietnam. Nevertheless, leave some of it aside when drafting agreements and concentrate on the local requirements.
Each country has its own customs and standard procedures. Hence, these documents must strictly apply to local regulations. To have a good head start, you must follow them.
It is common that the language of your contract in Vietnam is English and reusing a template contract from other offices registered abroad is suitable. However, there are differences in each jurisdiction. Only sign a contract that is written in a language both you and your partner fully understand.
Terms and Conditions in Vietnam
Several businesses sell their services without asking you to sign a contract. A perfect example is the e-commerce industry. To prevent any abuses, companies who do not give out contracts still wish to discipline the users on how their products must be handled or what the client should acknowledge when conducting the purchase. Often used and handy alternative is adding the Terms & Conditions (T&C) clause. Hereby note that it is a must to present these paragraphs in Vietnamese as well.
In case you feel uncertain about your contract or T&C translation, have it reviewed before signing or publishing. Unless you have a partner in Vietnam already, Emerhub can either review or compose the translation for you.
#2 Employment Regulation in Vietnam
How will your company handle its recruitment processes? Labour regulations in Vietnam may look slightly different to what you are used to in your home country.
Another reason for planning ahead and looking for the employment regulation beforehand is that it might be different to what your group’s standards are.
While the probation period in Vietnam is two months, your group standards may see a four-month probation instead. Picture a situation where you wish to terminate an employee’s contract due to probation after three months passing. By the laws of Vietnam, this means your company is in violation. There are two solutions in case of a dispute:
- Rehire the employee
- Do not rehire, but pay higher compensations
More thoroughly on hiring foreigners in our recent blog post Employing Foreign Workers in Vietnam.
#3 Compliance in Vietnam
One of the keys for a country manager in Vietnam is knowing the local compliance. Thus, at this stage, make it a priority to familiarize yourself with the requirements. Reports about your activities need to be submitted throughout the year. To best keep track, here is a list for you:
|Compliance based on events
Find us covering company’s compliance requirements in a separate blog post Corporate Compliance in Vietnam: A Year in the Life of a Foreign Company.
Choosing Business Location in Vietnam
There are two key points a country manager in Vietnam should consider when it comes to location:
- Choice of business location is oriented towards the needs of staffing or clientele
- Business is done either in a rented office space or a virtual office
Using a virtual office in Vietnam helps cut back high operating costs and skip paying rent for a physical rented office. Depending on your company’s needs, virtual office may be a convenient solution in terms of staffing and operating your business, allowing more flexibility. For example, this format is well used in the field of e-commerce. Once you have the virtual office with an address in Vietnam, you are able to set up a company as well.
Think whose interests are you accommodating first and foremost? Is you choice of location based on knowing where you clients are or knowing how efficient you manufacturing is going to be? Both are equally important to consider, depending on your field and demand for business. Plus, staff availability and salary expectations in areas may vary significantly.
What might help you decide is knowing that there are four different minimum wage regions in Vietnam. It has just recently been announced what will be the level for 2018.
|Minimum Wage 2018
|VND3.98 million (~ $US 175)
|VND3.53 million (~ $US 155)
|VND3.09 million (~ $US 136)
|VND2.76 million (~ $US 121)
Region I refers to Ho Chi Minh City and Hanoi with highest minimum wage levels, IV to the rural with the lowest.
For a more thorough overview on the same topic, read our post Is Hanoi or HCMC a better business location in Vietnam?
Hiring Support Staff
Hiring an assistant has probably crossed your mind. What are the main qualifications you are looking for in your new employee? How will choosing an assistant with the right skill set help you achieve your goals as a country manager in Vietnam?
For example, assistant’s efficient English proficiency might save you time, money and energy when handling international business. However, processes, like requesting VAT invoices and organizing office renovation, go smoothly if you have someone on your side that speaks Vietnamese. Also, hiring a person fluent in Vietnamese means that your company can hire a contractor that cannot speak English and thus provides local prices.
Read our previous article to learn when is the best time to hire employees in Vietnam.
In case of unanswered questions about becoming a country manager in Vietnam, reach Emerhub by filling the form below.