Invest in Vietnam: The Dos and Dont’s for foreign investors

Learn about the common mistakes to avoid when setting up a new company in Vietnam as a foreign investor and ensure successful incorporation.



Foreign investment in Vietnam has been on the rise in recent years, with many foreign businesses looking to tap into the country’s growing economy and favorable investment climate. However, investing in Vietnam can be challenging, and foreign investors must navigate a complex regulatory environment, cultural differences, and other potential pitfalls.

In this article, we’ll explore some of the common mistakes that foreign investors make when expanding to Vietnam and provide tips on the dos and don’ts of foreign investment in Vietnam.

Mistake #1: Lack of market research when investing in the Vietnamese market

A common mistake when investing in Vietnam is the lack of market research. Many businesses enter the Vietnamese market without understanding local behavior and preferences. Without this information, they struggle to tailor their products and services to meet local demand. 

Mistake #2: Ignoring the language barrier

Vietnamese is the official language of the country, and English is only used in business and tourist hubs.  Hiring local employees fluent in both Vietnamese as well as English helps bridge the language gap when setting up your company in Vietnam. They provide valuable insights into local culture and business practices.

Mistake #3: Thinking you need a local partner for all types of businesses

Assuming that you always need a local partner is a common mistake when setting up a company in Vietnam. A local partner is only required in certain industries such as tourism, marketing, advertising agency, and transportation. Several industries, including IT, trading, consultancy, and manufacturing businesses, allow 100% foreign ownership.

Mistake #4: Registering a company with insufficient capital investment

To set up a company in Vietnam, there is no minimum capital, but you have to consider the following key points:

  1. Proof of funds: The government requires proof of funds in your bank account to cover your planned expenses. 
  2. Planned capital: It generally includes the rental fee, equipment cost, employee compensation, and benefits when setting up your company in Vietnam. 
  3. Rental fee: The capital for any business renting a space should cover rental fees for the first 6 to 12 months. 

Emerhub helps businesses maintain financial transparency and follow local tax laws.

Mistake #5: Disregarding local competitors in the market

Foreign companies sometimes forget to consider local competitors when entering a new market. While it’s great to have a first-mover advantage in a specific industry, having no competition can be a red flag about market demand. It is important to learn from competitors in the market and make a wise move when setting up a company in Vietnam

Mistake #6: Engaging with an unreliable local partner when setting up a company

Foreigners should check their options when engaging with local business partners to invest. Using an unreliable nominee or partnering with a friend to bypass regulations may result in financial loss, legal issues, or loss of control. 

Foreign investors struggle to understand the local laws and tax reporting regulations for a business in Vietnam. Quarterly compliance requirements include payment of Value-Added Tax (VAT), Corporate Income Tax (CIT), and personal income tax. 

Emerhub assists your business to meet legal requirements in Vietnam.

Mistake #8: Not exploring other options for doing business in Vietnam

Opening a company is not the only way to do business in Vietnam. You should learn about all the available options to find the best one for what you intend to do. Some of the other ways to conduct business activities in Vietnam are:

Employer of Record (EOR)

Employer of record service enables you to hire and manage employees in Vietnam. An EOR like Emerhub onboards, pays, and manages your employees in Vietnam while you maintain and control the day-to-day operations. 

Importer of Record (IOR)

Importer of Record (IOR), such as Emerhub, helps you import goods into Vietnam without the need to set up a local legal entity or get import licenses. This means you can save time and avoid the hassle of dealing with complex regulations. It is also the quickest and most efficient way to import.

Emerhub assists in finding the best option for your business

Choose the right partner for your business in Vietnam

With careful planning and preparation, you can avoid making mistakes when setting up a company in Vietnam. Emerhub helps you register your business in Vietnam. It ensures compliance so that everything goes without a hitch. Fill out the form below to get a free consultation from our experts.

Let's grow your business in Vietnam

Get in touch with Emerhub by filling in the form below and our consultants will reach out to you within a few working hours.

More articles from Vietnam

Talk to our consultants now