Business Development Opportunities In Vietnam: What You Should Know – JDI Group

Expanding overseas for business development opportunities is a huge milestone for many businesses. Be it to acquire new sales, investment opportunities, tech talent and more, expanding to a new market demonstrates a scalable business that can optimize its value to its highest potential.  

However, venturing overseas requires a high level of commitment and it can be a difficult decision as the world is full of potential markets for businesses to choose from. 

Thus, this article aims to uncover why Vietnam should be on the top of your list for business expansion. 

What Are The Benefits Of Overseas Business Expansion?

Let’s do a quick recap on why we should expand operations internationally and how Vietnam gained its current spotlight in the business development community. 

When it comes to overseas expansion, there are  three main driving forces to scale beyond domestic shores:

1. 1. 1. 1. Cost and Availability of Talent

            –– For many businesses, labour can dominate the majority of overhead expenses. Experts have identified Vietnam as a low-cost and highly effective labour market, which has also earned them a reputation as a popular outsourcing destination.

         2. Expanded Consumer Markets

             –– Venturing overseas into a new market can provide access to a much larger base of customers and push the limits of your company’s revenue-generating capacity. 

         3. Beneficial Free Trade Agreements

            –– Free trade agreements are attractive as they reduce import costs, increase export competitiveness, create market access and generate more investment opportunities.

So many countries in the ASIAN region meet those factors with Vietnam taking the top ranks. In fact, it is  nominated by the Standard Chartered Bank as one of the top destinations for business expansion in 2021.

Business Development Opportunities: Why Expand To Vietnam? 

Significant Growth Opportunities: An Untapped Market

The early bird catches the worm. We’ve all heard about the early mover’s advantage, but in reality, it is much more challenging to apply than theorized, especially in a mature market such as Singapore’s. 

Hence, it is worthwhile to explore the opportunities offered by a new, untapped market –– and experts believe that Vietnam is the way to go.

Financial Services

You’d be surprised to find out that only 60% of Vietnam’s population have bank accounts. However, despite cash dominating a significant portion of transactions, the prospects of non-cash payment in Vietnam remain positive. 

The Vietnamese government has made it an agenda to ease the country into the modern era of digital payments, pushing forth a series of regulations to harness the potential of digital transformation. 

As digital transformation efforts are still at an infancy stage, there are still plenty of opportunities for new products and measures. This movement is also expected to be further catalyzed by a young, tech-savvy population with a higher mobile penetration rate and access to digital payment systems. 

Consumer Goods

With a booming population of 98 million people and 70% below 35, Vietnam is the 10th largest consumer goods market in Asia. Consumer confidence has also seen substantial growth over the past five years, owing to its rapid population growth and emerging middle class. 

Among a broad spectrum of consumer goods, the expenditure on mobile phones, digital cameras, and other gadgets has risen over the years. However, online & digital channels of commerce have yet to take off in Vietnam completely.

As a result, experts believe that we can expect the demand for e-commerce to continue to soar as internet penetration and household income continues to grow. This would generate valuable opportunities to introduce products and services that would establish the online marketplace as Vietnam’s mainstream mode of commerce.

Skilled & Affordable Labour Force

With a relatively young population, Vietnam is the 2nd largest labour market in ASEAN. Not only are they strong in numbers, but Vietnam has also been commended internationally for its increasingly tech-savvy population and strong government support. 

In becoming an IT nation, the government has heavily invested in computer science and engineering as part of its curriculum. Therefore, Vietnam boasts a strong force of 250,000 young and capable engineers, passionate about upgrading themselves and integrating cutting edge technology into their work. 

For most early-stage tech companies in Singapore, human resources make up most operational costs, with the IT team being the most costly. 

In Vietnam, a mid-senior developer or software engineer with five years of experience would draw a monthly gross salary of approximately US$2574. That is almost only half the salary of an equivalent employee in Singapore! 

In other words, with the same budget, you would be able to have twice the amount of employees in Vietnam. 

Great Business Environment

As the government is heavily invested in making Vietnam an attractive business destination, many beneficial regulations and laws are passed to encourage a greater flow of business and investment. In fact, Vietnam has built itself an excellent network of Free Trade Agreements (FTAs) that allows its businesses to enjoy the benefits of international trade at low barriers to entry.

These trade networks provide special privileges to domestic manufacturers and retailers in the form of cheaper imports from partner countries and higher competitiveness of Vietnam’s exports. 

On top of its FTAs, the Vietnamese government is also concerned with further reforms such as strengthening the banking sector, removing corruption, refining legal and tax structures, and improving trade facilitation. 

Expanding to Vietnam will allow your business to benefit from the well-built network of FTAs along with preferential business regulations that would help your business compete internationally.

Overseas Business Development Challenges

Legal and Tax Considerations

Every country is subject to the legal and tax regulations that govern their businesses; Vietnam is no exception. Therefore, it is essential that you thoroughly understand the legal implications and disclosure requirements of setting up shop there. 

New entrants to Vietnam may find it challenging to deal with the country’s tax system complexities. This is due to the unfamiliarity with tax laws such as the individual income tax (IIT), social security costs, VAT, withholding tax and business tax. 

Doing your tax and legal due diligence will help you evaluate your potential tax liabilities and improve the accuracy of your financial projections.

Operational

A solid and reliable local talent team will form the bedrock of your business. So, naturally, you would want a team that understands the culture, market nuances and has a strong understanding of your business and the country’s regulatory landscapes and policies.

Hence, attracting the right local talent is extremely important! However, many new companies lack the reliable networks needed to find the right fit for their business and often benefit from 3rd party talent agencies to ease this process.

Conclusion

Entering a foreign market is a feat for any business. Hence, having a third-party insight and advice into your business development in a new market would undoubtedly help you cut a few corners and get your engine going as quickly as possible. 

At JDI, we have assisted countless companies in their efforts to enter the Vietnam market. Thanks to our experience with a broad portfolio of clients, we have amassed a vast amount of insight into the Vietnam market across many industries. 

Our strong local networks have also helped us seek out the best local talent for each business’s needs in a timely manner. If you think you have what it takes but still unsure, please contact us for a quick detailed consultancy.