Entering the market in Vietnam

September 26, 2024

Entering the market in Vietnam continues to attract significant numbers of foreign investors due to its strong economic growth, strategic location, and emerging industries. An article published in Treasury Today highlights the appeal of Vietnam’s market, particularly in the context of Southeast Asia’s economic landscape. However, the path to success in Vietnam requires a broad understanding of operational and cultural challenges.

Foreign investment in Vietnam

Vietnam’s projected economic growth in 2024 is 5.5%, supported by a recovering semiconductor industry and stable growth in the region. Foreign investors from industries like technology, manufacturing, and processing are capitalising on this trend. Leading global companies such as Samsung, Apple, and Intel have made large investments, contributing to Vietnam’s reputation as a growing manufacturing hub. Free trade agreements and improved diplomatic relations with countries like the US and Australia are further opening doors for international businesses.

Challenges in the Vietnamese market

Despite these opportunities, businesses face hurdles when entering Vietnam. Dung Nguyen Hoang, Partner at Kreston VN, warns of several obstacles, including corruption, bureaucracy, legal grey areas, and poor enforcement of intellectual property rights. He also highlights that local companies often struggle to access finance, as most businesses fail to meet the strict credit requirements of Vietnamese banks. Infrastructure and skill shortages add further complexity.

Furthermore, Vietnam’s regional market differences must be considered. For instance, consumers in the north prioritise brand reputation, while those in the south focus on value. Understanding these cultural and economic factors is essential for long-term success.

While Vietnam presents attractive growth prospects, it is crucial for companies to engage local partners and advisors to effectively manage the complexities of entering this promising yet challenging market.

If you would like to speak to one of our experts in Vietnam, please get in touch.