Exporting to Vietnam

Vietnam is an exciting place to do business. There is a large, young population and a growing middle class. The economy is growing fast and government reforms will open up markets for UK companies (IMF, 2019).

Growing economy

Vietnam grew 7.1% in 2018 (IMF, 2019), the highest for a decade (World Bank, 2019).

Open to international business

Vietnam has moved up the World Bank’s ease of doing business rankings in recent years. The government is making changes that will open the country up to foreign businesses.

Ease of doing business

69th

out of 190 countries (World Bank, 2018)

Currency

Dong

Business language

Vietnamese

You are likely to need a translator

GDP per capita

$2,551

UK is $42,558 (IMF, 2018)

Economic growth

7.1%

(IMF, 2018)

Time zone

GMT +7

Opportunities for exporters

There are opportunities for UK companies across a broad range of industries. Our trade advisers in Vietnam have identified particular opportunities for UK businesses in the following sectors

Doing business in Vietnam

Preparing to export

Taxation

The UK and Vietnam have signed a double taxation agreement, meaning the same income is not taxed twice.

VAT

If you’re registered for UK VAT, it may be possible to zero-rate the goods you export to Vietnam, provided certain conditions are met.

VAT applies on the value of imported goods, and importers pay it at the same time as they pay import duties. Different rates of VAT are applied to different goods and services, but generally the rate is up to 10%.

A Special Sales Tax (SST) applies to the production and import of certain goods including cigarettes, alcohol and most vehicles, and to services such as casinos, gambling, lotteries and golf clubs.

Intellectual property

As a first step, we advise you to speak to an intellectual property (IP) lawyer if you think you need patent protection when exporting.

Vietnam has IP protection laws, but enforcement is not strong. You’ll need to take measures to protect your IP before exporting.

For further help and information, contact the National Office of Intellectual Property of Vietnam (NoIP).

Payment terms

Vietnamese companies can prohibit the use of letters of credit because of the cost and collateral requirements from banks.

Payment terms of 60, 90 or 120 days are common.

Standards and regulations

You’ll need to make sure you get the technical licenses you need for your products before you export. The licensing process can take some time.

The Information Centre of the Directorate for Standards and Quality (ISMQ) is responsible for Vietnam’s standards system.

Operating in Vietnam

Business culture

It’s important to develop personal relationships to do business in Vietnam. You should have a local representative for direct exports.

There are also some cultural differences to be aware of. For example, smiles and nods do not mean ‘yes’ to your proposal. You should also present business cards with both hands and use the correct form of address for people. For example, ‘Mr Nguyen Nam Thuy’ would be ‘Mr Thuy.’

Challenges

The State Bank of Vietnam (SBV) imposes strict controls on foreign exchange transactions.

You must get foreign currency convertibility rights from SBV as early as possible. As these are normally part of the investment licence, they’re only given to companies operating in specific industries. Convertibility rights don’t guarantee the availability of foreign exchange.

Next steps

DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.