Doing business

Current business situation

The Department of Foreign Affairs and Trade’s Smartraveller site provides advice for business travellers and tourists going to Laos. This is regularly updated, and should be checked before planning travel.

Business culture

Learn and understand the social and business culture. Laos is a Buddhist country and an understanding and observation of important religious practices and ceremonies, when they happen and how the religion influences the working culture of Lao people will be a significant advantage. Although English is widely spoken, a basic to intermediate understanding of the Lao language will not only make communication easier, but be viewed as a sign of respect to the country and its people. If possible, a business card in both English and Lao language on the reverse side should be presented during the initial greeting.

Lao people should be addressed by their first names, preceded by their title ‘Mr/Madame’ or ‘Than’ (pronounced ‘Tarn’ and used especially if they occupy a position of respect).

Attending and organising social engagements such as dining out or playing golf are useful to create a level of mutual trust and understanding between business partners. Foreign businesses who have been successful in Laos have taken considerable time to build relationships with relevant business and government contacts.

While English is becoming more widely spoken, foreigners should learn at least some basic Lao Language and try to ascertain when meeting someone for the first time whether they are fluent in English and if not, hire an interpreter to ensure a smooth meeting and follow-up. While the Lao language is very different to English, Lao people will sincerely appreciate any efforts to learn their language and basic greetings, even if mispronounced, will act as a good icebreaker in business dealings and show that you are keen to understand the Lao culture.

Face-to-face contact is very important in initial dealings with Lao people and a capacity to understand (often) a very different set of viewpoints. It is important not to become angry or frustrated with Lao counterparts. Foreigners should take care to avoid a confrontational or aggressive style in their business meetings; aside from being rude and unnecessary, this can cause a ‘loss of face'. Lao people are generally not direct or forthright in their dealings and take to subtle, rather than blunt messages. Lao people may often say yes to direct questions, but this may only mean that they hear and understand you.

It is very important to determine at the outset in any business dealings the hierarchy and seniority of whom you are dealing with and those responsible for decision-making. Decisions can often take a considerable length of time as they are relayed up and down the chain of hierarchy that exists within companies or government ministries.

A small token of gratitude in the form of a gift is always appreciated when visiting a Lao counterpart. Gifts should always be offered with the right hand. If wanting to be particularly polite, foreigners should support their right elbow with the fingers of their left hand. Before entering a Lao home, shoes should always be removed.

It is considered rude to point with your feet, particularly the soles of your feet, towards a person or object; use your hands instead. Try to avoid doing so when sitting opposite anyone. Tuck your feet away under your body when sitting on the floor or on a chair.

Bargaining is expected in most commercial transactions, although Lao people are generally gentle negotiators.

For men, clothing such as shirt and trousers are appropriate for business meetings, with a jacket and tie generally worn for more formal meetings and occasions. Women usually wear long skirts (called a ‘Sinh’) and blouses which cover their shoulders and upper arms. Very short dresses and skirts and brief tops should be avoided. Always try to wear fabrics that are suitable in very hot weather.

Setting up in Laos

Due Diligence

Start by investigating the current state of industry you are entering. In many cases, it may not be as developed or competitive as what you are accustomed to, and you will need to project how big the market may be, how you plan to develop and commercialise it to make it sustainable. There are numerous Australian companies in Laos as well as many examples of successful foreign owned small-to-medium sized companies operating there. Many have been industry pioneers in Laos and enjoy a significant market share due to this. Reaching out to these organisations, either directly or via AustCham Lao will give you an instant network of people that can advise you.

Regulatory Environment

As in any country, it is important to understand in some detail, the regulatory, compliance and taxation requirements and how these are administered in Laos. These requirements will differ from industry to industry and understanding them as well as possible before starting the business can avoid unnecessary risk and surprises down the track. Further information on regulatory, compliance and taxation requirements is available from the appropriate Government body, seeking local legal advice and/or speaking with other members.

Technology and Staff development

Since Laos is currently developing in most sectors and industries, technology and automation of processes will not be as prevalent as you are accustomed to. This may mean that you need to dedicate more time, detail and patience to certain areas of your business, particularly in the early stages. Laos, along with the Australian Government and other foreign organisations, is developing the secondary and tertiary education, and professional development framework. Some Australian companies have successfully implemented internal training and development programs for Lao staff to ensure the leadership positions within their organisation will be held by Lao people in future. Ensuring you have detailed business processes in both English and Lao from an early stage in the company, along with committing a certain amount of time and capital to training your staff, will ensure better results in the short-term, and help to ‘future- proof’ your business as it evolves.

Links and resources

Government, business and trade

Austcham Lao
Australian Embassy in Laos
Australia in Laos - Facebook
Laos PDR Trade Portal
Ministry of Industry and Commerce
Ministry of Planning and Investment
European Chamber of Commerce and Industry – Investment Guide

News and media

The Vientiane Times

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.