(Last updated: 18 May 2011)

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

Business etiquette

Business tips

Business practices:

• One of the keys to business success in Vietnam is understanding that local customs and behaviours have a significant effect on business relationships. While there are few formal limitations to doing business in Vietnam, there are some informal barriers and practices that differ from Western norms.
• Bureaucratic difficulties are not uncommon, particularly in relation to customs and documentation. However, patience, persistence and sound business advice can help in overcoming these obstacles.
• The exchange of business cards is important. If you have a business card that is in English and Vietnamese, it is good etiquette to present the card with the Vietnamese side facing up. Receive cards with both hands and carry a large supply even for short visits.
• Establishing contacts and networks is easier if the first meeting is through introduction from a known Vietnamese business contact or friend, or through an official channel such as Austrade.
• Personal business introductions are a fundamental way of doing business in Vietnam and ‘cold calling’ is not recommended.
• Bureaucracy and corruption are significant issues but the Vietnamese Government is making a concerted effort to streamline bureaucracy and stamp out corruption.
• Gift giving is widely practiced in business, usually at the end of meetings or during a meal in honour of your guests. Small gifts, such as a company tie or a book on Australia, are suggested. It is customary to send gifts and cards to all of your business associates and contacts just before Vietnamese Lunar New Year, or ‘Tet’.
• Wear business attire similar to what you would wear in Australia, although suit jackets for men are not always required in Southern Vietnam and in the summer months in Hanoi. Women should avoid wearing halter neck tops, or shorts in the more traditional areas.

Language:

• Most of your business contacts in the foreign invested companies will be able to speak English but this may not be the case with government ministries and state owned enterprises. You will need to speak slowly and concisely.
• Make sure your interpreter or local business partner has knowledge of the northern or southern language. The Vietnamese accent and pronunciation is quite different in the north and the south. A number of the better-educated older Vietnamese speak French and/or Russian.
• It is impolite to undermine the authority of a more senior Vietnamese person by directing questions or responding to a more junior person whose English skills may be better.
• When using interpreters, talk to the person you are dealing with and maintain eye contact, talking through your interpreter, not with them. If possible, try to have a Vietnamese-speaking team member. It is also advisable to employ an interpreter who has a good knowledge of your industry.
• The Vietnamese are very polite people and will often smile and agree with you when in fact they may not have fully understood what you have said.
• It is advisable to have bilingual sales literature, including business cards and product manuals, for more complex negotiations.

Business entertainment:

• Eating and drinking are a major part of doing business in Vietnam. Dinners with local agents and customers help to develop networks and give the local agent ‘face’.
• Vietnamese men often smoke during the meal.
• Toasting at banquets and after-dinner activities such as singing are common practices. When cognac or whisky is served at a meal, the custom is for individuals to drink only after a toast is made. The glass should be held in the right hand supported by the left. Returning a toast is standard practice. Common toasts are ‘Tram phan tram ('chum fun chum' = empty your glass - 100 per cent) and ‘Chuc Suc Khoe’ ('chook sook hue' = good health).
• Seating should be arranged so that the Australian host’s party is interspaced with the Vietnamese guests.
• The guest of honour will be expected to leave the dining table first at the conclusion of the meal.

Negotiations:

• The most important quality in negotiations with Vietnamese is patience.
• Outward displays of anger are interpreted as a sign of personal weakness, and will invariably be met with a stony response and increased resistance in negotiations.
• You should focus on transaction details as well as cultural factors. More often than not, this means price, as the formative Vietnamese market is extremely price-conscious.
• Vietnamese buyers have a preference for stable and well-proven products, turnkey solutions, and a strong reliance and expectation on the supplier to provide after-sales service support.
• Do not feel compelled to fill silences that may occur during business negotiations. Being silent is particularly useful if the Vietnamese have made an unreasonable demand or proposal.
• The pace of negotiations may be slower than expected with informal conversation at the beginning of the meeting.
• As business decisions are not usually made during an initial meeting, it is often beneficial to send a written proposal well before the meeting if an immediate response is required.
• Negotiations will usually continue after an agreement is executed. Have your lawyer operate behind the scenes rather than taking part in the negotiations as most Vietnamese companies prefer a less legalistic approach to negotiations.

Correspondence:

• Prompt response to faxes from business associates in Vietnam indicates professionalism, commitment and an interest in the market. However, you may find that the Vietnamese company may not reciprocate.
• Telephone charges are very high in Vietnam and the company may expect you to call them.
• Internet access should not be taken for granted, and is also expensive.
• Other problems can occur with the telephone service and it is our experience that many barriers to concluding deals are caused by very simple communications misunderstandings.
• Correspondence to government ministries and departments should be written in Vietnamese if possible.

Forms of address:

• It is normal practice in Vietnam to put the surname first, followed by a middle name and then the given name, eg. Nguyen Hong Lan. In this case, the person should be addressed as Ms Lan. The full name is only used on a formal occasion.
• The Vietnamese will often address Australians by their first name preceded by their title, eg. Mr. Greg.
• Vietnamese will often ask you how old you are at the beginning of a conversation because there is no universal word for ‘you’ in the Vietnamese language and people need to classify you as either older or younger than themselves in order to determine the correct form of address.

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

Import duty rates are classified into three categories:

• ordinary
• privilege import tax tariff
• special privilege tax tariff

Privilege import tax tariff is applicable to goods imported from countries that have a Most Favoured Nation (MFN) status with Vietnam (including Australia).

Special privilege import tax tariff is applicable to goods imported from ASEAN countries in accordance with the agreement CEPT/AFTA for 2003–2006. Tax rates for import goods within ASEAN countries are mostly from zero to five per cent.

New tariff arrangements between Australia and Vietnam under ASEAN Australia, New Zealand Free Trade Agreement (AANZFTA) will open up new opportunities for Australian exporters. Almost 90 per cent of tariff lines (including wine) covering 96 per cent of Australia-Vietnam trade will be tariff-free by 2020 under this agreement.

For instance, regarding wine, tariffs on 9 lines reduce to 20 per cent in one step in 2022; tariffs on 2 lines (grape must) reduce to 40 per cent in one step in 2022.

Australian exporters can now access Austrade’s AANZFTA tariff finder. The tool provides an easy reference for Australian exporters who want to know what the applicable tariff rate is for their products under the AANZFTA.

Import goods from non-MFN countries are taxed at a rate 50 per cent higher than imports from MFN countries.

To be eligible for the privilege rates, the imported good must be accompanied by an appropriate Certificate of Origin (these can be obtained from Chambers of Commerce and other approved agencies).

A customs declaration must be lodged at the local office of the General Department of Customs for each permitted consignment of imported goods within 30 days of the goods entering Vietnam and duty must be paid within 30 days of receiving notice of the amount.

In addition to the above tariffs, Vietnam also reserves the right to impose surtaxes, such as anti-dumping and countervailing duties.

Since Vietnam pursues a policy of export promotion, duties are only imposed on a small number of exports, which are mostly processed from natural resources and agricultural products. Goods that are not listed in the Schedule of Export Duties are entitled to an export duty rate of zero per cent.

Non-tariff barriers

Import restrictions

The following imports are prohibited, with certain exceptions:

• firearms
• ammunition
• explosives and military equipment
• drugs and toxic chemicals
• dangerous and unhealthy cultural products
• firecrackers
• children's toys with the potential for harmful influences
• cigarettes
• second-hand consumer goods
• certain automobiles and other vehicles
• used equipment

As other products can be banned from import temporarily, current advice should be sought.

Prohibited exports include:

• antiques of high value
• logs
• timber
• rattan canes
• weapons
• drugs
• toxic materials
• precious or rare plants and animals

Wood products are still subject to government imposed quantitative restrictions or targets and are administered through export quotas.

Import/export in Free Trade Zones

Companies may choose to produce within an Export Processing Zone (EPZ) in order to take advantage of the exemptions from customs duties for equipment, raw materials and commodities imported into the zones and for finished goods and products exported from the zones subject to specific provisions regulating EPZs. All of the production within the EPZ must be exported.

Industrial Zones (IZs) are also being developed which offer tax advantages for establishing a factory within the zone. Companies can produce within the IZ for the domestic market or for export. The company will pay no duties when importing raw materials, if the end products are exported.

Product certification, labelling and packaging

Special certificates

Health certificates are required for plant and animal products. All pharmaceutical products are required to be registered and approved by the Ministry of Health.

Certificate of Analysis

Certificates of Analysis are required for imported food and beverages. All imported foodstuff for consumption in Vietnam (with the exception of products substituting mother milk and some particular items) must declare their content and obtain a Receipt of Quality Statement issued by the Food Administration. The content must include details of perceptibility, physical and chemical criteria, microbiology, heavy metal content, food-sun ingredients, expiry date, and instructions for usage and preservation and production process.

Documentary requirements

Shipping document

Generally, the Vietnamese importer (agent, distributor, import-export company or joint venture partner) handles the preparation of the documentation and licenses. Shipping documents include commercial invoices, pro forma invoices, bills of lading, packing lists, certificate of origin, insurance certificate, and import licenses.

Commercial invoice

Vietnamese foreign trading organisations usually require the following information to be contained on the commercial invoice:

• a complete description of the goods
• all marks and numbers
• the number of cases/bales or other shipping containers
• the net and gross weights
• the net value of the good
• the country of origin

A number of copies are required, the language used and any additional information should be contained in the import contract.Certificates of origin.

Required for fruits, plants, seeds and vegetables.

Bill of lading

Importer’s instructions should be followed and all information should conform with that contained in other shipping documents.

Packing list

Use of a packing list is recommended even if not specifically requested in the import contract. All information should conform with that contained in other shipping documentation.

Certificate of origin

The C/O form must be an original and there should be a certificate number in the C/O. Authorised signatures should be in blue or red colour. If in black, Vietnamese Customs may suspect they are copies. If you or your importer encounter problems with the C/O from Australia, please contact Austrade first to assist with release of the shipment and consultation with the local Department of Customs.

Public health requirements

Plants and parts of plants must be covered by a certificate of inspection issued by the appropriate authority in the country of origin attesting that the plants and/or parts of plants, as well as the packing material and accompanying soil, are free from diseases and pests. In Australia, the authority is usually the Australian Quarantine and Inspection Service (AQIS), Commonwealth Department of Primary Industries and Energy or the State Department of Agriculture.

Live animals require certificates attesting that the animals are free of brucellosis, tuberculosis and communicable diseases, the certificates are to be issued by the appropriate authority in the country of origin.

Approval and authorisation from the Ministry of Health must be obtained before importing or distributing pharmaceuticals. This ministry is also responsible for registering these products.

Weights and measures

Weight and measures are based on the metric system. Gross and net weights should be shown in kilograms.

Vietnamese standards system consists of over 5000 standards. Specific information by product or by standard may be provided by the importing organisation. Otherwise it may be sought from the relevant ministry or the government's management body with overall standards responsibility, the Directorate for Standards and Quality (STAMEQ) of Ministry of Science, Technology, and Environment. Vietnam is currently adopting over 1000 international standards to become national standards.

Intellectual property protection

Despite some formal legislative protection, intellectual property rights (IPR) infringements are pervasive in Vietnam. The problem stems from insufficiencies in the code of law, inadequate enforcement of regulations, lack of understanding of the concept of private ownership of IPR, and the powerful price advantage of counterfeit, versus genuine, merchandise. The experience of several major international companies indicates that informal negotiation and settlement, supported by educational campaigns, constitute a more effective approach in some instances.

Banking and finance

Business security

In Vietnam, payment risk can be minimised by only doing business after receipt of a confirmed letter of credit (LC). It is better to accept only those LCs that have been issued by one of the four major state-owned commercial banks in Vietnam, and by centrally located branches of those banks.

Communication is not always good within the network and LCs issues by small provincial banks may not always be honoured. Having a foreign bank such as the ANZ confirm the LC where possible is also recommended.

Vietnamese importers may need to wait two to three weeks to get approval from the State Bank of Vietnam to open an LC. Exporters should make some allowance for payment delays in their cash flow projections.

The general risk of non-payment in Vietnam has reduced considerably in recent years, provided that exporters are dealing with qualified importers and buyers. Prior due diligence is important in this respect.

The Vietnamese banking system still operates very slowly and Vietnamese companies can often have difficulties in getting quick access to foreign currency. Foreign currency payments abroad by banks can be temporarily stopped on decree for various reasons.

The Australian Government’s Export Finance Insurance Corporation (EFIC) offers a range of export credit and insurance products, although its credit rating for Vietnam is not very high. EFIC also provides a country risk analysis and regular updates on countries around the world through its market watch service.

Dispute resolution

Negotiation between the concerned parties is the most common and preferred means of dispute resolution.

Although contracts are difficult to enforce in Vietnam, particularly if one party to a dispute is a foreigner, investors generally should negotiate and include contract resolution procedures in their contracts.

Vietnam has acceded to the New York Convention on Foreign Arbitral Awards, but as yet there have been no disputes between a foreign and a Vietnamese entity settled under this multilateral agreement.

Economic Courts, in addition to hearing bankruptcy cases, also have jurisdiction over cases involving business disputes. Administrative Courts hear cases that concern alleged infractions of administrative procedures by government authorities.

Outside the court system, dispute resolution may also be pursued through the Economic Arbitration Centers. Each Center must include at least five arbitrators licensed by the Ministry of Justice. The Vietnam International Arbitration Center (VIAC) operates in close coordination with the Vietnam Chamber of Commerce and Industry.