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Vietnam Welcomes Small and Medium Size Foreign Investors

Since the early 1990s, the FDI into Vietnam has soared as the country relaxes its regulations for foreign investors. Besides the giant manufacturing factories mostly owned by Korea, Japan, and Taiwan, an increasing number of smaller-scale foreign enterprises are turning their attention to Vietnam.

Pictures above: small and medium size firms tend to reside more on the trade, tourism and software sectors

Take Japan, one of the leading investors in Vietnam as an example. According to the Vietnam Economics News Online on August 20, 2005, large Japanese firms in Vietnam have reduced in number, while small ones are rising. This trend is predicted to prolong, for the number of big companies accounts for only 10% of the total number of companies in Japan. In spite of less capital, small and midsize Japanese enterprises enjoy the advantage of more stability and endurance when investing abroad. Japan, however, might not represent a typical foreign investor, as Vietnam Economic Times (Issue No. 142) also notes that the number of foreign companies in Vietnam, both large and small, continues to boom.

While most large business groups are devoted to manufacturing, small and midsize firms tend to reside more on the trade, tourism and software sectors. Gary Malcolm, an Australian, one of the four owners of the Wide-Eyed Tours, recalled his experience opening a business in Vietnam with mere $10,000 in January 2004 to the Vietnam Economic Times. One point that both he and other small and midsize foreign companies in Vietnam concur is the need for a local partner to help ease through the already-complicated legal process.

Moreover, knowing the culture and the language is a plus for big and small investors alike. Both the rich culture and the business customs in Vietnam might take some time to grasp, but the payoff is worth it. “… everything [should] be done according to the law … pay the right taxes, and not do business outside of the terms of our license.” said Gary in the same interview, “And it’s worked perfectly.” Surely enough, Gary and his Wide-Eyed Tours is not the only small business that thrives on the competitive basis of low administration and operation costs in Vietnam.

Foreign investors also benefit greatly from the local governments’ vying to attract foreign investment to their own regions. Snatching this opportunity, and the future will offer opportunity and future profits to the smaller-scale foreign investors in Vietnam.

The important consideration in starting a new small business in Vietnam as anywhere in Asia is first in having a realistic opportunity, sufficient resources, good research and access to an experienced professional with knowledge of the country, culture and regulatory environment and a most importantly a willingness to adapt and change your plan to meet the realities actually experienced. 

Picture above: Mr. Chris Runckel, President of Runckel & Associates at the training course for Vietnamese entrepreneurs on how to export to the US in 2004

Runckel & Associates has helped a number of small businesses to source product out of Vietnam as diverse as ladies handbags, fabrics, baby clothing, daily household items, metal parts and many other products.  Our Vietnam-based staff specializes in helping foreigners make first contacts, learn local business requirements, help make shipping and customs arrangements and many other formalities.

Vietnam can be an exciting place with good quality work to meet your company’s requirements.  We encourage you to contact us through the link below.

 


Copyright, 2006 © Runckel & Associates

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