Vietnam’s dynamic growth and attractive investment incentives draw many foreign companies. However, the real challenges when doing business in Vietnam go beyond capital, requiring careful navigation of regulatory intricacies, cultural nuances, and operational realities.
Newcomers often face hurdles in licensing, tax compliance, labor management, and local partnerships. Understanding these obstacles and adopting practical strategies to address them is essential for achieving long-term success in Vietnam’s competitive market.
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Regulatory Complexity
Foreign investors entering Vietnam must first secure an Investment Registration Certificate (IRC) and then an Enterprise Registration Certificate (ERC) to legally doing business in Vietnam. Beyond these mandatory licenses, companies often need to obtain sector-specific permits such as trading licenses, construction permits, environmental clearances, or healthcare certifications depending on their industry. The process is governed by multiple agencies with overlapping requirements, which can lead to delays or misinterpretations that halt operations.
Additionally, one of the real challenges of doing business in Vietnam is navigating a legal framework that is frequently updated. Companies must stay alert to regulatory changes, as failure to comply can lead to costly delays, penalties, or even revocation of their business license.
Solution: To overcome this, foreign businesses should engage local legal advisors and maintain active communication with the Department of Planning and Investment. Adopting a compliance tracking system or legal tech solution can help automate key deadlines and flag updates—ensuring smoother operations during the critical first year.
Read More:
- Investment Registration Certificate (IRC) in Vietnam: Complete Insights for Investors
- Obtaining an Enterprise Registration Certificate (ERC) for Company Setup in Vietnam
Unexpected Taxes and Fees
Vietnam’s Corporate Income Tax (CIT) is a competitive rate of 20% for most enterprises, with preferential rates of 15% or 17% available for smaller companies based on revenue thresholds. However, additional taxes such as land-use fees, special consumption taxes (SCT) on products like alcohol and tobacco, and variable provincial levies frequently catch foreign firms off guard.
Read More: Corporate Income Tax in Vietnam: Rates, Incentives, Deductions, and Filing Requirements
Moreover, Value-Added Tax (VAT) procedures can be complicated, with strict documentation required for VAT refunds and specific rules governing import-export taxes that can heavily impact cash flow, especially for trading and manufacturing companies. Many foreign companies face delays in VAT refunds that strain liquidity.
Read More: Vietnam VAT Registration and Refunds: A Step-by-Step Guide for Expats
Solution: Tax compliance presents real challenges when doing business in Vietnam. Engage consultants who understand both national and local tax codes to navigate complex rules, conduct tax impact analyses, and optimize VAT refunds. A solid monthly reconciliation process helps address unexpected levies early and avoid fines. Staying up to date with GDT circulars and legal changes is also essential for compliance.
Read Related: Personal Income Tax in Vietnam for Expats: Key Insights about Expat Salary
Language and Cultural Barriers
Language and cultural differences present real challenges when doing business in Vietnam. Vietnamese is the primary language for official documents and communications, making it crucial to have bilingual staff familiar with legal and business terms. Foreign investors often overlook cultural nuances like indirect communication, relationship-building (“quan hệ“), and hierarchical business etiquette—differences that can lead to misunderstandings, delay negotiations, or erode trust with local partners.
Read Related: Vietnamese Culture Orientation Courses for Expats: Traditions, Customs, and Values
Solution: Hiring bilingual staff or professional interpreters with legal and commercial expertise helps address real challenges when doing business in Vietnam. Miscommunication can be costly, so it’s essential to ensure clarity in both language and context. Foreign companies should also invest time in building strong personal relationships through face-to-face meetings and social engagements, which are key to navigating Vietnam’s informal but crucial business practices. Attending local networking events and understanding business etiquette further helps bridge cultural gaps and support long-term cooperation.
Read Related: 5 Best Places to Learn Vietnamese in Ho Chi Minh City: Online Courses and Language Lessons
Securing and Retaining Skilled Talent
One of the real challenges of doing business in Vietnam is attracting and retaining skilled professionals in an increasingly competitive market. Vietnam’s expanding economy has fueled strong demand for talent in fields such as technology, finance, marketing, and management. In major cities like Ho Chi Minh City and Hanoi, both local companies and multinational firms are competing aggressively for the same limited talent pools.
Foreign businesses often struggle to align compensation packages and employee benefits with local expectations—including social insurance, paid leave, and performance bonuses. High turnover rates, especially within the first year, can disrupt operations and drive up recruitment costs. Adding to the complexity, companies must also navigate Vietnam’s work permit and visa regulations when hiring expatriate employees.
Solution: To address real challenges in talent management when doing business in Vietnam, foreign companies should offer holistic compensation packages that include bonuses, training, career development, and comprehensive social insurance. Partnering with reputable local recruitment agencies provides access to qualified candidates and valuable market insights. Internship and graduate hiring programs can help build a strong talent pipeline. Additionally, streamlining HR policies ensures compliance with labor laws and simplifies the management of expatriate work permits.
Establishing Reliable Supply Chains
Supply chain management presents real challenges when doing business in Vietnam, especially for new market entrants. Infrastructure and manufacturing capabilities vary widely across regions, directly impacting supplier reliability. Many foreign companies encounter issues such as inconsistent product quality, financially unstable suppliers, and frequent delivery delays. On top of that, customs clearance procedures can be complex, with inconsistent enforcement and documentation requirements that may result in unexpected shipment holds.
Additionally, poor last-mile transport infrastructure—particularly outside major cities—can significantly raise logistics costs and cause missed delivery deadlines. These operational hurdles are critical to address for companies that rely on imported materials or local supplier networks, especially during the first year of doing business in Vietnam.
Solution: Conduct thorough due diligence including financial health checks, factory audits, and reference reviews when selecting suppliers. Diversify supplier bases to mitigate risks of single-source dependency. Work with experienced third-party logistics providers that have deep local expertise and strong customs brokerage capabilities. Build contingency plans for critical supplies and maintain open communication channels with suppliers to quickly address issues.
Cash Flow in a Controlled FX Environment
Currency management poses real challenges for foreign companies doing business in Vietnam, due to the country’s managed float exchange rate regime overseen by the State Bank of Vietnam (SBV). Enterprises are exposed to risks related to VND volatility, as well as regulatory hurdles when repatriating capital or dividends. Large foreign exchange transactions often require multiple layers of approval and extensive documentation to comply with anti-money laundering and foreign investment laws.
These procedures can delay cross-border payments and increase working capital needs. In addition, currency controls make it more complicated to pay foreign suppliers or transfer profits offshore, adding another layer of complexity to financial operations in the Vietnamese market.
Solution: Incorporate various exchange rate scenarios into financial planning and budgeting to prepare for volatility. Utilize forward contracts or currency options offered by Vietnamese banks to hedge foreign currency exposure. Work exclusively with banks knowledgeable in corporate foreign exchange rules under SBV regulations. Ensure proper documentation and timely submission of required reports to expedite approvals for fund transfers and dividend repatriations.
Digital and Payment Ecosystems
Digital payments present real challenges for foreign businesses doing business in Vietnam. Mobile wallets like ZaloPay, MoMo, and ViettelPay dominate the local market, unlike credit cards or international methods. Companies that don’t support these platforms risk losing customers. Meanwhile, government pilot programs and evolving regulations around mobile money may introduce new licensing and compliance hurdles for foreign firms.
Solution: Collaborate with local payment service providers and fintech firms to integrate mobile wallets, bank transfers, and e-wallets into checkout processes. Stay informed on evolving regulations and licensing obligations related to digital payments through the Ministry of Information and Communications (MIC). Leveraging popular social-commerce platforms and digital marketing channels to promote these payment options boosts adoption and customer engagement.
Brand Awareness and Trust
Launching a new brand in Vietnam requires tailored marketing strategies that consider the country’s unique media consumption habits and digital landscape. Vietnamese consumers are highly active on social media platforms like Facebook, TikTok, and regional apps. Traditional advertising channels coexist with influencer marketing and social commerce, which are increasingly critical for reaching younger demographics. Many foreign companies underestimate the resources needed to develop localized content and manage ongoing engagement that builds consumer trust amid competing established brands.
Solution: Develop culturally relevant marketing campaigns drawing on insights from local market research. Leverage local influencers and social commerce trends to increase visibility and credibility. Utilize data-driven tools to track campaign effectiveness and quickly optimize messaging and channels. Engaging in community events, CSR projects, and localized promotions further strengthens brand affinity and helps penetrate the market.
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The Nest Asia is a one-stop resource offering comprehensive information, practical relocation advice, cultural insights, valuable connections, and trusted services to help expatriates living in Vietnam navigate the transition, overcome challenges, and build a fulfilling life abroad. Starting your journey in a new country can often feel overwhelming. The Nest Asia is your trusted partner – we’re here to simplify that process and ultimately make Vietnam feel like home for you and your loved ones.
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Disclaimer: The Nest Asia is not an authorized provider of official government or non-government services. The information provided is intended for general guidance only. While we strive to offer accurate and timely information, we make no representations or warranties regarding its completeness or accuracy.
