The lowdown on setting up operations in Vietnam

So you’ve done your market research and exploration trips to Vietnam, and you’ve decided that you want to enter the market. But where do you start? How can you open an offshore company and set up operations there?

Before diving in, it’s important to take a good look at what options are available in the country.

Do you really need a business entity?

Setting up a legal business entity is the most standard practice, but it also comes with high initial costs and a lot of effort. Moreover, the expense of maintenance as well as monthly office rent, human resources, finance accounting, consolidation with corporate headquarters, and tax reporting can be very intimidating, especially for startups with a limited budget.

To avoid the risk of business or financial penalties due to non-compliance, you often have to engage with local consultants and spend extra cash to resolve any problems related to laws.

Fortunately, there are some alternatives to setting up a legal business entity which may meet your requirements at the early stage:

Work with local business distributors/resellers

If you’re looking to sell your products/services in a local market where you don’t have inside knowledge or experience, a reliable and trusted local distributor or reseller will greatly increase your chances of penetrating the market.

By leveraging relationship networks and sales channels, local ownership advantages, and licenses to operate, startups can avoid market barriers when it comes to expanding products or services overseas.

In fact, you may not need to have your own entity, as all the local transactions can be done by your distributor/reseller.

Once your company has a firm grasp and foundation in the local market, then you may reconsider setting up a legal entity. You should examine whether to support business partners, set up a joint venture entity with a partner/reseller, or operate as a wholly owned subsidiary.

Outsourcing/offshoring

Vietnam is an ideal place for outsourcing employees because of its inexpensive and highly skilled workforce. So if your purpose of entering the market is to tap into the local labor force and gain access to talent for operation needs, outsourcing or offshoring through a trusted service provider will be your best bet.

After receiving help and advice from your trusted offshoring partner, it will make more sense to have a legal entity to take on the legal and operational responsibilities of managing your new offshore team.

Legal entities

Five-step process for successful incorporation

Feeling overwhelmed?