In this post, I would like to share with you some challenges that you may face when you start a business in Vietnam. A lot of good information about doing business in Vietnam are available, which can make you feel too positive. I share these things not to make you feel fear or lost motivation. In fact many foreign investors and FDI companies has been running very well businesses in Vietnam. Before you invest your money and time to make your business here, it’s important to understand to all situations, includes worst-case scenarios. Hence you will have a better preparation.
So let’s find out what the challenges are?
You can not do business in Vietnam without money
When you register a company, the government will require you proving that you have real money in your bank account, by a bank statement. The amount of money depends on what kind of your business. In general, it’s around 50.000 USD. After registering company, you must transfer the registered capital into your company bank account within 90 days, otherwise you have to pay a fine due to late in contributing capital. It’s also applied in the case that you called capital from investors, the investors shall transfer the invest money to your company bank account within 90 days after registering company.
For more information about Capital for open company, please read This Post.
You must have a company address before registering company
Address of company is where your company mainly conducts its business. Before registering company, you must have a specific office address already, by signing a lease agreement with landlord. Here are some problems:
– Many investors quickly signed lease agreement and paid deposit without the knowledges about how a legally address is under Vietnamese laws. Later when lawyer or government notified “that address is illegal to set up company there”, they had to choose other address and lost money for previous one. In case you failed on establish company with the government, you would have chance lost deposit too.
– The process of set up company maybe takes a long time, at least 1 month, or 3 months or half year. During that time, you may do nothing but still have to pay for rent.
For more information about Location of company, please read This Post.
The paper works are a big challenge (notarized, translation, consular authentication)
All documents are required to be written in Vietnamese. All foreign documents shall have certified Vietnamese translations. Licenses are written only in Vietnamese and do not have bilingual. It will cost you some money for translation services.
Documents which were issued in other countries, to be legally using in Vietnam, shall be notarized by a Notary public or certified by Courts there, then be consularized by a Vietnamese Embassy/Consular.
For example, if you want to use a Chinese Company as the investor for the new company in Vietnam. You will be required submiting the Chinese Company Registration License, which should be notarized in China, consularized by Vietnam Embassy in China and translated into Vietnamese. This process maybe take 1 month total.
For more information about Consular Authentication, please read This Post.
Licensing takes a lot of time, a lot of licenses and conditions are applied for foreign investor
Vietnamese citizens can open company within 1 week, and it costs approximately 100$. Unlike that, foreign investors need at least 1 month to set up their company and it may cost them few thousand dollars. Since 2 mandatory licenses are required for foreign investors, which are Investment Registration Certificate and enterprise Registration Certificate, in some cases needing more licenses. In general, conditions applying for foreign investors who want doing business in Vietnam are more difficult than for Vietnamese citizen. Some fields of business have not opened market for FDI sectors, such as produce lubricant
Another minor things
Some services may try to charge you higher service’s price. Because you are foreigner, they may think you are rich or know nothing.
After getting the Enterprise Registration Certificate, your company number will be public, you will receive many marketing calls everyday. Even cheaters will call you and require to buy tax books with price around 30$. These things are super annoying. In fact, the authorities are trying to reduce and stop them.
Expensive service doesn’t mean a good service. You pay for an expensive service (or maybe you don’t know that it is expensive), because they look professional, that’s normal. But then you might be angry since the service would be not run smoothy as their commitment. Choose the service which makes you feel that they have experience on your matter, or from recommendations of your partners, friends or local people.
Plan a timeline
You should come to Vietnam, spend time to investigate and understand the market here. Keep in mind that things maybe not go easy and fast. But it will be alright if you have a good preparation for the long process upcoming.
Having a good bargain in lease agreement.
Seek advise from a lawyer in order to check legal status of the location before you decide to lease it. Try to deal a good bargain in lease agreement. For example, in case you failed on establish company with the government or this location has legal problems, the lease agreement will be terminated and you can take back your money (or deposit).
SHOULD YOU ENGAGE IN A LAWYER AND AN ACCOUNTANT
Investment registration may seem like a major step in a new business venture for many people. Like anything, it can be daunting if you haven’t done it before and you definitely to make sure that it’s done correctly. Otherwise, you may waste a lot of time and pay fines if you do mistake, even a little one.
The process is generally quite smooth if you involve a professional to help you out. Every one wants to spend less time administering their business and more time running it. In Feline Legal, with many years experience in corporate services, lawyers and accountants will assist you and provide advance with forming your company. We also complete the paperwork, register your company and follow steps after that. You can save a lot of time and enjoy good services with reasonable price
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