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Fundraising in Vietnam

View of Ho Chi Minh CIty


Fundraising has become increasingly more important for many companies in Vietnam, including everything from non-profits to startups. Being the fastest-growing country in Southeast Asia and with a population of around 98 million, Vietnam is indeed one of the most interesting countries in the region for the purpose of fundraising.

In this article, we review the current state of fundraising in Vietnam, the most common options for fundraising, and success stories in the fundraising market. We review the trends and opportunities, which will give you a better overview of the market.

The Fundraising Landscape in Vietnam

Vietnam has become one of the most promising startup ecosystems in Southeast Asia, with a growing fundraising landscape that continues to attract investors globally. It has almost 3,500 startups as of the moment we write this article, up from just 400 in 2012, which speaks for itself. Thanks to the country’s dynamic and innovative startup scene, a growing number of venture capital firms and angel investors look to invest in promising businesses.

One of the key drivers of the growth is the government’s push to promote entrepreneurship and innovation. Recently, the government has launched several initiatives to support startups, including tax breaks, access to funding, and support for research and development. As a result, we have seen a growing number of incubators and accelerators providing support to early-stage businesses.

Another factor driving the fundraising landscape in Vietnam is the country’s young and tech-savvy population. Vietnam has one of the youngest populations in Southeast Asia, with a median age of just 30 years. This has created a large pool of talent that is well-versed in the latest technologies and trends, making it an attractive destination for investors looking for innovative and forward-thinking startups.

As mentioned, Vietnam’s startup scene has also been boosted by the country’s rapid economic growth. Growing at an average rate of around 6% per year in recent years, and by as much as 8% in 2022, the country has a young and growing middle class that is increasingly looking for new and innovative products and services. This in turn has attracted a growing number of investors looking to capitalize on the trend.

Overall, the fundraising landscape in Vietnam is vibrant and growing, with a range of opportunities available for both startups and investors.

Types of Fundraising in Vietnam

Startups and businesses have access to a handful of fundraising options to secure capital for operations and expansion. The options have unique features that make them suitable for different stages of a company’s growth, and each has its advantages and disadvantages.

Venture Capital

One of the most common fundraising options in Vietnam is venture capital. Venture capital firms provide financing to startups and small businesses in exchange for equity. This option is popular among startups and businesses that are in the early stages of their growth, especially those in the technology sector. Venture capital firms in Vietnam include IDG Ventures, CyberAgent Ventures, and 500 Startups, which have invested in some of Vietnam’s most successful startups, including Tiki, Grab, and VNG.


Another common fundraising option in Vietnam is crowdfunding. Crowdfunding is a method of raising capital through small contributions from a large number of people. This option is ideal for startups and businesses that have a strong community following, such as social enterprises or creative projects. Some popular crowdfunding platforms include Dreamstarter and Fundstart.

Debt Financing

Debt financing is also a popular fundraising option in Vietnam, especially for established businesses with a stable cash flow. In short, this option involves borrowing money from banks or other financial institutions, with an agreement to pay back the loan with interest over an agreed period. While this option can be useful for businesses that need to maintain control over their equity, it also comes with the risk of high interest rates and strict repayment terms.


Initial Public Offerings (IPOs) are another fundraising option in Vietnam, which is suitable for more established companies looking to raise large amounts of capital. In Vietnam, the Ho Chi Minh Stock Exchange and Hanoi Stock Exchange are the two main stock exchanges where companies can list their shares. Some successful companies that have gone public in Vietnam include VietJet Air, Vincom Retail, and Mobile World Group.

Each fundraising option has its unique features that make them suitable for different stages of a company’s growth. For example, venture capital and crowdfunding are popular fundraising options for startups, while debt financing and IPOs are better suited for established businesses. Additionally, each fundraising option has its advantages and disadvantages, and businesses must carefully consider their options before choosing a fundraising strategy that best suits their needs.

Success Stories of Fundraising in Vietnam

Vietnam has been experiencing a remarkable growth in its startup ecosystem, which has led to some inspiring success stories in terms of fundraising. Here are some notable examples of companies that have successfully raised significant capital in Vietnam:

VNG Corporation

VNG Corporation, a leading gaming and messaging company in Vietnam, raised $200 million in its Series B funding round, which was led by a consortium of international investors in 2016. The company, founded in 2004, is one of the pioneers in the Vietnamese startup ecosystem and is now valued at over $1 billion.


Tiki, an online marketplace for books, electronics, and other consumer goods, raised US$275 million in 2021. The company, founded in 2010, has become one of the largest e-commerce players in Vietnam, and the funding round was led by Japanese investment firm, Sumitomo Corporation.


Momo, a leading mobile wallet and payment platform in Vietnam, raised US$200 million in 2021. The funding was led by Warburg Pincus, one of the largest private equity firms in the world. Momo has been instrumental in driving the adoption of mobile payments in Vietnam and is now valued at over $1 billion.


VNPAY, a leading digital payment platform in Vietnam, raised $300 million in a funding round led by SoftBank Vision Fund 2 in 2021. The company has become a key player in Vietnam’s cashless payment ecosystem and has processed over 20 million transactions per month. The funding will be used to expand VNPAY’s services and reach in Vietnam and other Southeast Asian countries.


Sendo, another major e-commerce player in Vietnam, raised US$61 million in its Series C funding round in 2019. Sendo has been growing rapidly since its founding in 2012 and now has over 15 million users in Vietnam.

These success stories demonstrate that Vietnam’s startup ecosystem is capable of attracting significant capital from international investors, and that there are opportunities for growth in a range of sectors, from e-commerce to digital payments. These companies have also contributed to the overall development of Vietnam’s economy, creating jobs and driving innovation.


Fundraising is a growing industry in Vietnam with a range of opportunities available for organizations seeking to secure capital. The country’s thriving startup scene, supported by a government push for entrepreneurship and innovation, is attracting investors globally. With a young and tech-savvy population, a rapidly growing economy, and a conducive environment for startups to thrive, Vietnam has emerged as one of the most promising startup ecosystems in Southeast Asia.

Vietnam’s fundraising landscape offers several options for businesses, including venture capital, crowdfunding, debt financing, and IPOs. Each fundraising option has its unique features that make them suitable for different stages of a company’s growth, and businesses must carefully consider their options before choosing a fundraising strategy that best suits their needs.

Overall, the fundraising landscape in Vietnam presents a wealth of opportunities for organizations looking to raise funds effectively. With the right approach, organizations can leverage Vietnam’s dynamic and innovative startup scene to attract investors and donors and achieve their goals and objectives.

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    Vietnam’s Supply Chain: A Comprehensive Overview

    Vietnam cargo port

    Vietnam’s supply market gets increasingly more attention as companies seek to diversify manufacturing, and as its manufacturing capabilities increase. It has also introduced various free trade agreements, and the government has eased foreign ownership regulations in the past years.

    Yet, many companies have little insights into the country’s supply chain capabilities and infrastructure, and how this will change in the coming years. We have therefore written this article and where we will review the following topics:

    • Vietnam’s economic zones
    • Vietnam’s supply chain infrastructure
    • Supply chain issues in Vietnam
    • Vietnam’s role in the global supply chain
    • Supply chain cooperation in South & Southeast Asia

    Vietnam’s Economic Zones

    Manufacturing is highly concentrated in key economic regions as these are more developed and have received the most investments in infrastructure, logistics, and facilities. Besides, the availability to labor and special financial incentives also play an important role. Let’s start and review the key economic zones of Northern, Central, and Southern Vietnam.

    Northern Vietnam

    The North Key Economic Zone covers the provinces of Hanoi and Bac Ninh, as well as Hung Yen, Vinh Phuc, Hai Duong, Hai Phong, and Quang Ninh. Most of the manufacturing activities in the North can be found in the Red River Delta, which consists of two municipalities (Hanoi and Hai Phong) and eight provinces, comprising the above-mentioned provinces except for Quang Ninh.

    Vietnam’s Northern Key Economic Region is well-positioned as a hub for China-plus-one manufacturing activities – when existing manufacturing in China is complemented by one or more low-cost markets like Vietnam. Many companies have invested in Northern Vietnam to profit from the lower labor costs compared to China while remaining close to Chinese suppliers.

    Furthermore, the North Key Economic Zone has well-developed transportation networks and prime industrial land on the back of extensive infrastructure development. Particularly, the region’s industrial parks and economic zones are well connected to the sea via Hai Phong port (in Hai Phong city), which is the country’s largest port in the North. Moreover, the Ha Noi-Hai Phong-Quang Ninh (adjacent to Hai Phong) development triangle geographically connects to other economic areas in the country and abroad.

    Heavy manufacturing dominates the Northern Key Economic Region, which is partly a result of China-plus-one expansion programs. Investors in heavy industries such as automotive utilize the concentration of infrastructure and talent that works to their benefit. Worth highlighting is also that we find many electronics manufacturing clustered in the North, particularly in the Red River Delta region.

    Investors in other sectors that are not labor-intensive or in heavy manufacturing such as IT may not select the North as the benefits of the infrastructure networks here may not be of significant value due to the nature of these sectors.

    Southern Vietnam

    The Southern Key Economic Zone includes the provinces of Ho Chi Minh City and neighboring provinces such as Ba Ria-Vung Tau, Binh Duong, Dong Nai, Binh Phuoc, Tay Ninh, and Long An. The locations of these cities and provinces, excluding Long An province, forms the Southeast region of Vietnam. This region has virtually always led the country in terms of exports, FDI, and GDP growth.

    In comparison to the Northern Key Economic Zone, the Southern Key Economic Zone has a broader spectrum of manufacturing and services, with stronger economic diversification. As a result, enterprises in more specialized or niche industries may find that the South offers a more conducive environment for investments. This is especially true for small and medium-sized businesses (SMEs), and Ho Chi Minh City has recently been a magnet for startups and tech entrepreneurs.

    Consumption is another key benefit of the Southern region. Investors seeking to establish a brand identity with Vietnamese customers may discover opportunities in the South, which is home to Ho Chi Minh City, the country’s largest city in terms of population and financial contribution. As a result, Ho Chi Minh City is a favored location for manufacturers of some specific industries such as pharmaceuticals and luxury goods. Furthermore, manufacturing in the South benefits from its proximity to Ho Chi Minh City, Tan Son Nhat International Airport, and various seaports, including Saigon Port and Cat Lai Port.

    In stark contrast to the North, Vietnam’s Southern Key Economic Region innately lacks proximity to China. Therefore, it takes more time for investors who want to explore a China-plus-one expansion strategy to transfer components between factories in China and assembly facilities in the South of Vietnam. This suggests that investors with time-sensitive manufacturing chains would be best served by selecting locations in Northern Vietnam.

    Central Vietnam

    The Central Key Economic Zone is made up of five cities/provinces – Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, and Binh Dinh.

    Textiles, building materials, and paper and forest products are the primary industries in this region. Besides, businesses like shipbuilding, logistics, and other high-tech industries are anticipated to grow significantly in the near future.

    Investors in Central Vietnam’s industrial zones could benefit greatly from infrastructure and facilities designed to meet the needs of the country’s rapidly expanding sectors, such as textiles and electronics.  Da Nang, the economic hub of the Central region, delivers a consistent supply of skilled personnel to the Central Key Economic Zone and offers high-quality factories for rent in prominent locations. Besides, manufacturing in Da Nang also enjoys a higher level of urban planning and development than many other cities in Vietnam. This probably leads to the provision of cascading benefits for a diverse range of investors within the region.

    Seeming to have a superior organizational structure than other areas of Vietnam, Da Nang is still confined by its population, making retail scalability here a nerve-racking challenge. In other words, there are unlikely to be any ripe opportunities in the Central Key Economic Zone for investors desiring to build a long-term brand identity here.

    Vietnam’s Supply Chain Infrastructure

    While other ASEAN nations spend an average of 2.3% of their GDP on infrastructure, Vietnam currently allocates around 6% of its GDP. This significant difference puts Vietnam as the leading country in respect of infrastructure investment in ASEAN. Positive as it may sound, a gap seems to remain between Vietnam’s current infrastructure and its ambition of being a fast-growing economy.

    According to the Global Infrastructure Hub, Vietnam’s infrastructure requires an average of US$ 25-30 billion annually to secure economic growth. However, the national budget only has room for US$ 15-18 billion (7% of GDP).

    As a result, the remaining US$ 10-15 billion must be raised from private investors. During 2022-2027, Vietnam’s infrastructure is expected to grow at an annual rate of around 4%.

    Transportation infrastructure

    Only 20% of the roads in Vietnam are paved with medium to low-quality materials, leading to cracks and bumpy surfaces. The country is therefore in a desperate need for road quality improvements, given that road transports is the backbone of the country’s logistics and transport industry.

    In 2021, the government announced the Decision No. 1454/QD-TTg, which promotes the development of a new road system for 2021 – 2030, with a vision stretching to 2050. It intends to expand the current national roadways of 1,290 kilometers to as much as 5,000 kilometers by 2030. This includes the upgrading of road surfaces and expanding access to key ports, airports, and railway stations.

    In addition to road systems, Vietnam also has 22 civil airports, 12 of which are international and 10 are domestic. In 2025, the Long Thanh International airport in Dong Nai, which would eventually replace Ho Chi Minh City’s Tan Son Nhat International Airport, is planned to be finished in the first phase. Looking ahead, the number of airports is planned to increase to 26 by 2030 and 30 by 2050 by the Vietnamese government.

    Port infrastructure

    There are 320 ports in Vietnam with a combined capacity of up to 470-500 million tons of cargo per year. This can be compared to the Port of Shanghai, which handled 542 million tons of goods in 2019, while the port of Singapore handled more than 600 million tons of goods that same year.

    Specifically speaking of seaport infrastructure, Vietnam currently has 45 seaports – 2 international seaports; 12 regional seaports; 18 local seaports; and 13 oil & gas seaports. Vietnamese port infrastructure is the subject of large-scale investments by many companies globally. However, this infrastructure continues to face hurdles because its current capacity has not been able to match the surging demand for imports and exports. This signals the need for more investment.

    Manufacturing infrastructure

    When evaluating and searching the most favorable manufacturing locations, which are typically industrial parks, the technical infrastructure is often regarded as the most important. Transportation infrastructure, which consists of two fundamental aspects – the internal transportation system and the surrounding transportation system – is the most crucial element of technical infrastructure in industrial parks, being frequently examined by investors.

    Apart from transportation infrastructure, the most relevant technical infrastructure elements in industrial parks are also electricity supply, water supply, and other aspects such as waste treatment systems. It’s crucial to confirm that a factory has all utilities available for companies being able to run operations.

    Access to roads and seaports

    Overall, the transportation infrastructure – the combination of the internal transportation system and the surrounding transportation system – is adequate and meets fundamental standards, with considerable variation among regions.

    First, in terms of the internal transportation system, most industrial parks have a basic infrastructural design. This involves, for example, the deployment of a chessboard pattern or by combining four main road lanes and two side road lanes, which make internal transportation easier.

    Looking at surrounding transportation systems, we also see differences between industrial parks located in the North, Central, and South. Northern industrial parks are remote from seaports but more than 91% are close to highways, with 11% being right adjacent to highways.

    In contrast to the North, the Central’s industrial parks include only national roads and provincial roads, with the former accounting for more than 88%. In contrast to the North, the Central region is bordered by the sea, thus the industrial parks here are close to the seaport (57.75% of Central’s total industrial parks), which is suitable for export-import and trade goods.

    Nearly 60% of industrial parks in the South are adjacent to national roadways, and around 50% are near a seaport, making the South superior in terms of logistics.

    Electricity supply

    More than 70% of Vietnam’s industrial parks get electricity from the national power grid, which has a capacity of 22/110 kV. With that said, many industrial parks have increasingly focused on renewable energy as supplements, or even alternatives to coal-fired power. Solar power, in particular, is used in approximately 8% of the industrial parks. Renewable energy plants are also being erected at a growing rate, and an increasing number of factories are installing rooftop photovoltaic panels.

    Worth highlighting is also the increased interest in eco-industrial parks, which grows in popularity. This concept, which helps mitigate emissions effectively and efficiently, has been experimented with in around five industrial parks so far. Some investors in large industrial parks are progressively integrating the eco-industrial park mode.

    Water supply

    More than one-third of Vietnam’s industrial parks have access to a water supply system with a capacity of 10,000 – 20,000 cubic meters per day. Similarly, more than one-third of the industrial parks install wastewater treatment systems that have a capacity of less than 5,000 cubic meters per day. However, industrial parks located near major economic centers usually require substantial water waste treatment capacity, as these generally attract more manufacturing, necessitating more treatment of wastewater.

    For instance, roughly 45% of the South’s industrial parks that are located within a radius of 30 km from Ho Chi Minh City are equipped with a wastewater treatment system with a daily capacity ranging from 5,000 to 10,000 cubic meters.

    Unfortunately, most industrial parks have paid scant attention to solid waste treatment. This is evident because more than 90% of Vietnam’s industrial parks lack their own solid waste treatment plants. More specifically, only about 20% of the North’s industrial parks within a 30-kilometer radius have their own solid waste treatment facilities. In general, local service providers will be outsourced to handle most of the garbage treatment.

    Supply Chain Issues in Vietnam

    Like most Asian countries, Vietnam is still highly dependent imports of raw materials from China. Consequently, Vietnam’s supply chain has been hampered by raw material shortages due to China’s long-lasting geopolitical tensions and previously strict zero-covid strategy.

    The country also relies heavily on Chinese imports of intermediate commodities such as semi-processed goods and capital goods, resulting in large trade deficits with its neighbor. In consequence, this leads to longer production lead times and increased logistics costs. Although Vietnam is primarily strong in midstream supply chain activities, it has yet to be a top-of-mind destination for upstream activities, including the design and production of sub-components, as well as downstream activities involving sales and distribution.

    The uneven manufacturing capabilities across different stages reinforce Vietnam’s fear of remaining an “assembly platform”, and it has a long battle to climb up the global value chain.

    For Vietnam to move up the global value chain, it must focus more on educating its workforce. This will enable foreign companies to relocate more upstream manufacturing activities such as the production of sub-components in Vietnam, making the country less reliant on imports of such components from China.

    This will also result in an important shift and allow Vietnam to take full advantage of free trade agreements, like the EU-Vietnam free-trade agreement, for products being considered “made-in-Vietnam”.

    Vietnam’s Role in the Global Supply Chain

    Amid the growing manufacturing exodus out of China, Vietnam is one of the largest beneficiaries on the back of many positive characteristics. First, Vietnam has strategic proximity to China – the “factory of the world”. Second, Vietnam’s labor force is abundant at a competitive cost that ranges from one-third to one-half of that in China and lower than most other countries in Southeast Asia. This has resulted in much manufacturing moving from China to Vietnam.

    Importantly, Vietnam also enjoys a slew of favorable bilateral and regional free trade agreements (FTAs) including the EU-Vietnam FTA, the UK-Vietnam FTA, the Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Last, the Vietnamese government and authorities actively support the manufacturing sector through a plethora of incentives from tax reductions or exemptions to related paperwork and process streamlines.

    These perks have provided a big fillip to Vietnam’s position as a promising manufacturing hub and a sourcing market, especially in Asia.

    Supply Chain Cooperation in South & Southeast Asia

    Countries in the South and Southeast Asian regions can benefit from the many fruitful trade agreements in the regions, including:

    • ASEAN-Australia-New Zealand Free Trade Area
    • ASEAN-China Free Trade Area
    • ASEAN-India Free Trade Area
    • ASEAN-Japan Comprehensive Economic Partnership
    • Regional Comprehensive Economic Partnership

    Looking at supply chains in South & Southeast Asia, there’s still much room for increased collaboration between the countries, which could reduce their undue reliance on China for the import of raw materials and sub-components.

    For example, Vietnam could switch to importing more raw materials from other Asian countries that have high availability of certain raw materials, like Indonesia and India. Besides, the countries can also enhance the legal corridor by providing special trade incentives to one another, enhancing and promoting the supply chains linking the countries.

    These proactive efforts being put in a coherent manner could mitigate supply chain vulnerabilities in South & Southeast countries by gradually cutting China out of the picture, which helps build greater supply chain resilience and strengthen economic self-reliance.


    Most of Vietnam’s manufacturing is concentrated in key economic zones, thanks to the comparatively developed infrastructure, availability to labor, financial incentives, and governmental support.

    Although Vietnam’s infrastructure still has room and need for further development, the advantages are notable. This is particularly true as the Vietnamese government has actively invested in the country’s infrastructure more than many other Asian countries in recent years. This leads to considerable expected growth in Vietnam’s infrastructure sector for years to come, which bodes well for the country’s logistics and supply chain.

    Possessing various strengths, Vietnam stands to benefit from its emergence as an important hub in the global supply chain. This is especially true considering foreigners efforts in decoupling from China. However, there are still critical supply chain issues that must be resolved long-term, related to both infrastructure, efficiency, and production capabilities. One resolution to help address these issues is establishing cross-border supply chain cooperation, especially with South & Southeast Asian countries.

    Read more about our sourcing & supply chain experience or other consulting capabilities.


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      Vietnam Contract Manufacturing: A Complete Guide

      Worker in electronics factory


      Vietnam has become one of the most sought-after manufacturing destinations in Asia, following the US-China Trade War, recent supply chain disruptions, and for companies to find manufacturing diversification opportunities.

      The country is mainly known for its cost-competitiveness and increasing manufacturing capabilities. Yet, improvements are still needed considering infrastructure, efficiency, and transparency. Many have read about Samsung’s and Apple’s vast expansion plans in Vietnam, but how easy is it really to find local contract manufacturers?

      In this article, we review where most contract manufacturers are located, what industries they operate in, and the benefits and disadvantages of working with local contract manufacturers.

      Vietnam’s Contract Manufacturing Locations

      Most contract manufacturers in Vietnam can be found in the North and the South, either in or surrounding the cities of Hanoi and Ho Chi Minh City. Let’s review what sets the cities and regions apart.

      Northern Region

      Foreign investors early targeted the Northern parts of Vietnam and it’s now considered a primary manufacturing location for electronics, tech products, telecommunication equipment, and heavy industry.

      Hanoi and surrounding provinces all benefit from the proximity and shared land border with China, allowing for imports of raw materials and components. Yes, Vietnam still relies much on imports from China, something we will review later in this article.

      Bac Giang, Thai Nguyen, Bac Ninh, and Hai Phong are some of the fastest-growing cities and provinces that foreign companies target when relocating the production of the above-mentioned products. Noteworthy, the Northern parts of Vietnam also have a comparatively developed road network, even stretching all the way to Shenzhen in Southern China.

      Southern Region

      The Southern part of Vietnam is the most economically active with Ho Chi Minh City being the country’s economic center. The city is surrounded by several other provinces and cities that are crucial for manufacturing, including Binh Duong, Long An, and Dong Nai.

      Both Northern and Southern Vietnam are strong in textile and clothing manufacturing, but you will find more contract manufacturers of furniture in the South.

      Central Region

      In Central Vietnam, Da Nang City is a top choice for manufacturing, being the country’s fifth biggest city and a gateway to the Central Region, which is quickly industrializing. The city has changed dramatically in recent years, thanks to a more sustainable approach to urban development. This has allowed the city to sustain economic growth while also maintaining its status as the country’s “most liveable city”. This city is expected to be the most advantageous location in Central Vietnam for manufacturing, although it is still far less appealing than the two most well-known cities in Vietnam, Hanoi, and Ho Chi Minh City. This is owing to several difficulties for contract manufacturing in Da Nang, notably the lack of a major port.

      Even if Da Nang relies much on its information technology and manufacturing sector, you’ll not find as many contract manufacturers here. With that said, the central parts of Vietnam should be of interest to companies that source outdoor furniture, with cities like Quy Nhon being major producers of the products.

      Vietnam’s Contract Manufacturing Sectors

      We have reviewed the different regions in Vietnam and where most contract manufacturers are located. Let’s continue and review in what industries you can find Vietnamese contract manufacturers.

      Apparel and textile

      Vietnam has long been a large exporter of garments and textiles, with a robust manufacturing base of over 6,000 textile businesses employing millions of people. The textile sector is Vietnam’s second largest in terms of export revenue.

      The industry grew much in the late 1990s, and many multinational apparel companies now have a presence in Vietnam. Looking at the supply base, 70% of the factories are in or near Hanoi and Ho Chi Minh City, where the sector began to expand.

      If you intend to manufacture or source textiles and apparel in Vietnam, you will almost certainly wind up in one of these areas. Vietnam manufactures a wide range of apparel products, making it a feasible market for several businesses. The most notable products include sportswear and gym clothes, footwear, bags, and backpacks.


      The country is also a major producer of electronics. Foreign direct investment capital in Vietnam is increasingly shifting to electronics manufacturing industries and electronic motherboard enterprises. The electronics industry accounts for a sizable portion of Vietnam’s manufacturing output and exports.

      With multinationals such as Samsung, Foxconn, and Intel present, Vietnam has risen to the top of the electronics manufacturing world in terms of export value during the last decade. Consumer goods hold the lion’s share of electronics manufacturing in Vietnam with the most common products being mobile phones, computers, laptops, and related components.

      Most electronic goods are produced in the North (Bac Ninh, Bac Giang, and Hai Phong provinces) as they may employ components from neighboring areas. Two-thirds of foreign electronic manufacturers are estimated to locate their factories in the North, with the remainder seeming to spread between the Central and Southern regions.

      Notwithstanding, Vietnam is well-known for its strong capability in midstream activities. Meanwhile, upstream activities, involving the design and production of sub-components, and downstream activities, involving sales and distribution, are primarily done overseas. Local companies concentrate more on the assembly of finished products and sub-assemblies for export.

      Benefits of Contract Manufacturing in Vietnam

      Even if it’s still not easy to find contract manufacturers, the industry will grow in the coming years and with some notable benefits.

      Cost-efficient and plentiful workforce

      Vietnam has some of the lowest labor costs in Southeast Asia after Indonesia and Cambodia, which is further bolstered by the country’s young population. This is especially apparent in labor-intensive industries like textiles and apparel, footwear, and electronics. Labor costs in Vietnam are typically one-third to one-half of those in China.

      Furthermore, Vietnam’s labor force is large, as the proportion of the Vietnamese population of working age is almost consistently greater than 50%. Many of these workers reside in urban areas and have high literacy rates.

      Free trade agreements

      Vietnam has various Trade Agreements (FTAs) with different countries, including the EU (EVFTA) and the UK (UK-Vietnam Free Trade Agreement), with the EU ultimately removing 99.2% of all tariffs after 7 years from the entry into force.

      Manufacturers gain financial and service benefits ranging from hassle-free customs, expanded export markets, and supply chains to being price competitive with competitors operating in FTA countries. The trade agreement network in Vietnam is among the most advantageous any manufacturer will find at this point in the value chain.

      The reformed customs process and several seaports in Vietnam make shipping quick and easy. Sourcing from Vietnam can be made easier with the right bespoke manufacturing partner, who will walk your company through each step and ensure that all paperwork is in place.

      Government incentives

      For more than two decades, the Vietnamese government had a strong focus on economic growth and development. Thanks to policy changes and the easing of foreign investment restrictions, the country has become more favorable to establish production in recent years.

      Disadvantages of Contract Manufacturing in Vietnam

      Let’s continue and review some of the disadvantages of working with contract manufacturers in Vietnam.

      Less skilled workforce

      Although the Vietnamese workforce is abundant at a reasonable cost, it is not as skilled compared to China’s on average, for example. This is particularly the case in advanced manufacturing. In comparison to other Asian countries such as Malaysia, Vietnam’s advanced and high-tech manufacturing skills remain a weakness.

      Higher minimum order quantities

      Minimum order quantities (MOQs) are typically higher in Vietnam although this varies based on industries and specific products. If your company requires a smaller test run for a new product, manufacturers might struggle to move to lower production runs.

      This is because Vietnam is a supply market where low prices and high volumes are prevailing business strategies. Taking clothing manufacturing in Vietnam as an example, most factories will be likely to decline your order if you want to make less than 1,000 items at a reasonable price in Vietnam. The basic reason is that they will incur financial losses.

      Our advice is that any factory that accepts low-quantity orders should be approached with caution, especially when considering product quality.

      Lack of price competition

      Generally, price competition in Vietnam manufacturing can be difficult and frustrating, and there is little opportunity to haggle for the most affordable prices. The first reason is that Vietnam is home to fewer factories than countries like China. This means businesses will be constrained by fewer options, which may imply a lack of price competition.

      The second reason is that a substantial number of foreign suppliers have extensive knowledge, depreciated equipment and machinery, and modern production networks with low-cost, high output. At the same time, many domestic firms have inefficient production methods and poor administration, resulting in a low level of price competition.

      Considerations before choosing Vietnam for Contract Manufacturing

      Even if Vietnam rises in the importance of becoming a manufacturing hub in Asia, it’s comparatively underdeveloped and there are certain shortcomings you should beware of.

      Protecting intellectual property (IP)

      Due to a lack of technical understanding and human resources to identify all cases of infringement, intellectual property enforcement in Vietnam still suffers from many shortcomings.

      Overall, however, Vietnam provides robust intellectual property protection, allowing clients and manufacturers to avoid time-consuming and sometimes devastating IP issues. Furthermore, as a member of the WTO, Vietnam is required to adhere to this organization’s intellectual property regulations, which protect industrial property and other rights.

      Patents for industrial designs, for example, are renewed for up to two consecutive five-year periods. Furthermore, Vietnam safeguards semiconductor integrated circuit designs until one of the following conditions is fulfilled:

      • The end of 10 years from the filing date
      • The end of 10 years from the date the designs were first commercially exploited anywhere in the world by the person having the right to registration or his licensee
      • The end of 15 years from the date of creation of the layout designs

      Relying heavily on imports from China

      Vietnam continues to import a substantial number of raw materials from China. Furthermore, Vietnam is heavily reliant on imports of intermediate goods from China, such as semi-processed products and capital goods, resulting in substantial trade deficits with this country. This reliance also results in other manufacturing-related concerns including longer production lead times and higher logistics costs.

      Rather than focusing on raw materials or intermediate products, Vietnam appears to be more appropriate for processing and finalizing commodities before exporting finished goods.


      In Asia, Vietnam is one of the most prominent manufacturing hubs and one of the largest recipients of foreign investment. Vietnam’s contract manufacturing sector has hugely benefited from its proximity to China, especially since many enterprises seek to relocate entirely or partially out of China.

      Most contract manufacturers in Vietnam are located in major cities such as Ha Noi, Ho Chi Minh, and Da Nang, or adjacent provinces/cities such as Hai Phong, Dong Nai, Binh Duong, and Vung Tau.

      Clothing and textile firms have always been drawn to Vietnam. Furthermore, electronics has emerged as a key industry for contract manufacturing in Vietnam. This can be seen by the shift of several global corporations like Foxconn, Intel, and Samsung into this country.

      Contract manufacturing in Vietnam comes with many benefits, including its large labor pool at a low cost, and a wide array of free trade agreements. This is in addition to the stable and supportive Vietnamese authorities.

      However, when it comes to manufacturing with advanced technologies, a large portion of Vietnam’s workforce still lacks many required high-level skills. Other drawbacks include high minimum order quantities and a lack of price competition.

      In advance of contract manufacturing in Vietnam, some factors should be put into consideration. Two critical ones are the protection of intellectual property and the heavy imports of raw materials and intermediate goods from China to Vietnam.

      Read more about our market entry & expansion experience or other consulting capabilities.


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        Importing Wood to Vietnam: An Introduction

        Loading timber onto a truck


        Vietnam has a diverse sourcing market for wooden products and furniture, counting for more than 4% of the global market. It’s the second-largest market in Asia, and the largest in Southeast Asia, putting it under the spotlight from major trading partners. Since Vietnam’s admission to the WTO in 2007, the industry has grown much, particularly as eleven of its thirteen free trade agreements have been signed already.

        In addition to local sourcing of wood materials, Vietnam relies strongly on imported wood to meet the demand for products used domestically and overseas. As a result, an increasing number of wood manufacturers seek to import wood from overseas in the most effective way. In this article, we review the most important information to be aware of if you plan on importing wood to Vietnam.

        Vietnam’s Wood Industry

        Vietnam’s furniture industry has been active for decades and recently surpassed Poland and Germany to become the world’s second-largest furniture exporter, trailing only China. The industry has grown by double digits in recent years and is expected to grow even more with the implementation of new lucrative trade agreements.

        According to Vietnam’s General Department of Forestry, exports of wood and wooden products totaled 10.42 billion USD in the first seven months of 2022, a 1.3% increase over the same period the previous year. This sustainable development is expected to continue in the coming years, contributing to the growing demand for wood materials.

        As Vietnam becomes a key manufacturing hub, more and more foreign companies are establishing factories in the country, which also facilitates the growing demand for wooden pallets to support and move goods in warehouses, or for exports.

        When reviewing local wood types available, Acacia and Rubberwood are among the most popular materials for Vietnamese domestic furniture production, these wood types grow significantly faster in hot and humid climates. Yet, many companies must import raw materials as their foreign clients are unfamiliar with Vietnamese wood types or prefer Western wood.

        What foreign wood types are in demand in Vietnam?

        There are a handful of foreign wood types in high demand in Vietnam, including:

        • Pine
        • Oak
        • Ash
        • Beech
        • Walnut

        White Oak is a strong, versatile, and popular wood type used for top-quality furniture production. Given its luxurious look and stable supply possibilities, white oak remains one of the most important and sought-after wood species for furniture making in Vietnam, being used in cabinetry, indoor furniture, and engineered flooring.

        Ash is widely used for furniture manufacturing and is widely used for doors and general cabinetry due to its attractive price along with high quality, pleasing color and pattern. In the meanwhile, Beech is a relatively ‘low-cost’ hardwood species that is used for cabinet making and simple furniture, such as toys and chairs.

        In terms of pine, thanks to its durability, versatility, and abundant production, it remains the preferred material for sofa framing, low-value components, such as bed-slats in furniture. Pine is also popular to produce residential furniture such as tables, chairs, bookshelves, and wooden pallets.

        However, neither Oak, Walnut, Beech, nor Ash is available in Vietnam. Almost all Vietnamese factories rely on imports of these wood species.

        Here, Asia Perspective can help factories in Asia to source:

        • White Oak (Europe, USA)
        • Ash (Europe, USA)
        • Beech (Europe)
        • Pine (Scots Pine, Taeda Pine, Eliottis Pine)
        • Spruce (Sweden)

        Tariffs for Wood Imports to Vietnam

        Thanks to the EU-Vietnam free trade agreement (EVFTA), the import tariff of wood from Europe to Vietnam is more beneficial than that of the United States.

        Chart showing Vietnam wood import tariffs

        Vietnam Wood Exhibitions

        Participating in exhibitions has numerous advantages, the most significant of which is that it allows companies to bring their images and brands closer to consumers. By joining wood exhibitions, companies will have the opportunity to exchange information, find potential partners and customers, and learn new techniques and technologies. There are some outstanding wood exhibitions in Vietnam:


        Being recognized as Vietnam’s largest wood exhibition. VIETNAMWOOD is held every two years and has truly become the most effective networking platform for woodworking entrepreneurs seeking new business opportunities. The 19th exhibition held in October 2022, successfully attracted 11.650 visitors from over 32 countries.


        BIFA Wood Vietnam is a large fair for professionals in the wood industry, connecting suppliers with potential customers, diversifying import and export markets, and providing businesses with opportunities to find new markets. The 2022 fair was jointly organized by two of Southeast Asia’s most powerful brands in the timber and woodworking sectors: Binh Duong Furniture Association (BIFA) and Panels & Furniture Group of wood magazines.


        VIFA, which began in 2008, aims to be the best place to promote and export Vietnamese furniture, home decoration products, and handicrafts. In 2014, VIFA collaborated with an exhibition organized by Ho Chi Minh City’s Ministry of Industry and Trade and changed its name to VIFA-EXPO. This combination has created favorable conditions for the rapid development of Vietnamese furniture.


        Vietnam is the world’s second-largest furniture exporter, and the industry has been active for decades. Having said that, it has taken off in recent years, particularly since Vietnam acceded to the WTO in 2007. Many of its free trade agreements, including the EVFTA with the EU, have been signed since 2007.

        As input materials for wood manufacturing, various wood types are in high demand. The most common domestic woods are acacia and rubberwood. Popular furniture made of beech, oak, and pine, on the other hand, would necessitate the importation of wood.

        With the EU-Vietnam free trade agreement (EVFTA), the import tariff of wood from Europe to Vietnam is significantly lower than that of the United States.

        Joining wood exhibitions is an effective way for furniture manufacturers and wood companies to spread their images and brands closer to the market. Vietnam is a popular destination for the well-known wood exhibition, where corporations can exchange information, find potential partners and customers, and learn new techniques and technologies.

        Read more about our market entry & expansion experience or other consulting capabilities.


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          Mergers and Acquisitions in Vietnam: A Complete Guide

          Consultant inspecting a factory


          Increasingly more companies seek to establish a presence in Vietnam through local M&A activities, a result of its growing manufacturing industry and domestic consumption. While the market experienced a slowdown from 2018 to 2020, it started to take off again in 2021.

          Due to the increased interest in local M&A activities, we have written this article where we review Vietnam’s M&A market, the regulations, types of transactions, and the outlook.

          Vietnam’s M&A Market

          The M&A market in Vietnam has been growing fast since 2007, the same year as it joined the WTO.

          In the first years, most investors came from foreign companies, including South Korea, Japan, Hong Kong, and Singapore. With that said, domestic Vietnamese investors have joined forces and are actively increasing their presence, both in terms of the number of deals and transaction values.

          Acquiring a well-established local entity is a preferable market-entry strategy among many foreign companies, particularly in the consumer-related industries. Many Vietnamese brands are no longer owned by Vietnamese companies, but foreign ones.

          For example, Sabeco, a state-owned beverage company with more than 100 years of experience was sold to ThaiBev in 2017, the largest transaction in Vietnam at that time. Kinh Do – who used to be the market leader with a 28% market share of confectionery in Vietnam, was also sold to Mondelez International in 2014.

          Capturing the growing middle-income population in Vietnam, several finance-related sectors were also targets of foreign investors. Almost all consumer lending companies are also owned by foreign investors, at least partly. Examples include Home Credit (European), Shinhan Finance (South Korea), HD Saison with the involvement of Credit Saison (Japan), and MCredit with the involvement of Shinsei Bank (Japan).

          Recently, SMBC’s purchase of shares in FE Credit from VPBank was known as one of the largest deals in 2021 in Vietnam, with a deal size of roughly 1.4 billion USD.

          Graph showing M&A deals in Vietnam

          Other finance-related industries, like insurance and banking, also receive more attention from foreign investors. Many non-life insurance companies in Vietnam now receive support from foreign strategic investors. One example includes BIDV Insurance Corporation with support from Fairfax Asia Limited (Canada), AXA (France), and Chevalier (Hong Kong). Bao Viet Holdings is another insurance company that got investments from Sumitomo Life (Japan).

          Renewable energy is another industry that gets increasingly more interest from foreign companies. Solar energy projects that had Commercial Operation Dates (COD) before 31 December 2020 can enjoy fixed feed-in tariffs (FIT) set by the government.

          This deadline for wind power projects was 31 October 2021. Hence, projects that were eligible for such FIT seem to be more attractive for investors, as their output is secured. With no fixed prices investors have more uncertainty which can be risky in Vietnam.

          M&A Regulations in Vietnam

          Like in other countries, M&A activities in Vietnam are subject to many regulations. The four most notable ones are the Investment Law, the Enterprise Law, the Securities Law, and the Competition Law.

          These laws were revised between 2018 and 2020, in preparation for the booming trend of inbound and domestic M&A activities locally.

          The Competition Law

          The Competition Law on M&A transactions regulates Economic Concentration (EC). This can restrict M&A activities if they negatively affect competition in the market.

          The National Competition Commission oversees this case-by-case and by various factors such as:

          • The combined market share of the related parties to the EC
          • The level of concentration pre- and post-EC
          • The relation of the businesses participating in the EC
          • The competitive advantage that the EC might bring to the market
          • Specific characteristics of each industry

          Transactions that make any company own more than 50% of the market shares are not allowed to proceed with M&As, except in special cases. If the market share is 30% to 50%, the company is required to report the transaction to local authorities. However, it has become more difficult to enforce such regulations as the market share can be subjective to estimate, unless obvious.

          Tender Offer

          A tender offer is often required when buying secondary shares of a listed company, as explained in the Securities Law. This is an effort to ensure fairness among the existing shareholders.

          In detail, if an M&A transaction increases a shareholder’s ownership from less than 25% to more than 25%, a tender offer is required. If a shareholder already owns more than 25% of a company and wants to increase the ownership, a tender is also required if the transaction results in ownership of 35%, 45%, 55%, and so on.

          This is waived in some cases, especially when fairness has been ensured before the purchase of shares. For example, when it is the purchase of new shares issued by the company, or when the purchase of the secondary shares has been approved by the Board.

          Foreign Ownership Limit

          Foreign ownership is restricted in some industries. Hence, foreign investors are suggested to consult with local experts and do research carefully before deciding to kick off an M&A strategy in Vietnam. Otherwise, transactions could result in a large waste of money and human resources, as the deal was not allowed from the start.

          Let’s take the example of the banking industry. Foreign ownership is capped at 30% for any commercial banks in Vietnam. A foreign individual is not allowed to own more than 5% of a Vietnamese financial institution. Also, a foreign organization is not allowed to own more than 15% of a Vietnamese financial institution, except when the organization is a strategic investor, then the cap is set to 20%.

          Another industry that receives much attention among foreign investors is the logistics industry. Companies providing ocean freight or inland waterway transportation can only have 49% foreign ownership. This limit also applies to companies providing other types of transportation, with the cap of foreign ownership between 49% to 51%, depending on the nature of the business.

          Veto Right

          It is also important to consider the veto right in joint-stock companies (JSC). The Enterprise Law explains that important decisions by Boards require at least 65% approval of the shareholders.

          In other words, any shareholder that owns more than 35% of a JSC has the right to disapprove significant decisions, including but not limited to changes in business scopes, changes in the managerial structure, approval of the sales of projects or assets that have the value of more than 35% of the total asset of the company.

          The veto right is crucial to take into consideration before acquiring a JSC in Vietnam. Hence, 35% (or 65%) of the ownership of a company is an important threshold. It could help the investor to minimize their paid capital, while remain the right to approve important strategic decisions of the company.

          It could also help the strategic investor to eliminate the interference of small shareholders while keeping their investment at the lowest level (only buy 65%).

          Types of M&A Transactions in Vietnam

          M&A transactions can be structured in different ways, with the most common one being the acquisition of shares or capital contribution of target companies. Each transaction type has pros and cons that can benefit investors, depending on the case. Let us review both below.

          Shares or Capital Contribution Acquisition

          This is the most common type of M&A transaction where the buyer becomes the shareholder of the target company. This can be done by acquiring the primary (newly issued) shares or the secondary (existing) shares.

          The process is comparatively simple with all the assets and liabilities being transferred directly and automatically to the new shareholders. The seller and buyer do not have to go through all items on the asset and liability lists. Hence, it saves time and cost for both sides to manage such M&A transactions.

          However, it also brings disadvantages. The buyer automatically “inherits” all financial liabilities and might be facing potential unforeseen disputes or compliance issues later. Hence, it is important to have professional agencies in charge of the due diligence, to ensure transparency and that can foresee the potential risks of the target company.

          Asset Purchases

          In this method, the buyer purchases assets from the target company and incorporates such assets into an already licensed entity. This is common for asset-heavy industries (energy, manufacturing, or logistics), or when the buyer only wants to acquire a business division (unit) of the target company.

          This option allows the buyer to be flexible in choosing the necessary assets to acquire, without taking over the irrelevant ones such as financial liabilities. However, the process of buying each individual asset will take time with complex documents required for each asset type.

          The valuation is another challenge for this M&A type, especially when it comes to intangible assets. The investors are also suggested to prepare for a very high tax rate (as much as 20%) for the purchase of the property.

          Merger or Consolidation

          During a merger or consolidation, the target company transfers all its properties, labor rights, obligations, and legitimate interests to another company. Once done, the target company terminates all its activities.

          Under this type of M&A, the most important factor to consider is the conflict of the culture between the two (or more) merging companies. How to balance the interest of all stakeholders (shareholders, employees, or management team) is also a crucial decision to ensure the smooth operation of the merged company afterward.

          Outlook for M&A Activities in Vietnam

          As mentioned, M&A activities have increased much in Vietnam since 2007. The market has become more active lately with the involvement of both foreign and domestic companies, acting as investors. Experts forecast that the market will keep growing fast, especially when the country is in the recovery phase after three years of being hit by the pandemic.

          As mentioned, the growing middle-income population is one of the key drivers that attract foreign investors’ attention to the consumer-facing industries. In 2021, while many countries saw negative GDP growth rates, Vietnam grew by 2.58%, and the most M&A deals and total deal values were recorded.

          With no travel restrictions, it’s easier for foreign entrepreneurs to visit and explore business opportunities here. One of the main challenges for M&A activities during the pandemic was the travel restrictions, which prevented investors from visiting the potential targets directly. This is even more difficult when it comes to manufacturing companies, having facilities that must be audited. Most of these assessments were either outsourced to local agencies or carried out remotely (by sending photos or through video calls).

          Moreover, the many free-trade agreements signed have made Vietnam an increasingly interesting destination for trade and manufacturing. With wider access to global trade, as well as tariff exemptions, many domestic companies are expected to become more attractive, both as financial investments and as key parts of the global supply chains of foreign companies.


          Vietnam’s M&A market has been highly active, despite the pandemic. The consumer-related industries have and will certainly be one of the key drivers that attract more foreign investment.

          Japan, South Korea, and Singapore have long been the top investors in Vietnam, but the country has gained more interest from Western companies, as well as Vietnamese domestic investors. Major challenges that prevent Western investors from inbound investments are the cultural differences and the untransparent legal system.

          To minimize such concerns, the Vietnamese government has been working to revise, update and provide a clearer legal system, including key regulations that directly affect M&A activities, such as the Enterprise Law, the Investment Law, or the Competition Law.

          It’s fair to say that M&A is a preferred option among many foreign companies who want to get quick access to Vietnam’s domestic market and through inorganic growth. Just be sure to work with credible local partners that can minimize the risk of pitfalls and for proper due diligence.

          Read more about our market entry & expansion experience or other consulting capabilities.


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            Moving Manufacturing from China to Southeast Asia: An Introduction

            Factory workers in Indonesia


            Foreign companies have used low-cost country sourcing strategies for decades with a strong focus on China. In the past years, we’ve seen a new trend where increasingly more companies look for alternative sourcing markets in Asia.

            In this article, we explore why this move is happening, specific brands that already moved parts of their production to Southeast Asia, what should you pay attention to if you are a manufacturer, and which countries are on the rise as alternatives to China.

            Why are companies moving manufacturing from China?

            Increasingly more companies have understood the importance of diversifying their supply chains from China, a trend that was accelerated during the pandemic.

            The increasing labor costs is a major concern, which are around three times higher in China compared to Vietnam, and five times higher than Indonesia on average. Between 2009 and 2014, the Chinese minimum wage almost doubled, resulting in slimmer margins for foreign companies.

            Another reason is the supply chain disruptions caused by the pandemic that sent shockwaves to global manufacturers, urging businesses to rethink their procurement strategies. Some companies have decided to move their production to other countries completely, while many adopt so-called “China plus one” strategies. This means that production is kept in China, while parts of the production is allocated to other countries.

            The increasing import duties due to the ongoing trade war has also aggravated the struggles of businesses that are manufacturing in China. As China faces these and many other problems, Southeast Asia simultaneously rise fast and gain attention as an alternative market to China.

            Companies Moving Out of China

            Let’s review some notable companies that have moved parts of or all their production from China, and their future plans for the new manufacturing destinations.


            Under the trade war pressure, Apple has been encouraging its suppliers to move production out of China. Parts of the iPhone’s production lines have been moved to India, some MacBooks are now assembled in the U.S, and Vietnam has been rising as an essential hub to produce Air Pods.

            It plans to have 30% of its classic Air Pods produced in Vietnam instead of China. Foxconn for instance, the major supplier of Apple, invested 270 million USD in a plant to manufacture laptops and tablets in Vietnam in 2020. In fact, Apple tried to move more production to Vietnam in 2021, but the plan was postponed due to the pandemic, but the plan was resumed in 2022.

            Samsung Electronics

            Samsung stopped its smartphone manufacturing in China in 2019, and its TV and PC factory in 2020. Its global production is now based in Vietnam. The revenue of Samsung Vietnam is equivalent to roughly 20% – 25% of Vietnam’s total GDP in 2021 and the company is also a main contributor of FDI flows from South Korea.


            Nike’s suppliers have been relocating production to Southeast Asia and Africa for a few years. The brand used to have much production in China with an estimation of 35% in 2006 but the brand has reduced its dependence on Chinese suppliers. In 2021, 51% of Nike’s shoes were made in Vietnam while only 21% were made in China.


            Nike is not the only apparel and footwear giant to shift its production location. About 25% of manufacturers for Adidas in China were shut down as foreign businesses stopped their partnerships with Chinese factories. The reason behind this was the penalty tariffs due to the trade war. Opportunities, therefore, open for counterparts in Vietnam, Thailand, Bangladesh, and Indonesia thanks to low-cost benefits.


            HP, Dell, and other tech firms planned to reallocate up to 30% of their notebook production out of China. HP has reportedly planned to shift 20%-30% of its Chinese production to Taiwan and Thailand to mitigate the risks of rising costs and disruptions, the US tariffs on tech products also reduced profits.

            Considerations before moving manufacturing from China

            It’s undeniable that China is still crucial for the global value chain, and the country has significant advantages that makes it competitive for manufacturing. Let’s review some important items to consider before relocating manufacturing from China to Southeast Asia.

            Manufacturing capabilities

            It’s easier to say what products cannot be manufactured in China than the other way around. Anything from clothing, machinery, electronics, telecommunication equipment, vehicles, and chemicals are produced here. Not only can you find products that require labor-intensive manufacturing at low costs, but also advanced manufacturing.

            Manufacturing is also concentrated to different regions such as Guangdong province being particularly strong in electronics manufacturing, just to give an example.

            Experience with foreign companies

            Chinese suppliers are flexible and generally more experienced in working with foreign customers. They are nimble, fast, and understand Western standards well. The availability of skilled labor in China still also outweighs other Southeast Asian countries. It’s easy to come across suppliers who happily provide both OEM and ODM products, according to customers’ specifications.

            The business ecosystem and mature supply chain

            The supply chain in China has developed for decades. Foreign companies rely much on Chinese suppliers that are located. Therefore, moving out of China means moving the entire manufacturing and network from the country, which takes a great deal of effort, time, and money. Moreover, manufacturers around the world still depend a lot on Chinese raw materials and semi-final products. For example, clothing producers from Vietnam and Bangladesh must import most of their fabrics and threads from China; European manufacturers of cars must import wiring from China. This ecosystem makes China dominant in global manufacturing.

            Relocation costs

            With the strong concentration of manufacturing in China, relocations to other countries requires much capital and resources. Simply speaking, if you have your factory set up in China and want to shift to Vietnam, much capital is needed to set up a new factory, recruit workers, train the workers, send specialists to Vietnam for quality controls and inspections. You also have to add the work needed to deal with local authorities to get approvals and relevant certificates prior to operations.

            China’s consumer market

            Some enterprises hesitate to move from China due to its large consumer base. With a population of 1.4 billion, China remains the biggest consumer market for many products. If a company already has manufacturing in China, it is also easier getting access to the domestic market and to distribute products locally.

            Otherwise, you would need to export the products to China, which comes with tariffs, customs clearances, additional shipping costs, and more.

            What countries are companies moving to in Asia?

            While China will remain an important manufacturing destination, there are a handful of countries in South and Southeast Asia that gain much attention. Let’s review the most notable ones.


            Vietnam has traditionally attracted companies in furniture and textile production. Nowadays, multinationals set up production for more advanced products, including electronics, telecommunication equipment, and machinery. The benefits of choosing Vietnam as a manufacturing destination include its low labor costs, many trade agreements, enhanced manufacturing capabilities, and large labor pool. Even if Vietnam won’t replace China as a global manufacturing hub, it gains significantly as companies seek to diversify and set up manufacturing operations here.


            With a population of 275 million, Indonesia is the most populous country in Southeast Asia and with a workforce of around 135 million. With rapid urbanization and a median age of 29.7, the country is set to become a leading manufacturing hub in Asia.

            Its domestic market is expected to see great growth as disposable incomes increase and more people get access to smartphones, the internet, and modern financing options. At the same time, the country struggles with infrastructure issues, red tape, and regulations that tend to be unclear and change frequently.


            The manufacturing industry is India’s most important. ‘Make in India’ is a program to put India on the map as a manufacturing hub and attract more businesses and investors. India’s main products includes automobiles, chemicals, clothing, consumer electronics, electrical equipment, furniture, heavy machinery, refined petroleum products, and ship building.

            Notably, India has lower labor cost compared to China, yet you will have to deal with a weaker infrastructure, inefficient transport system, and lower domestic consumption.


            In general, companies are moving from China due to the increased labor costs, supply chain disruptions, and trade war. At the same time China faces these issues, other countries like Vietnam, Indonesia, and India become more interesting and capable.

            If you are considering a relocation from China, you should consider relocation costs and inefficiencies in new markets, not only looking at labor costs. China also possesses a business eco-system that cannot be replicated in the short-term.

            Southeast Asian suppliers highly rely on imports from China, which drives logistics costs and final prices, so these rising countries can be one of the sourcing bases but cannot completely replace China.

            Read more about our market entry & expansion experience or other consulting capabilities.


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              Setting Up a Joint Venture in Vietnam: A Complete Guide

              Businessmen talking


              Establishing a joint venture (JV) is a popular method used by foreign companies to enter the Vietnamese market. This does not only help to utilize the expertise of all participating parties but is also in line with the local regulation regarding foreign ownership in some industries.

              The procedure of setting up a JV shares similarities with that of foreign-owned enterprises in Vietnam. However, one of the unique challenges of a JV comes from the selection of the local partner, and how to structure this collaboration. The key focus is to benefit all parties while minimizing the potential conflict of interest, especially during the decision-making process.

              In this article, you will learn about the procedure of setting up a JV in Vietnam, together with relevant regulations that foreign investors should be aware of.

              What are the benefits of setting up a joint venture in Vietnam?

              A JV with a local business(es) is sometimes the best option for foreign companies thanks to the expertise of the local partner(s), as well as the low compliance risk. In some cases, it also is the only option for overseas brands to enter the Vietnamese market. This is especially applicable when it comes to the industries that have a limit on foreign ownership of the business. Below are some examples of the benefits that foreign companies can expect from this collaboration model.

              Compliance with local regulations

              Some industries limit foreign ownership as some industries that are considered to be sensitive by the government. Below you can find a handful of industries and the foreign ownership limitations:

              • Banking – 30%
              • Goods transportation by rail or domestic waterway – 49%
              • Goods transportation by road – 51%
              • Cargo handling services – up to 50%, depending on the type of cargo

              Therefore, establishing a JV might be the only way in for foreign companies in certain industries. However, this is more complicated and requires significantly more resources from the investors, both in terms of legal documents and human capital.

              Access to local expertise

              A great benefit of a JV is that you can utilize the local experience and network of the domestic Vietnamese partner.

              Foreign companies can establish their footprint in the domestic market while enjoying external support from someone familiar with the market for years. You and your partner can then bring your own strengths to further develop the JV.

              Your partner will support with related paperwork and documentation, as well as deal with local authorities. They can also provide insights about local practice, as well as established relations with relevant stakeholders, such as suppliers and distributors.

              Meanwhile, the foreign partner is expected to bring experience of globalization, technological innovation, and know-how, which typically are the weaknesses of the local party. Hence, the addition of a foreign company is considered a competitive advantage over local peers in the same industry.

              What are the disadvantages?

              Having a local partner(s) can sometimes bring disadvantages to foreign companies, mostly from the differences in working style. These differences are often associated with cultures, languages, and development plans.

              Conflict of interest

              One of the most common reasons for JV’s to fail is due to disagreement in strategic decisions. Even when they share multiple mutual goals, it is not always possible for the two to align perfectly.

              To prevent this situation, it is strongly suggested to clarify the scope of work, as well as the responsibilities. This shall be agreed upon in the company’s Charter, shareholder agreement, or any other type of agreement between the founding parties.

              When the conflict cannot be solved in goodwill, one might liquidate their stake of ownership, either to the other partner(s) or to an external party. Hence, it is important to consider and carefully discuss the tag-along and drag-along rights before the establishment of a JV, to ensure a smooth exit strategy for all parties, if needed.

              As a result, a 50/50 JV is not recommended, as it creates a deadlock when a disagreement arises. This could be resolved simply by making the equity of a party slightly higher than the other (51/49).

              Cultural differences

              It is a challenging task to select the right business partner, either to purchase from, sell to, or cooperate with. This is even harder when the business partner differs in both language and culture.

              It is often a challenge for a foreign company to understand, adapt and get used to Vietnamese culture at a start. The overseas partner will heavily rely on the local partner at the beginning. This mainly includes the initiation of business relations with relevant stakeholders or the fulfillment of necessary legal requirements.

              The differences in culture and language might lead to delays in decision-making or inefficient operations. To resolve such issues, a common solution is to engage employees of the foreign investor to hold some managerial positions, to act as a bridge between the foreign company and local practices.

              Requirements to set up a Joint Venture in Vietnam

              With a legal framework that is not as efficient and transparent like in Western countries, foreign companies needs to be fully aware of and understand the local requirements to set up a JV. This could be done via either publicly available sources of information or professional local advisors.

              Companies need to follow a three-step procedure, as shown below, to identify if they are allowed to do business in their target sectors:

              1. Identify if the target industry is prohibited

              There are both industries that are prohibited in general, but it could also be specifically for foreign companies.

              Examples of industries that foreign investors (including some JVs with foreign ownership) are prohibited to operate in are:

              • Catching or exploiting seafood
              • Notary services
              • Labor export
              • Direct waste collection from households
              • Import and dismantle used vessels
              • Manufacturing and trading of military weapons, equipment, and devices

              (Source: Decree 31/2021/ND-CP by the Vietnam Government)

              2. Check if the target industry is in the list of “Approach with conditions” for the foreign investors

              This is regulated in Decree 31/2021/ND-CP. Foreign investors (including some JVs with foreign ownership) are required to meet a certain set of conditions, in order to do business within that industry.

              The conditions vary case-by-case, but can be grouped into the following categories:

              • The proportion of foreign ownership
              • The type of the investment
              • The scope of the investment activities
              • The capacity of the investors

              Other conditions as regulated by applicable legal documents from either local authorities or international treaties that Vietnam is a member of.

              3. No restriction or condition for foreign companies

              If the target industry does not fall into any of the categories in Step 1 or Step 2, companies are all treated equally, whether there is foreign ownership.

              Minimum Capital Requirements

              Vietnam has no general minimum capital requirement for JVs. However, some industries are still regulated:

              • Consumer finance company: 500 billion VND (22 million USD)
              • Financial lease company: 150 billion VND (6.5 million USD)
              • Real estate: 20 billion VND (870 000 USD)
              • Audit services: 6 billion VND (260 000 USD)
              • Air transportation (cargo and passenger): 100 billion VND to 1000 billion VND (4.3 million USD to 44 million USD), depending on the nature of the business and the number of aircraft
              • Insurance (life and non-life): 200 billion VND to 1000 billion VND (8.7 USD to 44 USD), depending on the nature of the business

              Apart from the industries that have minimum capital requirements, a general rule for all businesses established in Vietnam (including JVs) is that they should have sufficient and reasonable registered capital that matches their operation. This is typically assessed by the local Department of Planning and Investment.

              Foreign-invested businesses, including JVs, are required to have a direct investment capital bank. Foreign capital must be injected through this bank account.

              How long does it take?

              When establishing a JV in Vietnam, two important milestones are the issuance of the Investment Registration Certificate (IRC), and the issuance of the Business Registration Certificate (BRC).

              The average processing time (from the submission date of proper documents) is 10 to15 working days for IRC and 5-10 working days for BRC. It is worth noting that the IRC might take significantly longer depending on the nature of the business. For example, projects that lease public land from local authorities, or projects that require the transfer of a restricted technology, are both subject to the additional approval of the provincial people’s committee.

              The preparation of proper documents and licenses usually takes the longest time. This is even harder to estimate when it comes to the “Approach with conditions” industries, where the shareholders of the JV need to fulfill a certain set of requirements, either before or after the submission of IRC and BRC.

              What to consider when setting up a joint venture in Vietnam

              As mentioned above, it is important to identify the desired industry of the JV, as some are subject to foreign-ownership restrictions, and some (in the worst scenario) are not allowed in Vietnam. Common conditions to be fulfilled are the percentage of foreign ownership, minimum paid-in capital, or the acquisition of relevant sub-licenses.

              Another factor to consider when establishing a JV in Vietnam is the selection of suitable partner(s) locally, which will impact the development of the company. The reputation and reliability of partners should be assessed from multiple aspects to give a true and fair view of this matter. This can be done either by the company themselves, via their local and international business networks, or independently by professional local market entry specialists.


              Setting up a JV brings many benefits to foreign companies, especially those entering Vietnam for the first time. It requires less paid-in capital (as this is shared by the shareholders) from the company than establishing a local legal entity itself. The JV is also a chance for foreign companies to learn, and to take advantage of the accumulated market insights of the local partner(s).

              However, the foreign company in a JV also needs to prepare for many challenges. Some are similar to establishing a normal foreign-owned enterprise, including steps such as complicated legal procedures, the opening of a direct investment capital account, and large paid-in capital for some industries. Moreover, the foreign partner also needs to be ready for unique challenges of JV, such as the conflict of interest with the local partner, or the impact of cultural differences on the collaboration of the founding parties.

              Finally, it is also important for foreign companies to identify if the intended industry of the JV falls into any of the “Prohibited”, or “Approach with conditions” ones. If there are conditions to fulfill before establishing the JV, all founding members should have a clear plan to meet such requirements, as well as to acquire relevant licenses.

              Read more about our market entry & expansion experience or other consulting capabilities.


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                Vietnam’s Fintech Industry is A Natural Magnet for Capital

                Vietnam currently houses nearly 200 fintech firms, offering a broad range of services from digital payments to wealth management, P2P lending, and blockchain-based solutions. The rise of the fintech ecosystem in Vietnam is disrupting the overall financial industry, capturing markets that were once untouched by traditional banking, and along the way, gained a lot of attention from global investors.


                Vietnamese fintech working looking at financial charts


                A market set for exponential growth

                From a mere 39 firms in 2015, the size of Vietnam’s fintech industry grew dramatically to 112 in 2017, 169 in 2019, and approximately 188 by September 2021 (Tracxn, United Overseas Bank – UOB, 2021). The top sub-sectors accounting for 76% of the total fintech market share in Vietnam include digital payments, peer-to-peer (P2P) lending, cryptocurrencies and blockchain, investment tech, and point of sales.

                Graph showing Vietnam fintech market share

                Vietnam’s fintech industry has come a long way. However, it is still nascent, especially when compared with the other top 6 ASEAN economies (Singapore, Indonesia, Malaysia, Thailand, Philippines, and Vietnam). Vietnam currently has the lowest number of fintech firms in the group. The annual number of newly added firms has also been modest compared to the ASEAN-6’s results.

                Chart showing total fintech firms in operation in Vietnam

                For investors and newcomers, the current small size of Vietnam’s fintech industry makes it particularly attractive for investment, as it still offers numerous gateways to get involved. The fintech market in Vietnam is only heating up, while in other ASEAN-6 countries, it is getting fiercely competitive and relatively saturated.

                The attractiveness of Vietnam’s fintech industry is evidenced by the expansion of capital in both size and value. According to the FinTech in ASEAN 2021 report conducted by UOB, PwC, and SFA, Vietnam gathered 15 investment deals during the January-September 2021 period, placing the country in a joint third position with Malaysia, behind Singapore and Indonesia. The country also ranked third in fintech deal value, with 375 million USD funded in 2021, accounting for 11% of the total deal amount in ASEAN-6 2021. In comparison, funding in Vietnam’s fintech industry took up only 3% of total funding deals in ASEAN-6 in 2020.

                Graph showing Vietnam fintech deal value

                Major deals in 2021 include a 250 million USD investment into the payment solution company VNPay. Followed by two investments, worth 100 million USD (Series D) and 200 million USD (Series E) into e-wallet company MoMo (the second round was concluded in December 2021). Investments into Fintech startups also take up the largest share of investment value in startups in Vietnam 2021, with 26.6% of total investment.

                Chart showing investment in Vietnamese startups

                A Diversifying Landscape

                Vietnam is a predominantly cash-based economy, and more than 70% of the population does not have a bank account. The low financial inclusion is attributable to the limited access to financial information and banks in rural areas.

                Yet, Vietnam is an increasingly tech-savvy market, with a 70.3% internet penetration rate and 63.1% of the population being smartphone users as of 2021. The COVID-19 pandemic also brought about a shift in Vietnamese spending habits. Contactless transactions are becoming the preferred choice of payment. SaaS cloud banking platform Mambu reported that around 85% of Vietnamese banking consumers are more likely to use online and digital banking services in 2021 compared to a year and a half ago. These factors create a huge opportunity for fintech companies to fill the gap.

                Riding on the shift in consumer behaviour, digital wallet providers have proliferated in recent years, especially during the COVID-19 pandemic. The sector is getting intensely competitive with over 40 non-bank payment service providers. Familiar brand names include MoMo, VNPay, ShopeePay, ViettelPay, Moca (GrabPay), and Zalopay, which account for most of the current market.

                Still, even the largest e-wallet companies are struggling to find a competitive edge, as tension is added from traditional banks also developing e-wallet functions. Most competitors are aiming to become super-apps, merging multiple services into one app, while attracting potential customers with marketing efforts and targeted discounts. Various mobile wallet apps have been providing other financial services, such as saving accounts, loan applications, and non-life insurance products in combination with discount vouchers and cashback offers.

                Digital payments remain the most attractive sector for investors. 85% of total capital invested in Vietnam’s fintech during the 2019-2021 period is in core payments, according to the Vietnam Innovation & Tech Investment Report 2021 by Do Ventures and Vietnam National Innovation Center (NIC). UOB explained in FinTech in ASEAN 2021 that due to concerns surrounding the prolonged pandemic, investors have turned to be more risk-averse and preferred to invest in mature fintech companies as they are deemed more resilient.

                Table showing capital invested in Vietnam fintech

                While digital payments will likely continue to dominate the fintech market, P2P lending is peaking up. P2P lending poses an attractive and convenient alternative to bank loans for both individuals and businesses, as most fintech firms in the field offer loans at relatively lower rates than traditional banks. According to a study by the World Bank, about 79% of people in Vietnam do not have access to formal financial services, including lending. There are also around 60% of small and medium enterprises (SMEs) that are not able to borrow from banks due to a lack of assets. The cluster presents a vast ground for development. Morgan Stanley also projected that the P2P lending model will be a global trend of the future.

                Insurtech and wealth tech are also rising in popularity. According to Fintech & Digital Banking 2021 report by MBBank, the use of big data for analysis of demographics, consumer behaviour, social ecology, medical data, and biometrics in insurtech could significantly support the insurance industry in areas ranging from marketing to risk management, product development, pricing, and customer service. Adoption of technology opens opportunities for traditional insurance companies to provide flexibility in insuring policies and variability in pricing. Vietnam’s insurance market is growing at a steady pace. According to the Vietnam Department of the Insurance Supervisory Authority, Ministry of Finance, the total insurance premiums collected by insurance companies rose by 24.98% in 2021 compared to the previous year.

                Several names have been establishing a strong foundation in Vietnam’s rising wealth tech industry. In February 2022, investment app Infina announced they have closed 6 million USD in their seed funding from Sequoia Capital, Y Combinator, and several other venture capitals. Infina, together with Finhay, is catering to the group of young, first-time investors whose needs have not yet been well-addressed by existing solutions in the market. There has been a recent surge in demand for retail investment assets in Vietnam recently. 1.53 million new retail stock accounts were opened in 2021, exceeding the previous four-year total. Purchases of cryptocurrencies as investment assets are also on the rise. It is estimated that approximately 5.9 million Vietnamese people are current holders of virtual assets. That is 6.1% of the total population (TripleA, 2021). Given the rising interest in investment from the overall public, tech firms in the field could easily expect to attract a wider customer base in the future.

                An Ecosystem Strongly Backed by Government

                The Vietnamese government has been encouraging the adoption of advanced technologies by introducing several regulations in favour of the banking and financial services sector. In March 2017, the State Bank of Vietnam (SBV) established a Steering Committee on Financial Technology dedicated to the building of a regulatory framework for the development of the fintech ecosystem and creating opportunities for local fintech companies.

                A five-year project (2021-2025) has been approved to support the development of cashless payments. The project aims to accelerate the growth of cashless payments with improved security, safety, and confidentiality, and to make it more accessible to residents in all areas, including rural, remote, and mountainous places. In numbers, the project aims to increase the value of non-cash payments to be 25 times higher than the GDP, and the proportion of cashless payments in e-commerce to reach 50% by 2025. Additionally, the project attempts to close the current gap in financial inclusion, lowering the rate of the unbanked population to 20% among people aged 15 and over.

                The Ministry of Finance, in collaboration with the SBV, has established a regulatory sandbox to further boost the financial ecosystem. The pilot regulatory program will enable businesses in various fintech sectors, including P2P lending, payments credit, and consumer identification, to participate. A research group is also in place to cover policies for virtual assets and cryptocurrencies. The sector currently has no regulation in place, even though Vietnam is already ranked top 10 among 154 countries in Chainanalysis’ Global Crypto Adoption Index from 2020.

                While there is a need to tighten regulations to hinder malicious acts in the industry, the government is allowing a lot of space for foreign investors to take up ownership of fintech firms.

                A Magnet for Capital

                Vietnam, with a young, urban, and tech-oriented population, is seeing accelerated growth in fintech adoption. Within the last 6 years, the industry has expanded by over 5 times. And yet, there is still an enormous ground for new players to enter the market, given the current small size of the industry in comparison to the vast population of Vietnam.

                Aside from the digital payments sector, which has been in fierce competition, Vietnam’s fintech industry also has rising startups in alternative lending, wealth management, and cryptocurrency, among others. The rate of adoption in each sector has been impressive, for both B2C and B2B business models. For most customers, fintech opens new doors that were once deemed inaccessible with the traditional brick-and-mortar financial services.

                In parallel with the growth of technology integration in financial services, the government has been relentless in rolling out regulatory strategies to adapt to new business models, including the opening of the research centre and regulatory sandboxes. It also strives to sustain a favourable environment for foreign investors, balancing tightening regulations to reduce risks and allowing the market to grow through foreign investments.

                All these factors combined make Vietnam’s fintech industry a promising opportunity for investors. There has been a surge in fintech investment in Vietnam recently, and we could undoubtedly expect to see a much more dynamic inflow of capital in the future.

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                  Exporting Food Products from the EU to Vietnam: A Comprehensive Guide


                  Vietnam has emerged as one of the fastest-growing markets in Asia, being the 10th largest trade partner of the US and the 16th largest of the EU. With a population of nearly 100 million people along with a fast increase in the middle and high-income groups, Vietnam shows increasingly greater demand for imported food products.

                  Main import markets include the EU, the US, Korea, Japan, and Australia. Products from these countries are often considered to be of higher quality than domestically produced ones, at the same time as the Vietnamese get an increased appetite for foreign products.

                  The EU-Vietnam Free Trade Agreement (EVFTA) came into effect in 2020 and has created ample opportunities for both Vietnam and EU enterprises to expand their businesses locally, with decreased or eliminated tariffs for more than 99% of traded goods.

                  In this article, we review what products are in demand in Vietnam, the import process, as well as the import duties.

                  What food products are in demand in Vietnam?

                  Vietnam is a big producer of food products, and some are already supplied by domestic producers, leaving less room for foreign enterprises. In this article, we only review the most noteworthy categories with a strongly growing demand and explain the trends for these.

                  Fresh fruits and vegetables

                  In 2020, fresh fruits and fresh vegetables ranked as the first and the third most imported food products by value. Both are important for Vietnamese diets, and it doesn’t come as a surprise that Vietnam is one of the biggest consumers of fruits and vegetables globally.

                  The import value of fruit also increases as Vietnamese consumers pay more attention to the quality of the products. Moreover, while tropical fruits used to be dominant as they grow in abundance in Vietnam and are sold at low prices, Vietnamese are now willing to spend more for other types of fruits. Main imports from the EU include apples, plums, peach, grapes, cherries, and olives.

                  Among the European Geographical Indications (GIs) indicated by the framework of EVFTA we find:

                  • Kiwi Latina: Kiwi fruit from Italy
                  • Cítricos Valencianos (Cítrics Valencians): Citrus fruit from Spain
                  • Pêra Rocha do Oeste: Pears from Portugal
                  • Pruneaux d’Agen (Pruneaux d’Agen mi-cuits): Prunes from France
                  • Mela Alto Adige (Südtiroler Apfel): Apples from Italy

                  Fresh and processed meat

                  Meat consumption has increased much in Vietnam in the last decade and pork accounts for around 70% of the total consumption. It’s currently the second-biggest pork consumer, just behind China, and spent more than 600 million USD in 2021 on imports of pork.

                  The demand for fresh beef has risen sharply thanks to the growth of the Vietnamese middle class, as the product is more expensive than pork. Imported beef is mainly used in luxury restaurants, hotels, high-end outlets, and meat-oriented chains. Main export markets include Australia, the US, and Canada, partly due to the lower tariffs.

                  Processed meat commonly consumed includes sausage, bacon, and ham. If you are a German sausage producer and plan to enter the market, you already have an advantage in branding as the “German sausage” is widely known among Vietnamese as the best sausage that is worth trying. Sausage is widely used in many dishes such as the famous banh mi, which is a traditional baguette.

                  Dairy products

                  Vietnam’s domestic production of dairy products only meets around 30% of the consumption, resulting in a need to import dairy products. One of the reasons is the country’s climate, which is not favorable to raise dairy cows. Raw milk is therefore primarily imported from Australia, the EU, New Zealand, and the US.

                  Cheese and butter demand is fueled by exposure to Western culture, and consumers often choose imported cheese and butter rather than the limited choice of domestic brands, if they choose quality over price.

                  The demand for imported baby formula also continues to increase, thanks to Vietnam’s growing population and the increased disposable incomes. We see significantly higher usage of baby formulas compared to Western countries and around two-thirds of Vietnamese families buy the products.

                  Dairy products

                  Vietnamese have become more health-conscious and understand the benefits of olive oil, increasing the demand for the product. There is a big demand for vegetable-originated oils, and olive is one of the most popular options. The market relies on imports of olive oils from foreign countries, primarily Spain, Italy, and Greece.

                  Process when Importing Food Products to Vietnam

                  Most categories of imported food must undergo inspections. Depending on the product types, the following bodies are responsible for different food categories, implementing Law 55/2010/HQ12:

                  • Ministry of Health (MOH): Responsible for most pre-packed and processed food products
                  • Ministry of Agriculture and Rural Development (MARD): Responsible for agricultural products
                  • Ministry of Industry and Trade (MOIT): Responsible for higher-risk foodstuffs, such as alcoholic beverages, processed milk, and edible oil

                  Notice that the import procedures will differ depending on your products, make sure to check the regulations from the corresponding authorities mentioned above.

                  Some general steps for the imports of fresh fruits are as follows.

                  Step 1: Check the import list

                  First, you need to check if Vietnam allows imports of your products from the country of origin. For fruit and vegetables, you can check the website of the Plant Protection Department.

                  Step 2: Apply for a phytosanitary license (if required)

                  The list of items can be found in Circular 24/2017/TT-BNNPTNT, showing that tubers, fruits, and seeds will need a phytosanitary permit before being imported.

                  Step 3: Product registration and quarantine at the border gate

                  Prior to imports, you must register the products with the customs. The products will also be in quarantine before the products have been tested.

                  Step 4: Quarantine sample

                  When the registration is completed, and after the goods arrive at the airport or seaport, the importer (or service company) coordinates a visit to the warehouse with the quarantine officer to collect the goods and to take samples.

                  Step 5: Import customs procedures

                  Currently, the Vietnam custom procedures are defined under Law No. 54/2014/QH13. For processed and packaged food, the importers need to:

                  • Perform product disclosure or product self-declaration
                  • Apply for a certificate of food safety eligibility
                  • Carry out relevant customs procedures for imported food
                  • Inspection by a government-appointed authority

                  Import Duties for Food Products in Vietnam

                  To find the applicable import duties, you should first check the HS codes. More detailed guidelines and full tariff information for EU countries can be found here. Below are HS codes of some of the most imported products in Vietnam:

                  • Fruits: Cherry: 08092100; Apple: 08081000; Grape: 08061010; Peach: 08093090
                  • Meat: Frozen beef, boneless: 02023000; Frozen pork: 02032900; Canned pork: 16024999; Pork sausage: 16010090
                  • Dairy: Mozzarella Cheese: 04061010
                  • Olive oil: 15091010 (Olive oil and its fractions, whether refined, but not chemically modified. Packed with a net weight not exceeding 30 kg)

                  Under the free trade agreement with the EU (EVFTA), the import duties for the above-mentioned products will be gradually removed by 2027. For example, beef is currently subject to import duties of 20%, but will be exempted from import duties by 2023, giving EU exporters a great price advantage.

                  Below you can find a list of food products that will be exempted from import duties from 2023 to 2030.

                  Table of food products exempted from import duties by 2030


                  Vietnam is a high-potential consumer market for food products as its middle and high-income class is growing fast, along with its strong population growth.

                  The country’s openness to trade has made the market even more attractive, and food producers from the EU should expect a fast growth in the demand for imported food products in the future.

                  EU countries benefit strongly from the European Union–Vietnam Free Trade Agreement (EVFTA), which was introduced as late as 2020. Many exporters are still unaware of this free trade agreement, which will get increasingly more attention in the coming years.

                  With that said, it can be complex to manage local registration processes, particularly if you have no or little experience in the Vietnamese market. Assure that you work with a reputable service provider that can help you in the process to avoid any pitfalls later.

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                    Vietnam’s Wind Power Opportunities for Foreign Investors

                    Vietnam is one of the world’s most energy-intensive economies, consuming more energy per unit of economic output than the Philippines, Malaysia, Indonesia, and India does. The country’s electricity demand is expected to increase at an average rate of up to 9% annually over the next decade (Fitch Ratings). Its onshore, nearshore, and offshore wind power potential is attracting diverse global interest and has been named by the World Bank as world-class in 2021.


                    Wind farm in Ninh Thuan, Vietnam

                    Vietnam’s Rich Wind Resources

                    Vietnam has a significantly higher potential for wind energy than its neighbours Thailand, Laos, and Cambodia. In 2021, Vietnam came 4th on the list of top 10 countries by added wind capacity, meaning the added amount of wind energy generated from wind power plants in the year, and 22nd by total newly installed wind power capacity in 2021, surpassing every other Southeast Asian country.

                    The country’s wind resources lie on its coastline of 3,000 kilometres, and in the hills and highlands of the northern and central regions. A study from World Bank ESMAP estimated that over 39% of Vietnam’s area had an annual average wind speed of over 6 m/s at a height of 54m, equivalent to a total capacity of 512 GW. By 2021, the country had installed 4,118 MW (4.118 GW) in wind power, a mere 0.8% of its total potential.

                    Out of the installed wind capacity, 3,124 MW is generated from onshore plants and 994 MW from offshore plants. Contrary to the current status, Vietnam’s offshore wind potential generated from wind at sea outweighs its current onshore wind resources. The Institute for Sustainable Futures (ISF) estimated in the development plan, Renewable Energy for Vietnam 2019, that Vietnam’s offshore wind potential could reach 609 GW, while the onshore wind potential in GW is approximated to reach 42.05 GW (the research is based on the meteorology data of 2015).

                    According to the World Bank Offshore Wind Roadmap for Vietnam, offshore wind capacity could supply up to 12% of Vietnam’s electricity demand by 2035. World Bank analysts estimated that offshore wind power capacity could increase to 5 GW – 19 GW, while onshore wind power capacity could grow to 17.34 GW by 2030.

                    Graph showing Vietnam's wind power capacity

                    Offshore wind projects are expected to be the next investment wave for FDI and private-sector investment. Despite their higher cost and complexity, offshore wind projects offer an opportunity to add capacity while providing more relief to the power grid than other renewables. Offshore output tends to fluctuate less than solar or onshore wind projects.

                    Several pioneering developers believe offshore advantages outweigh the challenges. Ørsted, Denmark’s largest multinational power company and the world’s largest developer of offshore wind power farms, opened a Vietnamese office and signed a memorandum of understanding with T&T Group to develop several gigawatts of offshore wind projects in Binh Thuan and Ninh Thuan.

                    According to Vietnam Electricity Corporation (EVN), out of 146 projects that signed the Power Purchase Agreement (PPA) with EVN, 84 projects have been operating commercially since before November 1st, 2021. Most are located in the central coastal region of Quang Binh in Quang Tri, and the southern coastal region of Ninh Thuan in Binh Thuan. Several wind power plants are in the highland Tay Nguyen area of Gia Lai, Kon Tum, and a large number of them are in the Mekong Delta area (Ben Tre, Tra Vinh, Soc Trang, Bac Lieu, and Ca Mau). Vietnam’s current largest wind power plant in operation is located in Ninh Thuan with 151.95 MW in capacity.

                    Map showing Vietnam's wind power locations

                    Governmental support


                    The surge in Vietnam’s wind power industry is largely due to the government’s strong support and implementation of generous feed-in-tariffs (FiTs), the Vietnamese government started offering a FiT of 8.5 cents US per kilowatt-hour (kWh) (1,927 VND) for onshore wind projects and 9.8 cents US per kWh (2,223 VND) for nearshore ones as per a 20-year PPA. The FiT was applicable to any project starting before November 2021.

                    The FiT was proposed by the government to extend until the end of 2023, mainly due to COVID-19, which hindered the progress of most onshore wind projects. After the expiration of the FiT, the Ministry of Industry and Trade (MoIT) has proposed an auction system starting in 2023 and onwards, similarly to other renewable energy asset classes, that will either 1) auction among developers to sell electricity to a local distributor, or 2) auction among investors to start their projects on the acquired land.

                    Power Development Plan PDP8

                    The MoIT recently released a draft version of its eighth national power development plan (PDP8) for 2021-2030, which also includes a vision for 2045. The plan includes a higher target of 18.0 GW of wind power by 2030 from a goal of 11-12 GW in PDP7. The ambitious target is expected to be followed with favourable policies to help Vietnam tap into its full wind power potential.

                    Tax Exemption and Reduction

                    The government also provides tax exemptions for wind developers within the first four years of operation. A tax reduction of 50% is applicable for the next 10 years of operation.

                    Opportunities for Foreign Investors

                    Foreign investors may own up to 100% equity in wind energy project companies as no foreign ownership restrictions are currently in place for the renewable energy sector under Vietnamese law. Developers are also able to invest in wind power projects on a greenfield basis. Still, most foreign investors currently attempt to participate in a joint venture with a local partner.

                    Under Vietnamese law, a project company or a special purpose vehicle will be established in the form of a limited liability company or joint-stock company. Commonly, investors initially find a limited liability company for the early-stage development of the project, before potentially converting the entity into a joint-stock company at a later phase when greater capital and financing requirements are available.

                    Foreign investors can also acquire equity interests in pre-existing wind energy projects via the acquisition of charter capital or shares in a Vietnamese project vehicle. Project companies that have already obtained fundamental early-stage investment approvals are viewed as attractive M&A targets by foreign investors to avoid regulatory hurdles of the early-stage investment approvals.

                    Vietnam’s very first Public-Private Partnership (PPP) Law, in effect on January 1st, 2021, provides an alternative pathway for foreign investment into greenfield wind energy projects with a Vietnamese government counterpart. In addition to the build-operate-transfer (BOT) model, which has been the most common PPP structure to date in Vietnam, the new law also recognizes build-own-operate and build-transfer-lease as relevant PPP models. While Vietnamese law will govern the project agreements, developers are free to choose a third country arbitration should a dispute scenario arise. Investors may also propose their own projects directly to the relevant state agency. Decree 35, released in March 2021, clarifies that the PPP law applies to renewable energy projects with a total investment value of 500 billion USD and over (approximately 22 million USD).

                    The next phase of Vietnam’s wind energy expansion will include larger, more capital-intensive, and more technically complex projects in both onshore and offshore wind. The Vietnamese government is continuing to strengthen its commitment and support in extending the country’s capacity in wind power, setting ambitious goals, and providing multiple benefits for developers. Strategic partnerships with governmental bodies, joint ventures with local entities, and acquisition of equity interests of existing businesses are some of the many ways foreign investors could capture the opportunities of wind power investment in Vietnam.

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