Doing Business in Vietnam: Always Look Ahead, Don't Worry About the Past

Photo of Ho Chi Minh City:
http://ow.ly/J3TP30azNRp

"The U.S. is now Vietnam's largest export market and a major source of foreign direct investment, helping fuel Vietnam's remarkable economic growth," according to the Vietnam Country Commercial Guide, a report produced by the U.S. Department of Commerce's International Trade Administration. Given the Economist Intelligence Unit's prediction that "Vietnam will be one of the region's fastest-growing economies" from 2017-2021, I was interested in attending an event hosted by the Trade Development Alliance of Seattle on Mar. 23, 2017 featuring Stuart Schaag, Commercial Counselor with the U.S. Commercial Service in Vietnam.

In his presentation, "It's Time to Rethink Vietnam," Mr. Schaag explained how the U.S.-Vietnamese commercial relationship has grown since the U.S. lifted its trade embargo against Vietnam in 1994 and the two countries renewed diplomatic relations in 1995. In fact, American exports to Vietnam increased by 77 percent from 2015-2016 with Ireland placing a distant second at 22 percent (exports of American products globally grew 10 percent for the same time period).

Vietnam is a member of the Association of Southeast Asian Nations. ASEAN, Mr. Schaag noted, is the largest destination of U.S. investment in Asia and the fourth largest market for export of U.S. goods and services. "560,000 American jobs are directly or indirectly supported by goods and services exported to ASEAN." Using 2012 statistics, he said "almost $100 billion of U.S. goods and exports go to ASEAN." Importantly, ASEAN contains a young population and growing middle class.

While American firms exported $26.9 billion in goods and services to Singapore in 2016, making it the largest export market in ASEAN, U.S. businesses exported $10.2 billion worth of goods and services to Vietnam--more than four times the amount exported in 2007.

Regarding the country's demographics, Mr. Schaag told the audience that Vietnam is the world's 14th most populous nation with 93 million people. Vietnam's labor force is comprised of 55 million individuals. The median age of Vietnamese is 30.7 and 24.1 percent are aged 15 and under. Citing statistics from the World Bank, 13.5 percent of Vietnamese lived below the poverty line in the 2014 compared to 60 percent in the 1990s.

The aforementioned Vietnam Country Commercial Guide notes: "With disposable income levels in major urban areas four to five times the national average, significant opportunities in the consumer and services sectors are fast emerging. A 2013 study by the Boston Consulting Group predicted that Vietnam's middle and affluent class will double by 2020, exceeding 30 million consumers."

Encouragingly, the report says: "Telecommunications, information technology, oil and gas exploration, power generation, transportation infrastructure construction, environmental project management and technology, aviation and education will continue to offer the most promising opportunities for U.S. companies over the next few years as infrastructure needs continue to expand with Vietnam’s pursuit of rapid economic development. Health care will also be a growing sector as the government expands programs and an increasingly wealthy population spends more on medical treatment."

My colleagues and I think Vietnam could be a lucrative market for technology companies specializing in cloud computing, connected devices, fintech, and mobile applications (particularly in education and health).

On the topic of entering the Vietnamese market, "U.S. companies preparing to enter the Vietnamese market must plan strategically and be persistent and consistent with face-to-face follow-up. It can take up to one or two years to make a successful sale into this market. Building relationships is important."

Mr. Schaag concluded his presentation by showing a video that illustrates how doing business in Vietnam is similar to the traffic in the country's dense cities:

• Go slow, take your time, don't expect to get there quickly.​
• Get some experience before venturing too far.​
• Always look ahead, don't worry about the past.​
• Have confidence (i.e. don't show fear).​
• Be in the right frame of mind. Find your zen.​
• Be open to doing things differently…​
• …but don't waiver on your values.​

What is your experiencing of doing business in Vietnam?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.