Doing business in Vietnam

I’m not Theo Paphitis’ biggest fan, but his programme on BBC2 last night: Theo’s Adventure Capitalists I thought was excellent. The show highlights the benefits, and warns of the pitfalls, of doing business abroad.

Last night, Theo followed three companies as they tried to lock in deals in Vietnam. Some important lessons came out.

First, with the pound weakened and the British economy sluggish, now is an excellent time to do business in developing countries that are not suffering from the same downturn in growth. Vietnam is growing at a rate of 4-5 per cent in spite on the global recession.

Don’t get overexcited, though, Theo warns:

“Setting up shop on foreign soil is fraught with danger and can lead to expensive misunderstandings.”

Always do your homework before diving in. Here is a starter for 10 on what to remember if you’re thinking about investing in Vietnam:

• Vietnam is a communist country. While the government is trying to encourage foreign investment, it is very particular about how it is done. Never forget that there will always be three parties to your business deal – the State being the third partner. It is not a free market so expect delays and expect extra costs for licenses and the like.
• Always look for local partners who are well connected and understand how business is done there.
• The Vietnamese never say no. Just because you don’t hear the word “no” do not assume the answer is yes.
• There is a fine balance between developing a good relationship and getting a signature on paper.
• Don’t sacrifice your good business sense.
• Never underestimate the sheer difficulty of understanding the subtleties of another culture.
• You don’t always need to understand the product if you understand the market and know how to do business.
• Be willing to walk away.

Next week Theo will be in India. It’s worth a watch.

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