Investors need to choose the right enterprise for cooperation

 

Why undertake background check on company in Vietnam?

Profitable investment is the legitimate aim of every investor. However, to be able to make an overall assessment of an enterprise that investors can trust is really a difficult choice. Especially for foreign investors who do not have much experience in the Vietnam market whom wish to enter Vietnam market for making investment through M&A.  It is very important for the foreign investors to undertake the background check on company in Vietnam, conduct research for the reputation of the company and each shareholders being corporate or individual, obtain public information of the company, and key personnel under take brief due diligence to access potential risks for cooperation.

According to the data reported as of March 20, 2021 by the Foreign Investment Department (Ministry of Planning and Investment), the total foreign investment capital registered for new, adjusted and contributed capital, purchased shares of investors foreign investment amounted to 10.13 billion USD, an increase of 18.5% over the same period in 2020. This data shows that the demand of foreign investors to invest in Vietnam is still gradually increasing. So, how can foreign investors choose businesses to invest with peace of mind?  They might need to be assured by having further information, and hence need to undertake background check on company in Vietnam

In addition to choosing an enterprise with an appropriate industry and intended investment capital, the fact that that enterprise has capability, and experience in the market in the business field is a criterion that investors should consider and can be trusted. Moreover, investors should take the time to learn information from official sources by looking up the company’s name, grasping basic information such as: owner’s name, representative, capital status, influential individual being shareholders,… and compare such to the company’s website to know if the company provides full information, images, updates on the company’s operations regularly, accurately or are not.

Risks when doing business with a wrong enterprise

Many cases of “virtual” businesses taking advantage of investment needs and the lack of information about the Vietnam market have taken advantage of and defrauded foreign investors. On the other hand, the enterprise will be the one to make decisions that directly affect the investment results of the investor; therefore, the foreign investors should understand, consider and choose a reputable and safe enterprise entirely to invest capital.

In addition, what is the name and influence of that enterprise in the investment field? What is experience and enterprise performance in recent years? It is also the actual evidence that proves the capability of that enterprise. An important note for investors is that in addition to information about enterprise achievements, negative information about the company such as violations in business practice, errors in service provision, etc. causing disputes, compensation with customers is less public information and difficult to find.

In many cases, investors do not have a thorough understanding of their partners, but only decide based on virtual commitments, the display of capability beyond the capabilities of the business. From there, putting your investment capital on a risky way lead to potential unnecessary disputes with the target enterprise.

Furthermore, understanding the Vietnamese legal regulations on rights and obligations for foreign investors, although not related to the selection of enterprises to invest in, is also necessary information for investors to have projection of the problems that may arise during the process of participating in investing in the business.

After all, what investors are looking for are “clean” enterprises that have the capability to grow quickly but at the same time must be able to maintain stability and develop sustainably. However, every business environment has certain potential risks and it is the job of foreign investors to always be alert and learn exactly the information of enterprises to minimize risks potential.

How the service of background check on company in Vietnam would help?

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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6 Powerful Insights for Foreign Investors to Successfully Set Up Technology Companies in Vietnam

 

Why Vietnam is the Next Big Tech Hub

If you’re looking for the next big opportunity in the tech industry, Vietnam should be on your schedule. With its booming digital economy, government incentives, and skilled workforce, the country is quickly emerging as a major hub for technology companies in Southeast Asia.

However, the journey to set up technology companies in Vietnam is not just about choosing a location and registering a business. Foreign companies must navigate a complex regulatory landscape, secure funding, and leverage local talent to succeed.

So, how can you overcome these challenges and capitalize on Vietnam’s thriving technology sector? We will walk you through concerned matters and steps taken to set up technologies company in Vietnam successfully.

What Makes Vietnam a Hotspot for Technology Companies?

Vietnam has positioned itself as a rising star in the global tech industry, attracting foreign investors, tech startups, and multinational corporations. Here’s what makes Vietnam an ideal destination for technology businesses:

1. A Thriving Digital Economy

- Vietnam’s digital economy is expected to reach $50 billion by 2025, driven by e-commerce, fintech, and AI adoption.

- A tech-savvy population, with over 77% internet penetration and 64 million smartphone users, creates a strong market for digital services.

2. Strong Government Support

- The Vietnamese government has introduced incentives for foreign tech companies, including tax exemptions, grants, and preferential policies for high-tech industries.

- The National Digital Transformation Strategy aims to make Vietnam a global technology leader by 2030.

3. Affordable and Skilled Workforce

- Vietnam produces more than 50,000 IT graduates per year, making it one of the fastest-growing tech talent pools in Asia.

- Salaries for software engineers are significantly lower than in Singapore, the U.S., or China, offering a cost-effective advantage.

4. Increasing Foreign Investment in Tech

- Major world players have invested billions in Vietnam’s technology sector.

- Vietnam ranked third in Southeast Asia for startup investments in 2023, following Singapore and Indonesia.

Vietnam offers a fast-growing market, government-backed incentives, and an affordable talent pool, making it an ideal place to set up technology companies.

Who Should Consider Setting Up a Tech Company in Vietnam?

Vietnam’s tech-friendly environment attracts various types of foreign companies, including:

1. Tech Startups & Entrepreneurs

- If you’re launching a fintech, AI, blockchain, or e-commerce startup, Vietnam offers low operational costs and a receptive market.

2. Established Tech Companies Seeking Expansion

- Global tech firms looking to expand in ASEAN can benefit from Vietnam’s strategic location and skilled workforce.

- Many multinational companies set up R&D centers in Vietnam to leverage cost-effective software development.

3. IT Outsourcing & Software Development Firms

- Vietnam is a leading IT outsourcing destination, ranking 6th globally for software outsourcing.

- The country has thousands of skilled developers specializing in AI, cloud computing, and cybersecurity.

Whether you’re a startup, an established tech firm, or an outsourcing company, Vietnam provides a strategic and cost-effective environment.

Where Are the Best Locations to Set Up Technology Companies in Vietnam?

Choosing the right location is crucial for the success of a tech company in Vietnam. The country has several major tech hubs, each with its own advantages.

1. Ho Chi Minh City (HCMC) – The Business Powerhouse

- Vietnam’s financial and commercial capital, home to most foreign tech firms and startups, designed to support high-tech industries.

2. Hanoi – The Government & Innovation Hub

- As the political and educational center, Hanoi hosts many government-backed R&D initiatives.

- Home to universities and top technical institutions, making it ideal for hiring local talent.

3. Da Nang – The Emerging Tech Hub

- Offers a low-cost alternative with excellent digital infrastructure.

- Home to IT outsourcing companies and a growing blockchain startup scene.

In short, HCMC is best for startups, Hanoi for government-related tech firms, and Da Nang for outsourcing companies.

When Is the Right Time to Enter Vietnam’s Tech Market?

Vietnam’s tech industry is booming, and there is no better time than now to enter the market. However, timing your entry right can make a big difference.

1. Market Readiness

- The Vietnamese government is actively pushing digital transformation, with strong growth in fintech, AI, and cloud computing.

- Consumer demand for digital services is at an all-time high, especially in e-commerce, edtech, and healthtech.

2. Foreign Investment Climate

- Vietnam’s Foreign Investment Law now allows 100% foreign ownership in many tech sectors.

- Trade agreements like EVFTA (EU-Vietnam Free Trade Agreement) and CPTPP make Vietnam a strategic export hub.

The best time to enter is now, as the country is rapidly modernizing its digital economy and attracting foreign investors.

Why Foreign Tech Companies Are Choosing Vietnam Over Other ASEAN Countries

Vietnam is becoming a preferred destination for tech companies, outpacing other ASEAN nations for several reasons:

1. Lower Operational Costs Compared to Singapore & Thailand

- Vietnam’s labor costs are 50-70% lower than in Singapore while offering high-quality talent.

2. Stronger Growth Potential Than Malaysia & Indonesia

- Vietnam’s startup ecosystem is growing 39% annually, higher than most ASEAN nations.

3. Investor-Friendly Business Environment

- Government-backed tech incubators and grants provide direct support to startups.

- Vietnam is ranked among the top 5 most attractive emerging markets for investment.

Vietnam’s low costs, high growth potential, and government support give it a competitive edge over other ASEAN countries.

How to Set Up a Technology Company in Vietnam

Setting up technology companies in Vietnam requires careful planning. Here’s a step-by-step guide:

Step 1: Choose the Right Business Structure

- 100% Foreign-Owned Tech Company (Ideal for startups)

- Joint Venture with a Local Partner

Step 2: Register Your Company

- Apply for an Investment Registration Certificate (IRC)

- Obtain an Enterprise Registration Certificate (ERC)

Step 3: Secure Funding 

- Explore venture capital & government grants

Step 4: Hire Local Talent & Build a Team

- Use local job platforms or headhunters to recruit.

Step 5: Comply with Local Regulations

- Ensure compliance with data protection laws & cybersecurity regulations.

Following these steps ensures a smooth entry into Vietnam’s tech industry.

Take Advantage of Vietnam’s Growing Tech Ecosystem

Vietnam is one of the most exciting places to set up a technology company today. With low costs, government support, and a young, talented workforce, foreign companies have the opportunity to thrive in this fast-growing market.

If you’re considering setting up technology companies in Vietnam, now is the perfect time to seize the opportunity.

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Research for the reputation of the company in Vietnam: Risk Management

 Risk management is a vital element when doing business but so far, not many enterprises concern about it.  

Researching a company’s reputation in Vietnam is an essential component of risk management for several reasons. In an increasingly interconnected and competitive global business landscape, understanding a company’s reputation can provide valuable insights into potential risks and help organizations make informed decisions.

Why researching a company’s reputation in Vietnam is a crucial aspect of risk management?

Risk Identification and Assessment:

A company’s reputation reflects its standing in the market and among stakeholders. Conducting research on a company’s reputation can help identify risks related to ethical concerns, legal issues, financial stability, and other factors that could impact its operations. By understanding these risks, organizations can assess their potential impact on business objectives and formulate appropriate risk mitigation strategies.

Operational Risks:

A poor reputation can lead to operational disruptions. For example, negative publicity or consumer backlash due to a company’s unethical practices or subpar products can result in decreased sales, loss of customers, and regulatory scrutiny. Evaluating a company’s reputation in Vietnam can help predict and manage such operational risks.

Financial Risks:

Reputation plays a significant role in a company’s financial health. Negative news or controversies can lead to declining stock prices, reduced market capitalization, and credit rating downgrades. By researching a company’s reputation in Vietnam, investors and stakeholders can gain insights into its financial stability and potential risks to their investments.

Legal and Regulatory Risks:

A company with a tarnished reputation may be subject to increased legal and regulatory scrutiny. Researching the company’s reputation in Vietnam can help identify potential violations, litigation risks, and compliance issues that could lead to legal consequences and financial penalties.

Supply Chain Risks:

A company’s reputation can impact its relationships with suppliers and partners. If a company is known for unethical practices or poor corporate governance, suppliers and partners might reconsider their associations, affecting the company’s supply chain stability.

Market Perception:

A positive reputation can enhance a company’s brand value and market perception. Conversely, a negative reputation can lead to decreased consumer trust, hampered growth, and reduced market share. Researching a company’s reputation in Vietnam helps gauge how it is perceived by customers, investors, employees, and the public.

Employee Relations:

A strong reputation can attract and retain quality talent. Conversely, a company with a poor reputation may struggle to recruit skilled employees and experience higher turnover rates. Understanding a company’s reputation can offer insights into its workplace culture and employee satisfaction, which are crucial for talent management and organizational success.

Crisis Preparedness:

A company with a well-established reputation management strategy is better prepared to navigate crises. By researching a company’s past actions and responses to adverse events, organizations can learn from previous experiences and develop crisis management plans that protect their reputation and minimize negative impacts.

Strategic Decision-Making:

The reputation of a company can influence strategic decisions, including mergers, acquisitions, partnerships, and market expansions. A company with a strong reputation is more likely to attract potential partners and investors, while a company with a questionable reputation may face challenges in these areas.

Stakeholder Trust:

A positive reputation builds trust with stakeholders, including customers, investors, employees, regulators, and the public. Maintaining trust is crucial for long-term business success, and reputation research helps organizations understand how they are perceived by different stakeholder groups.

Vietnam companies concerning about risks and risk management practice?

Researching the reputation of a company in Vietnam is a critical aspect of risk management. It provides insights into potential risks and helps organizations make proactive decisions to mitigate those risks. A strong reputation enhances a company’s resilience, competitiveness, and long-term sustainability in a complex and interconnected business environment.

According to a recent survey with 522 companies, there are only 43 companies, accounting for about 8%, have the independent risk management department in their business. More noteworthy, the majority of these 43 companies operating in the banking and financial sector, which has nothing new to risk management. In fact, not all banks have independent and effective risk management departments. The negative problems related to the banking system in recent times somewhat showed the picture about the risk management of this sector.

Risk is understood as any events and situations that could harmful to the ability to achieve the business objectives of the enterprise. Risk management is organized in a formal way and is conducted continuously to identify, control and report the risks that may affect the achievement of the business objectives of the enterprise.

So why businesses are not interested in risk management? Part of this problem stems from the awareness of the leaders. In order to build and operate the risk management system in the enterprise, it needs the commitment of the senior leaders. If senior leaders do not aware of this problem, the administration process will be difficult to achieve the desired effectiveness.

Recently, there are many theories and systems of risk management but small and medium enterprises should be cautious when apply because system and theory are just general and they should be adjusted when applying to each business.

In order to form the culture of risk management, the leaders must along with the employees to implement it regularly and for each project. In theory, the risk management process is carried out in 5 steps: identify risk; evaluate its impact; determine the likelihood; action and measures; monitoring and evaluation.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

About ANT Consulting and Market Entry Services in Vietnam

ANT Consulting is here to assist you from the outset; providing intelligence, information, advisory, management or support services that assist market entrance, and ensure efficient business start-up operation.

Research Service
Company Profiling and Due Diligence
Policy and Regulatory Research
Assistance in Setting-up Business Venture
M&A Origination & Execution

For legal advise, consult with ANT Lawyers

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