Establishing an overseas export business became a good deal harder when Covid-19 struck, writes Henrik Pontoppidan, recounting his experiences of setting up shop in Vietnam this year.
If you overlook Vietnam, you miss a huge opportunity. Vietnam is potentially an extremely lucrative sourcing ground for many industries and products, and its government is keen to create an investor-friendly environment – which is a strong contributing factor to the fact that Vietnam is still one of the few countries with a healthy growing economy, despite the Covid-19 crisis.
But embarking on a business adventure in Vietnam is also littered with pitfalls, as many companies and individuals have discovered. It can be a costly affair – but, with the right network and knowledge, it can also become very successful on a small budget.
There are many sources of information and guidance, but few deal with the aspect of ‘getting your hands dirty’ – how things are done on the ground to find the right people, skills, sourcing partner, prices, technology, components, admin and accounting, whilst remaining in control.
I set up a company in Vietnam with the intention of developing various furniture concepts into market-ready products, on a low budget.
If you search for guidance and information online, it’s likely you’ll find accountancy agencies, consultants, lawyers and solicitors, explaining (with a lot of jargon) how they will make it happen and guide you through the jungle of red tape, why you’ll need a Vietnamese partner (or not), how money transfers are processed, bank accounts set up, contracts written, how accounting works, ‘red invoices’ and non-elegible expenses, legal issues, employment law, income tax and corporation tax, rights, duties and responsibilities ... and it truly is a jungle out there, which is why the fees are usually shameless.
If you want to set up shop in Vietnam, you have two choices: be there and do it all yourself; or hand over a lot of power (and money) through letters of attorney to your consulting partners, then put your blindfold on, take a back seat and hope for the best (at least, that’s what it can feel like).
At the end of the day, all you want is to get your business activities up and running, without admin and red tape causing delays and a continous drain of your cash.
Whichever choice you make, with a bit of patience, it can work. If it doesn’t, it’s usually because you’ve been led to believe something which wasn’t quite so. Sometimes it’s because your Vietnamese supporters and consultants are not playing it straight. More likely, it’s simply down to bad communication. Even if your consultants speak perfect English, the risk of misunderstandings due to cultural differences is huge. If you’re unable to read between the lines of what you’re told, sooner or later you’re bound to encounter problems.
Why set it up yourself?
I set up my Vietnamese company to launch product concepts at the VIFA exhibition in March this year. Little did I know last December, when I touched down in Vietnam after having imported from the country for 10 years, that VIFA, like nearly every other global trade show, would be cancelled due to Covid-19.
At the time, my thinking was that in order to offer the right products and services to my future clients, I had to have a company on the ground, an office with Vietnamese staff, and a photography studio so I could offer good marketing help. Aside from the ability to employ and manage people, a physical presence in Vietnam would also enable me to process domestic transactions, which is a huge benefit to making sure things run smoothly.
I didn’t have unlimited funds to invest, so I couldn’t risk taking a hit on a bad turn. I was therefore fully committed to doing it all myself – setting up my own base, selecting my own consultants face-to-face (quizzing and challenging them relentlessly to make sure I understood everything), learning by doing, and networking on the ground.
The bonus of this approach was that I now have everything I set out to create – including a company licence, bank accounts, the ability to import and export, office/trading address, photo studio, staff, and resident status based on an issued investor certificate.
The whole thing cost me in the region of $2000 in fees to solicitors and accountants, and another $20,000 in investment capital (purely for operating). But it took a lot of blood, sweat and tears, and a lot of running around in person (I go everywhere by scooter – it’s convenient, and saves time and money).
Setting up shop during Covid-19
My company’s aspirations have, of course, been hit hard by the pandemic. Without my launchpad platform (VIFA), and without the ability for me and the rest of the world to travel unhindered internationally, launching a new export business has been hugely challenging. So, like many others in the shadow of Covid-19, I‘ve had to reinvent it a bit.
I now offer a third choice, which is almost completely free of the disadvantages of the first two. For companies anywhere in the world requiring a physical presence in Vietnam, I can act as that presence – reducing risks, speeding up processes, facilitating transactions and saving clients huge amounts of money.
