Establishment of subsidiaries – The typical investment form in Vietnam
Vietnam is a country classified under the developing economy group. Therefore, many domestic and foreign companies have been continuously investing in Vietnam to gain the market share and profit. In particular, one of the most typical forms chosen by many enterprises for starting their business in our country is the establishment of a subsidiary, which leads to a fierce competition between domestic and foreign enterprises. In such competition, with the home-field advantages, domestic enterprises will be easy to reach consumers, while in contrary, the foreign ones will certainly encounter a lot of difficulties when trying to approach and compete, especially at the initial steps of establishing office and headquarter. So what are the difficulties that the foreign enterprises are facing when establishing subsidiaries in our country?
Difficulties of the enterprises when establishing their subsidiaries
The first problem that foreign investors encounter when entering the Vietnam market is the legal issue. In recent years, the Government has reduced the complicated procedures that hinder the development. However, in order to establish subsidiaries in our country, the enterprises need to ensure the procedures for the application for business registration, the draft charters, the list of founding shareholders, the documents certifying the legal capital, the practice certificate of the Director or General Director, etc. For domestic enterprises, these administrative procedures may be simple, but with international enterprises, they will certainly face many difficulties in applying for or registering the abovementioned papers. This has caused obstacles making many foreign investors feel hesitant when setting up offices and subsidiaries in Vietnam.
In addition, the foreign partners have encountered difficulties in finding and using land sources to open workshops, rent offices, especially in the two largest economic centers – Hanoi and Ho Chi Minh City with very expensive real estates. The average cost for renting the establishment can be from several dozen to several hundred million VND per month, without mentioning the construction costs and other relevant documents. Not only that, the inability to upgrade making the infrastructure outdated and not guaranteed the quality of manufacture also makes the investors to have “headache”.
In addition to the difficulties about the establishment, cultural barriers are the factors that make many investors fail to expand the market. Many multinational companies and corporations have to withdraw from the target markets simply because they are unable to integrate into the culture and people there. As the culture of each region and each country is different, the dissimilarity over the regulations or principles is unavoidable. The solution for foreign investors to limit such cultural misunderstandings is to study and understand well about the people and countries there. The investors will need a lot of support in recruiting and working with Vietnamese laborers on their styles of work and thinkings as well as other issues such as consumption demand, working motivation, living purpose, etc.
Kizuna – The solution for the enterprises when establishing subsidiaries in Vietnam
If you are a new investor in Vietnam and are experiencing problems that require support in your business development, then Kizuna is the safest and most reliable partner. Kizuna JV owns a ready-built factory area in Long An with quality standards to suite the rental needs of the establishment, and at the same time provides support services on administrative procedures, legal procedures, human resources, office sharing and other related licenses along with a team of professional staff who are fluent in many languages. This support shall help international investors to save a lot of time and money in order to ensure that their market penetration process is successful and the set objectives are completed in the most effective and quickest way.
Accordingly, since the establishment until now, Kizuna has supported many domestic and foreign companies in developing the market, establishing subsidiaries in Vietnam and receiving a lot of trust. With the orientation of developing business community in Vietnam, in the near future, Kizuna serviced factory area will certainly be further improved and developed.
By Marketing Department – Kizuna JV Corporation
