The Canadian delegation at Hanoi’s University of Social Sciences and Humanities

For a Canadian businessperson making a first visit to Vietnam, the trip from the airport into Hanoi leaves little doubt that things are different here. The outstanding impression is of the traffic itself: a flood of motorcycles that often carry whole families, tiny trucks that look as if they are about to tip over from the stack of cargo they carry, busses, bicycles and, when you get closer to town, pedestrians and bicycle rickshaws. The lanes are often unmarked and, where they are, are scarcely respected.

The lanes of vehicles weave and flow like migrating salmon, mostly moving in the same direction, but with the occasional motorcycle threading its way against the flow.

If you are a pedestrian crossing the street, you inject yourself into the flow, crossing deliberately without pausing or speeding up until you reach the other sidewalk. You count on the drivers to understand what you are doing and to avoid you. The experience is hair-raising, but somehow people manage to make their way without serious accidents.

It’s not too different for Canadians wanting to do business in the country: with the right product or service and know where you want to go, you can do well, but you will likely need help navigating the culture and the rules.

By Canadian standards, Vietnam remains very poor. GDP per capita is barely above $1100. But the economy is industrializing rapidly and there is a small but growing middle class in this country of over 90 million people, most of whom are younger than thirty. They crave the education, financial services and the consumer products we take for granted. And there is an urgent and growing need for infrastructure: in the next ten years Vietnam will have to invest $170 billion in infrastructure, only half of which can be financed by government. The rest will have to come from private investment.

In recent years, a growing number of companies have been bypassing China and establishing assembly operations in Vietnam. You can see a number of large new facilities similar to the massive Panasonic plant along the road from the airport.

Today, the primary appeal is low-cost, low-skilled labour. People are hard-working, but there is still a scarcity of advanced skills and intellectual property is poorly protected. Over the course of the next ten or fifteen years, Vietnam will have to move up the value chain, conducting more of its own R&D, and modernising its approach to intellectual property. The low-wage, low-skilled jobs will start to migrate to other countries.

The best advice for Canadians looking to do business here is similar to what should be done in other emerging economies:

1. Do your homework. You need to identify how your product or service fits the market before you get on the plane.
2. Be prepared for the front-end investment that’s needed to build relationships and establish your niche. This can be costly. You can’t simply check into the Holiday Inn with your sample case and order book, do the deal and return home.
3. If you are investing here, you need to know who your partners are, and you should structure an agreement that provides for mediation in case of a dispute, perhaps in Singapore or Hong Kong. And you need to guard your intellectual property with care. There are Canadian law firms operating here that can help.
4. Canada maintains offices in Hanoi and Ho Chi Minh City. The commercial officers based there understand the laws and culture, and can help to point you in the right direction.

Doing business in Vietnam can be rewarding, but it takes planning and patience. There are both opportunities and challenges that you won’t find in Canada. The businesses that succeed here are the ones that navigate their way with care.

-Perrin