Is it possible? Or, more important, is it wise?

There's a guy here south of Nha Trang who invested 7 million USD in infrastructure , plant and machinery to manufacture and export.  He returned to his homeland empty handed and seriously pissed off.  Problem here is, they promise you everything is OK, yes yes yes, no problem. THEN after you spend a shit load of money the "problems" appear.  They have you over a barrel.  I've seen it happen to many people who come here thinking they can cash in on cheap labour.
Unless you have the top people in your pocket, you'll  get screwed over.   
The big multi nationals in the textile industry do very well. They deal with the top brass here, they have the right connections .  The smaller guys have to play games with the "local authorities" . You'll pay . Have a look at KPMG website here. The introduction statement on doing business here is sobering.  Expect the unexpected.

Yogi's right, your biggest obstacle will be the government. A Harvard MBA is great but my money would be on the corrupt VN officials holding all the cards. Without some real muscle behind you, I think they'll bleed you dry.

Culture.

The impulse to avoid saying No is quite strong. I've witnessed it. You must be very careful and check the status in details. We are not straight forward as in western nations.

1) Nha Trang has a lot of factories, endless work force, not in tourist mile, but in the outskirts, you see factory own buses collecting and returning possible thousands each day
2) is no difficulty, just $$$
3) skilled: you better define There are thousands "specialist in everything" or you mean the other ones?There, might be a few less but some ecist

Hi,

From my experiences of setting up companies, I don't think Nha Trang or Hoi An is a good place to build up business or factory although it is cheaper to set up companies here. Even Da nang, it is not a good place. One japanese company has to close their main office there and just remain one office locating in Hcm. I haven't been in Ha Noi but HcM is a big city and the work force is big enough. But some fields like Garment or clothing, the workers are not stable. When they know the other factories have higher salary, they will quit their job to move to better factories. But this is the responsibility of Human resources Department if you hire them. If you can hire a good HR recruiter who can see through a person, he will select the best skilled employer for you with cheaper salary. But so pity most of HR recruiters are stupid to base on candidate's records. None of them tries to search online to know more how candidate is. I feel pity for them when they aren't educated in HR university as well as they don't have that ability although they think it is a easy job bc they have had experiences.

About capital, don't try to show much money like 1m$ or 5m$. Just build up the company about 100 000$. Then if the business is better, add some more slowly and slowly. If you put much money for your company at the beginning, you will be paid attention by the governors like investigators. They will ask you illegal money while you have to pay for many things. Procedure is complicated in VN. One Viet Kieu told me that he used to have a successful event company in VN but soon it was collapsed because of those bad governors who always asked him to share 2/5 profit. I don't mean government is not good. Just the govern system is too big with many bad people working for it. And remember, there is no rule protecting employers. Just protect employees.

What kind of raws material you mean? VN does not have a union agricultural business system and they don't take care for shipping to the storage. That's what I think I will do in the future. If you are free, you can travel to many places in VN and talk with farmers. I am sure you will purchase raw material at very good price. But as you know farmers are not stable. You have to prepare plan B in case there is any changing. When I contacted to do business with chinese in technique, I felt very comfortable because they are very enthusiastic for any small contracts and they will take care of your product shipping. 

Regards.

Without a doubt, TP HCM (Ho Chi Minh City) is the most business friendly, supportive city in VN.

LOOK AT < http://www.business-in-asia.com/countri … zones.html > for a map of all the industrial zones in VN.

The fact is that HCM is filled with skilled workers AND HCM does more business in a day than Ha Noi in a week.

You omitted to say what skills you would need, or what products/materials you will need for manufacturing.

I can understand your dislike for big cities, but you could look at BINH DOUNG or DONG NAI.

READ: <  >https://en.wikipedia.org/wiki/Ho_Chi_Minh_City_Metropolitan_Area

I start all my businesses in HCM and then migrate them to other provinces - where communications are good, for example.

The three manufacturing businesses I own are in HCM as I can get anything I need here.

As for importation from China or elsewhere, the SaiGon Port can handle pretty large ocean going transport - the container ships crowd the river daily.

By 2020 there will be even more air transportation.

I don't think NHA TRANG has the infrastructure you are looking for. HOI AN is DEFINITELY NOT a manufacturing area, although DA NANG might be.

Education skills might be lacking but cleverness and productivity in workers is plentiful.

Thank all of you for your answers. Rather than answer each one of you, I will answer all of you in this one post which will simplify things.

First, my business is all-natural cosmetics, personal care  and household products, such as Burt's Bees, Aubry Organics, and Seventh Generation here in the States. We would be manufacturing and selling products that are needed in Vietnam but are not available and most of our initial sales will be e-commerce. Typically, we would contract out manufacturing but since Asia is most famous for stealing and copying proprietary products/formulas (which is ironic because against Buddhist religion) we might have to manufacture our own products to protect our intellectual property as long as possible.  Also, we are considering manufacturing products for Vietnam in China and products for China in Vietnam to protect our formulas. Also, on simple products we may set individuals with homes up to manufacture different items.which works very well in Brazil.

I understand that Vietnam is difficult to do business because they are ranked number 99 in the World Bank "Ease of Doing Business" rankings which is despicable and should be embarrassing for Vietnamese people.

http://www.doingbusiness.org/rankings

Having said that though, Brazil is ranked even worse at 116 and we are doing business successfully there. So foreigners  opening and running a successful business in Vietnam should be possible as long as you have a good legal and accounting firm, a good Vietnamese venture capital company putting up some capital and have some prominent names on your advisory board. We will let any corrupt local officials know up front that we intend abide by the law and there will be no payoffs because to set a precedence just keeps them and others coming back for more and more and encourages more corruption (again, such corruption is ironic considering it's against Buddhism). respectfully, the Vietnamese people sound like American Christians who preach one thing but practice another which is disappointing if true.

We are not coming to Vietnam for "cheap labor" as someone said here. We are coming to Vietnam for this:

http://tuoitrenews.vn/business/19314/vi … on-in-2013

E-commerce is where millions will be made in the future and we intend to capitalize with an aggressive marketing campaign.

I understand that HCM is the norm for manufacturing. However, one gets to a point in life where he doesn't follow the herd and realizes that the Quality of Life and happiness is just as important or more so important that $$$. I would bet that the successful business owners on the outskirts of Nha Trang are much happier than those in HMC. How can one be happy living elbow to elbow with so many people and so much pollution and not much open spaces or scenic beauty? So my exploratory visit to Nha Trang will be to some of those business owners and hopefully I can find a successful business owner foreigner or two to get their perspective as well. I realize than Hoi An is small and not many, if any, are manufacturing or doing e-commerce there. That's one thing that makes it appealing because ther are advantages to being the first or one of few. The fact that people in Hoi An don't care about the $$$, as someone here said, is an added advantage as there may be less corruption?  We opened up a plant in Brazil in one of the smallest cities with no industrial zone and no manufacturing and people said we were crazy. It turned out that we got more tax incentives and more cooperation and it s one of our best producer. and, the people ride their bicycles for miles to get to work.

A also understand about starting small and growing the business over time on increasing revenue - That's what we do! However, "small" is a matter of perspective. If we decide not to use venture capital and instead use our own money we will start much smaller and probably with one anchor product like our acne medication which is a HUGE seller in Brazil. There are other advantages to starting real small with US$100-500,000 is less money at risk and we get to keep 100% of the company and not give up 50% to the venture capital firm. And, it's possible we may do this?

I will take a look at Da Nang, Binh Doung, Dong Nai and thanks for the recommendations. However, for those touting all the known Industrial cities, remember that I will just a number in those places. There are typically great rewards for those that blaze new trails and go to cities that have little to no manufacturing because they will typically entice you to come and do everything it takes to get you to stay because they want more like you to come.  Would you rather be #1 or 1 in 10,000?

And, last but not least, having been an entrepreneur most of my adult life, I have learned that the business failures and horror stories typically happen to those who are ill-prepared, without much business experience, who go it alone without an advisory board of successful business men/women from the country one intends on doing business,  and the lack of understanding of the local culture, and without the patience and tenacity to see it through to success.

Ay more advice or comments will be greatly appreciate. And, if you think I'm being naive on any of this, please feel free to say so.

Regards,

 

@yogi007

There are many articles on the KPMG website. Can you be more specific as I would like to read the one you are referring to. If you can give me the exact title of the article then I can find it with a search.

Thanks!

@ParadiseCruiser

I'm not sure I understand "The impulse to avoid saying NO is quite strong"

Are you saying to say "NO" to the corrupt officials asking for bribes and payoffs?

If so, I agree! If not, please explain.

Thx!

Okay, my context

During my conversations with my mother, I offer some strong opinions about something need doing, like the gate need some detailed work. She doesnt need to do anything strenuous, just contact some skilled workers so they do the work and I pay the cost, as I go to office everyday. She doesnt say no but doesnt agree strongly either. Later on she will delay, not call the workers... She just dont want to say No outright to my suggestion.
The same thing happened in work situations, where people really dont like to say No. So they say, Yes yes... but...
You just have to pay attention to their tone of voice. If they dont show strong agreement or strong inclination, they might want to say No. This is Viet-Viet situation, not expat-Viet.

So yes, be cautious with conversation. it might be what you hear is not what they mean, or what you think they mean.

Back to your situation. @Dejavu.dot say some good things. Start small then expand cautiously. Local markets always have some differences you just dont know about. Specifically, HCMC and the south market environment is different from Hanoi and the North.

This is disturbing:

http://english.vietnamnet.vn/fms/busine … ppear.html

That's about a 42% failure rate for business in Vietnam. However, the positive side is that is about a 58% success rate compared to an 50% failure rate and 50% success rate here in the USA.

So Vietnam is actually a better place to start a business than the USA:)

http://www.washingtonpost.com/blogs/fac … ul-claims/

The advantage of industrial parks is that can be 'turn key' - great for start ups.

Most all industrial parks are self contained and have modern facilities including pollution abatement/treatment plants. Many also have standby generators for the inevitable power failures.

Importing Chinese-made products in to VietNam is not wise. Apart from the strained relations over the Spratley Islands, the VNese consumer is very smart and a great label reader and generally reject products made in China, especially cosmetics and other personal use items.

Avon was here for a while but failed and withdrew from the market.

Is there sufficient consumption of cosmetics in VN to sustain your business?

After seeing the product list and marketing plan via e-commerce ...., this will be a challenge, not easy to master. Products not available in Vietnam: there are not many and a huge percentage of Vietnamese sticks to traditional products (by brands they are however more open to changes)

And the second challenge is e-commerce. Despite a good coverage on Internet and related services, next to a computer/smartphone, Vietnamese still tend to follow conventional marketing methods like flyers or even mouth to mouth marketing and they want their purchases at the moment at the moment, money changes hands. Just a few days ago, I read somewhere that only about every 5th is actually having a bank account.

Da Nang maybe best location if you decided to go for this as there is tax-breaks and other incentive for investments

ABCABCABC wrote:

Da Nang maybe best location if you decided to go for this as there is tax-breaks and other incentive for investments

Although Mr Thanh has made Da Nang better than the other places in recent years but people working government are very difficult and need money-back. Moreover Da Nang people tend to protect Da Nang business so it is why there are not many big companies in da nang. It is difficult for Vietnamese who lives in other areas.

@Jaitch

"The advantage of industrial parks is that can be 'turn key' - great for start ups."
I agree.

I understand "the strained relations over the Spratley Islands" but in reality, this is more of a personal opinion with a few because the numbers don't lie. Every year China/Vietnam trade relations improve and this trend is expected to continue:

http://www.chinadaily.com.cn/business/c … 264283.htm

"Importing Chinese-made products in to VietNam is not wise"
We will not be importing finish goods/products, only raw materials that Vietnam can not supply.

"Avon was here for a while but failed and withdrew from the market"
Avon withdrew because they are mismanaged with an outdated business model that doesn't work in the age of the internet. They count on their 6,000,000 distributors world-wide to sell products and every year b2c e-commerce on-line sales for other competing products increase,  Avon gets hammered! this trend will continued until Avon is goes out of business or restructures with different, young management who better understand that e-commerce is the wave of the future.

"Is there sufficient consumption of cosmetics in VN to sustain your business?"
Yes, we will only sell products (mostly proprietary formulas) not available in the VN market place. Also, we are much more diversified than just cosmetics. We also will sell personal care and household cleaning items. And, cosmetics are number one exceeding all other products in on-line sales in VN with household products ranking no 3.

@l3ully

Respectfully, You need to read and remember this article. As evidenced by other emerging countries, this trend will continue.

http://tuoitrenews.vn/business/19314/vi … on-in-2013

We gave a great advantage over Vietnamese companies in that we understand the importance of the internet and know how to market more effectively on-lone to get the customers and have unique products that VN doesn't have, but needs.

Other than the bureaucracy, we have a definite advantage in the VN marketplace.

@ABCABCABC

Actually, after in-depth research, it appears you may very well be correct. Dha Nang's central/geographical location makes it easier/quicker to ship all over North/South/Central Vietnam along with their port for import/export, rail system, and industrial zone makes it look ideal.

Plus it is only 30km away from where I want to live, Hoi an:)

@Dejavu.dot

I think this is true all over Vietnam, some places worse than others. Hence, it will be difficult anywhere we go. However, we will maintain a board of advisors with local business men, bankers, venture capital firms that will help ensure our success. This formula has worked in other difficult countries and we expect that trend to continue.

I will now move this conversation to the Dha Nang forum as that is where we are focusing our efforts and I want to make sure my time is being used wisely.

Feel free to catch me over there.

Thank all of you for your opinion. And, if you are successful, foreign, business owner in Vietnam I would especially love to hear from you:
[email protected]

nobettertimethannow wrote:

@l3ully

Respectfully, You need to read and remember this article. As evidenced by other emerging countries, this trend will continue.

http://tuoitrenews.vn/business/19314/vi … on-in-2013

We gave a great advantage over Vietnamese companies in that we understand the importance of the internet and know how to market more effectively on-lone to get the customers and have unique products that VN doesn't have, but needs.

Other than the bureaucracy, we have a definite advantage in the VN marketplace.

In case, you mean 500 + on spam each day in each mail account, you are right.


If you rely on a single newspaper report, then I wish you a lot luck. You gonna need it in this case