Just 30 years ago, after emerging from decades of war, Vietnam was one of the five poorest countries in the world. Most of its existing infrastructure was damaged or missing, the population was dramatically decreased, and living conditions were abysmal.
But today, Vietnam has one of the fastest growing economies in the world and it’s apparent everywhere.
Since I first visited Vietnam in 2005, I’ve watched motorcycles replace bicycles and automobiles replace motorbikes. Upscale malls that didn’t exist 12 years ago are now crowded with Vietnamese shoppers with disposable incomes. And kids with braces on their teeth and expensive eyeglasses are now common sights.
Despite this rapid growth, the market is nowhere near saturated and there are still plenty of gaps and business niches to fill throughout the country. There’s also less regulation of new businesses compared to many other countries in the region, and the cost of labor and doing business is low.
Most existing businesses in Vietnam are independently owned and operated. The franchises that are found everywhere in North America are largely absent in Vietnam. Even major international chains such as Starbucks and McDonald’s have barely made inroads here. Investors who don’t have deep pockets are still able to successfully operate mom-and-pop restaurants, shops, and galleries without having to compete against large franchises.
According to Shahar Lubin, a U.S. native who owns a Middle-Eastern restaurant in Hanoi, “While Hanoi has been going through intense development for over a decade, there are still many untapped opportunities where a smart and lucky entrepreneur can stake a claim.”
After a recent change in legislation, expats are no longer required to have a Vietnamese partner but many find that it still makes running their business much easier. Since so much of Vietnam’s business environment is dependent on relationships, status, and cultural awareness, having a good Vietnamese partner adds value to your business.
Having said that, more and more expat entrepreneurs are striking out on their own. “When we started, we couldn’t be 100% foreign-owned,” says Mark Gustafson, who owns a restaurant in Ho Chi Minh City. “When they changed the law about a year ago, we restructured our company to be 100% foreign-owned. We were a family restaurant making it up as we went along, and now we’ve become a functional company.”
You’ll find the cost of doing business in Vietnam is low, with labor particularly inexpensive. Most employees are paid between $125 and $200 per month for full-time work.
“In our shop, we pay staff with basic knowledge $133 to $155 per month for full-time work,” says Silen Garrigues who owns a French patisserie in Hanoi. “A chef with one to three years of experience will start at $221 per month, and we will pay a shop manager $310 per month with a bonus as a starting salary—up to $443 per month if they are experienced.”
Mark Gustafson estimates that the cost of starting his business in Vietnam was one-tenth of what he would have paid in the U.S. “I always wanted my own restaurant. But in Chicago, you need about a million bucks to start anything, and I just couldn’t do it.” His modest investment brought immediate results. He says that in the first three or four months, the restaurant was experiencing an hour wait for tables with a line out the door. “More than we could ever anticipate, we had success right away.”
Doing business in Vietnam is much easier in some ways than it would be in the U.S. There aren’t as many regulations, and the government is actively trying to recruit foreign businesses. Since Vietnam is still developing, things can be a bit speculative. But opportunities await those who are inspired to operate in a country that has not yet become saturated with foreign businesses.