Since the mid-1980s, the Vietnamese economy has been performing very well. Thanks to stable prices and increasing wages, private consumption has had a real boost. This has created a growing middle-class with a higher demand for imported goods, pushing the economy forward.
Centre for foreign trade
The Vietnamese government is actively trying to attract foreign direct investments. It has become one of the most free-trade friendly countries in the region, thanks to economic zones and tax incentives for foreign companies with an office in Vietnam. The trade-to-GDP ratio is the third highest in the world after Singapore and Hong Kong. At the same time, the political leaders make large investments to improve infrastructure, particularly in the transport, telecommunications, and manufacturing industries. This makes the market even more attractive for foreign investments. But as you can read in the interview below with country manager Björn Savlid, corruption is still an issue in many areas of business.
Sweden as the first western diplomatic partner
Sweden has had a long relationship with Vietnam and in 1969, it was the first Western country that established diplomatic relations with the country. Swedish export consists mostly of engineering products, particularly machinery and equipment, and medical and pharmaceutical products. However, export is still relatively modest and there is a lot of growth potential, especially since a free-trade agreement with the EU was signed in 2019. Currently there are about 60 Swedish related companies present in Vietnam.
How we can help
Business Sweden has been active in Vietnam since 1999. Together with the Bangkok office, we also cover the Mekong region. From our office at the Swedish embassy in Hanoi, we support Swedish businesses with strategic advice and help them to set up a local network.
Björn SavlidCountry Manager Vietnam
What are the main advantages for expansion in Vietnam?
Vietnam is a fast-growing market with a young population, a growing middle class and, due to tensions between the USA and China, an expanding manufacturing sector. At the same time, Vietnam and Sweden have had very strong trade relations for a long time, so Swedish companies are trusted partners in the country.
What are the risks and challenges companies may face in Vietnam?
Although its market is growing, Vietnam is a very complex country. Large parts of the economy are still dominated or influenced by the state, and policies can change from time to time. In addition, corruption is still present throughout the country. Therefore, Swedish companies should count on investing enough time to find good partners or co-workers, while maintaining Swedish standards of transparency, sustainability and ethics.
Are there any cultural aspects to consider?
Knowledge of the local language is essential, so hiring a local interpreter is definitely a good move. Additionally, Vietnam is a relationship economy, so investing time in good stakeholder management is highly necessary. Make sure to spend enough time to develop a close and less formal relationship with your partner or potential customer. Only when you reach that level of trust, business deals can be closed. To avoid loss of face, negative information is usually shared before formal meetings in informal communication channels.