Country Profile displays Vietnam at a glance
Full name: Socialist Republic of Vietnam
Location: Sharing borders with China, Laos and Cambodia, plus the South China Sea, Vietnam is in southeastern Asia and is slightly larger than New Mexico.
Language: Vietnamese is the official language, with English replacing French as the increasingly favored second language.
The five-pointed star represents the five elements of the populace—peasants, workers, intellectuals, traders and soldiers—that unite to build socialism. Red symbolizes revolution and blood.
Total population: 95.2 million
Government: Communist state
Religion: Confucianism (more philosophy than religion), Buddhism, plus a large segment that doesn’t identify with a particular religion.
Economy: Since the United States lifted its trade embargo against the country in 1994, the U.S.-Vietnamese commercial relationship has grown dynamically; the U.S. is now Vietnam’s largest export market and a key source of foreign direct investment. In 2015, Vietnam was the United States’ fastest-growing export market (23.3 percent growth to $7.1 billion) and this demand for U.S. goods and technologies continues. Vietnam’s 6-plus percent of GDP growth is forecasted to continue.
Economic challenges: An undercapitalized banking sector and non-performing loans continue to present challenges for Vietnam’s economy. Weakness in the local real estate and security markets in recent years has improved, but left investors a bit wary of new concepts that require high investment.
GDP (official exchange rate): $200.5 billion
Currency: Vietnamese dong (conversion rate at press time: 1 VND equals $0.000044 USD).
Franchising in Vietnam: Given its culture of entrepreneurship and developing economy, Vietnam is ideally suited to franchising. The model began taking hold in the ‘90s with fast food chains such as the United States’ KFC and Filipino chain Jollibee opening stores. Now, the Vietnam Ministry of Industry & Trade reports up to 145 foreign brands have registered their franchise businesses in the country, with the majority of franchisors coming from the U.S., Australia, South Korea, Singapore, Thailand and Japan.
Challenges exist, including investors’ reluctance to invest in new brands not already proven successful in the region. Franchisors should also be mindful that many local companies might not have a complete understanding of the legal regulations related to franchising.
Ease of doing business ranking by World Bank: 82, up from 91 in 2016.
Cultural notes: The Vietnamese love bargaining, so expect them to negotiate aggressively. Business meetings are often over lunch, while dinners are considered social occasions and a good time to develop a rapport.
Sources: U.S. Commercial Service, CIA World Factbook, World Bank, “Kiss, Bow, and Shake Hands.”