View on the ground: The Vietnam Opportunity
This is the second post on our Vietnam opportunity series. In this post we talk with a foreigner on the ground with decades of Asia experience. We found an old friend from Shanghai who was kind enough to take time for an in-depth chat: Claude Rety.
Claude (above right) has lived in Asia for almost 20 years living in China, Indonesia and now Vietnam. Claude is an entrepreneur with two businesses. A retail consulting business named Rockhill Asia that operates two business lines. Rockhill provides procurement outsourcing services for major retailers across Asia, Europe and Africa. It also develops complete turnkey solutions for property developers in entertainment and retail. Claude also co-founded a Mandarin language training edu-tech company called Ni Hao Ma - Mandarin. Currently located in Vietnam and Cambodia and set to expand across SEA,.
Owen: How does Vietnam treat Expat entrepreneurs?
Claude: I think when we look at how countries treat entrepreneurs it has to do with the timing. When entrepreneurs enter Vietnam can greatly influence their experience. I’d say recently, being an entrepreneur in Vietnam is even better than before. Because of how the country has become attractive to foreign investment. Much is because China has become very difficult to access and to enter. A lot of industries and investors are coming here to this part of the world.
This is industries like manufacturing, retail, and edutech. There is a lot of good news both for Southeast Asia but for Vietnam in particular. Something that can be an experience for entrepreneurs is that they are still quite open. That narrative has changed.
There was a slowdown in the second half of 2021 economically, but in 2022 business is now back to normal.
Owen: How would you compare Vietnam to running a company in China?
Claude: I was a senior manager of a few companies in China. I’d say the set-up is quite similar here. Vietnam has taken a lot from China, in terms of how they organize their tax related procedures.. It’s quite a sense of déjà vu. Due to their historical background, we see some inspiration from the French legal framework has trickled down to Vietnam law and regulation.
But in terms of setting up a company, it is relatively easy and fairly straight-forward IF all the documents required and available and valid. Don’t expect to have a clear timeline – as each step of the process might encounter some adhoc additional requirements, but if someone has been in Asia for a while, this is something that occurs on a daily basis.
Owen: It is like China in that you can sometimes struggle to get the right business license to operate your company in your preferred sector?
Claude: Exactly the same draw. Whoever was in China before, will go through the same process in Vietnam. They don’t call it a WOFE here. It’s a foreign invested company, or FIC, you can do a rep office or buy a local company. It’s not complicated. But you do need to have the proper legal guidance to set it up the right way. Make sure that whatever the industry, it’s not on a restricted list. These terms probably ring a bell to you being in China before. There are some industries that foreigners are not able to come into, or it is kind of regulated. Or if you do come in, there are significant capital requirements in some sectors. The licensing and procedures can be quite long.
There is some homework and due diligence to be done here.
Understand that the procedure takes time. That it can’t be done overnight. Once you are set up right, then everything flows from there like resident permits and work permits. So, setting up your company is a gateway to setting up everything legally related to living in the company, like a lease. If you are legally based, so you can set up your bank account, lease etc.
Sounds like it is very similar to China.
It is very similar. That’s probably why it’s not that frustrating to us because we have been through it already in another country. But still, if you are a new expat or the first time in an Asian country, I think the person needs to be aware that it is not always so easy and black and white what needs to be done. It’s not always clear what is the process and what needs to be done. So, you know the thing, you need to ask questions. What is the process? What is the next step? It can be sometimes a bit of “we will see”.
There is often a lot of discretion from government officials on whether or not to grant a license I guess?
There is but again, there is always going to be a way. Some documents might be very challenging to collect , but with perseverance, there is most of the time another route available. “Guanxi” as we used to refer to in China is here again, essential.
What sort of companies that are seeing moving in. Is it a bit of everyone?
We’re seeing a strong increase in manufacturing, technology, cyber-security, IT / Programming, Infrastructure and Residential / Commercial Developments.
Are you seeing problems in hiring staff. You are seeing a lot of problems in the United States, Australia and even Europe these days.
It’s a good question and it depends on the level of skillset that you want to hire. For high profile employees, obviously the talent pool in the country is growing but it is quite limited. So, foreigners and expatriates need to be here. For middle management and for fresh graduates and young executives or associates, that’s fine. The workforce is abundant.
I’d add that Vietnamese are extremely hardworking. It is a true pleasure to work with Vietnamese. I’d also say that the women are really carrying the country forward in being proactive, ambitious, meticulous and fighting for a better future for themselves and their families. . They can speak excellent English and can communicate, are able to challenge (you), to being able to give ideas, putting in the hours etc.
That’s probably one of the highest, biggest upsides to being in Vietnam. And what I enjoy the most of this country is the people and how we can really get things done.
On top of that, I would say, there is a very hungry fresh wave of graduates that are coming out. That are extremely eager to learn and are super smart. Really want to make it happen.
If, whoever wants to come in has the time to train and to mold, or to mentor someone. Has the patience to, has the skillset to, there’s an opportunity to have really life-long employees if they are treated well if you see this person has potential and that in the long-run they can make it wealthy living.
How does Ho Chi Minh compare to living in China and to living in Indonesia?
Ho Chi Minh City is Shanghai and Hanoi is Beijing. Whereas Shanghai is, back when we knew it, back in 2005 it was already very structured. The country already had a very big masterplan. They had their vision.
In Vietnam there is a similar vision but the execution isn't as hyper-paced just yet. You won’t be able to find those massive six by six highways. They have ambitions to build a big subway network but it is still coming together.
For example, the Line 1 subway line construction has been going on for maybe 10 years in Ho Chi Minh. In Shanghai would have got that done in maybe 5 years. They are working on a second airport.
But on the other hand, it’s still a very historical side and very old side. You can feel and smell and see the old Saigon when you are walking on a Sunday morning, and you can see on the other side of the river. I’d compare it to Shanghai where you have Puxi and Pudong so you have the other side of the river can see the new development. Which is going to be the future city and the central business district. There is a lot of properties developing over there. I think we are seeing a sequel of Shanghai in Saigon.
And just to add on to that, entrepreneurs and expatriates or people wanting to come here they need to understand one important point. It’s kind of trickling down to one of the other questions, Vietnam is one country but actually within there are three different countries.
You have the north: Hanoi. You have the south: Ho Chi Minh. Then you have the center. In order to understand that, one tip I would give an expat coming here is to look and to watch the Netflix series called “The Vietnam War”. I think it is 10 episodes / 18 hour documentary. Each episode could be an hour and half or maybe 2 hours. It’s pretty detailed and it goes through the whole history of Vietnam.
When you see that video and when you walk around Hanoi or different parts of the country, you really understand that actually the north is a different mindset and culture versus the south. North is more traditional whereas the south is more westernized. It’s more open to the international world. And then the center has it’s own blend. It’s a blend between north and south.
When you were in Shanghai exactly? Was it 2005 to…
It was 2005 to 2013.
What’s some advice you’d give someone considering moving to Vietnam?
Whoever decides to come here needs to get properly counselled, in terms of the set-up and the company structure. Make sure you have all the documentation ready. Whatever the business is, you need to foresee the challenges of taking out money, out of Vietnam. Same as in China it is always challenging to convert those RMB to USD. Here is a copy/paste of that experience. I mean there are huge opportunities, this is Shanghai back in 2005, you just have to make it happen.
But on the other hand, company set-up is important. You don’t want to get stuck with the wrong tax rate. You want to be able to use your money freely as much as possible.
So, what you are saying is “take good advice before you come in” I guess?
Yup, absolutely. Get a good legal counsel and talk about the restrictions and challenges for your business. You wouldn’t want to set up your local company or your investment company. You might want to think about having your offshore holding company or in Hong Kong and having a different set-up.
What’s Ho Chi Minh been like for you and your family?
Coming from Jakarta in our last stop, it took some time to adapt because maybe as I mentioned last time, the set-up is a bit different. The housing and the people and the personnel. The whole set up is a bit different. You could probably get the same set-up, but it would probably cost you a bit more. But on the other hand, it’s nice to be in a country in the heart of Asia.
Absolutely everything is available from any social media platforms and tools. To Facebook, to Twitter to using a proper Microsoft 360 with no restrictions, to using LinkedIn, to using different Xero apps and all the good stuff that the world of productivity tools has to offer. It’s there.
(Unlike China) absolutely everything is available from any social media platform to (technology) tools.
Food wise, everything is available and there are no restrictions. Very good quality of life with food, dining and local and international restaurants. We are a bit spoiled here because there are some districts here that are more orientated towards expats. Like District 2 or District 7 in the south which are more expat areas. The South is more of a Korean and Japanese neighborhood whereas District 2 is more westerners. The reason why is District 2 is closer to the international schools.
In terms of schools, we have more than enough choices from top of the line British International School or ISHCMC, the International School of Ho Chi Minh and in the south you have Saigon South, which is a very school. Every single country represented with the Australian school, the Canadian school, the American school, the French school, the German School, the Taiwanese School, the British Vietnamese School, the Australian Vietnamese School.
It's a business and there is opportunity there. The local education is good, but it is bit limited, hence why there are so many international schools.
Are the school fees similar to Shanghai?
It can’t be worse than Shanghai! But you still need to account for $10,000 per year for primary and for secondary you need to account for $25-30,000 if you want to go top of the line. The British International School for secondary is $32,000 per year. But you can find the EIS or AIS maybe around $20K or you can go to the French school and it’s $10K.