Korea and Vietnam officially established bilateral relation on December 22nd 1992. After 25 years with many major milestones, Korea has been the largest investor of the foreign flows in Vietnam. In accordance with reports by the Foreign Investment Agency, in the first 5 months of 2017, investment capital from Korea to Vietnam reaches 4,41 billion USD, making up 36,4% of the total investment capital. Largest Korean incorporations also consider Vietnam as a strategic partner to invest in many major projects here: LG Display Factory and LG Innotek Factory (Hai Phong), Samsung R&D Centre (Hanoi), facilities of Kolon Industries (Binh Duong)… Besides that, big names in commerce and services are also well-known such as Lotte, CJ CGV, E-Mart (Shinsegae)… Regarding food and beverage industry, some brands like Don Chicken, Tous Les Jours, Paris Baquette… have been becoming familiar to Vietnamese customers.
The key for successful Vietnam market access of Korean investors is “Free Trade Agreement”, in which, Vietnam – Korea Free Trade Agreement taking effects on December 20th 2015 is the one reduce many limitations on foreign investment as well as tariff barriers for both countries. Joining the game, besides large companies and incorporations, there are also small and medium companies from Korea. If the key players has their advantage as long-term operation in Vietnam, those new participants who are starting researching Vietnam’s market may feel confused when facing regulations, domestic market and procedures related to foreign investment. Based on our experiences in consulting for Korean investors, Viet An Law Firm collects and provides some information as follows:
Advantages of Vietnam market:
- Population and labor force: In accordance with reports by General Statistics Office of Vietnam, until 2015, Vietnam’s population reached more than 91 million people, in which, 31 million people live in cities. Over the country, the labor force (15 years – 49 years) is calculated approximately 40 million people. Korean investors can take advantages of the growing and young population of Vietnam, not only as a consuming market but also as the potential labor force.
- Economic growth and politics: Vietnam is a politically stable and peaceful country, and a safe destination for serious and long-term investment plan.
- Consuming culture: In the current years, Vietnamese consumers are affected by foreign culture. We do not state whether it is positive or not because judgment are based on personal view. From the point of foreign investors, this is an opportunity to affect and raise revenue, especially in services sectors. Behavior of Vietnamese youth is affected by two main culture: Western and Korean.
Issues to be avoided when investing in Vietnam:
- Procedures: Although Vietnam has opened the market and changed the jurisdiction, investment procedures are still complicated and bring troubles to foreign investors with many papers. Besides the Investment Registration Certificate, Business Registration Certificate, Approval of capital contribution, shares purchase, capital contributions purchase, investors shall pay attention to conditional business sectors and sublicenses. Viet An Law Firm can help Clients research, prepare necessary documents to apply for Investment Registration Certificate as well as other simpler options to save time. Moreover, procedures for tax, labor, social insurance for employees are responsibilities investors have to fulfill.
- Do not research the market from the local view: During our consulting process, we conclude that researching and evaluating Vietnam’s market from the local view is a necessary job as it would help investors find out weaknesses of the market, threats and potential competitors in order to change and create product positioning to fit the market. Other things to consider are: locations, traffic, security, materials… Sometimes some small mistakes may affect the whole investment result. Investors need to be careful and evaluate the market carefully.
Take advantages of Korean culture: We can say that Korean culture has a great influence on Asia as well as Vietnam. This is considered as a success of Korea as culture is the key factor paving the way for a nation reaching out to the entire world.
Foreign investment services in Viet An Law Firm:
- Consult about legal procedures and regulations related to foreign investors in Vietnam;
- Consult about conditional business sectors and detailed conditions apply to each sector;
- Consult for Korean investors in Vietnam about investment limitations, Vietnam’s commitments on opening market, regulations applied to Korean investors in Vietnam jurisdiction;
- Draft, submit the application and work with state-authorized agencies when Clients grant authorization;
- Consult about related issues: contracts, Korean employees working in Vietnam, commercial franchise, intellectual property, tax, social insurance…
If you are looking for advice about procedures and legal issues related to Korean investment in Vietnam, please feel free to contact Viet An Law Firm for more information!