Two ways of setting up a business in Vietnam

Acquiring a Local Company:

Acquiring a local company in Vietnam can be an effective way to enter the market quickly and overcome some of the challenges of starting a new business from scratch. This method is also known as a merger and acquisition (M&A) or a share purchase. By acquiring a local company, the foreign investor can leverage the existing company’s licenses, permits, and contracts, as well as its local knowledge and network. It can also potentially save time and money compared to starting a new company.

However, acquiring a local company in Vietnam can also be a complex process that requires careful due diligence and legal consultation. The foreign investor should conduct a thorough assessment of the company’s financial, legal, and operational status before making any decisions. The investor should also be aware of potential risks and liabilities associated with the acquired company, such as outstanding debts or legal disputes.

Foreign Direct Investment (FDI):

Foreign direct investment (FDI) is another way to set up a business in Vietnam. FDI refers to the investment by a foreign investor in a new or existing enterprise in Vietnam with the aim of establishing a lasting interest and exerting significant control over the enterprise’s operations.

FDI in Vietnam is regulated by the Law on Investment, and there are various forms of FDI available to foreign investors, such as joint ventures, wholly foreign-owned enterprises (WFOEs), and business cooperation contracts (BCCs). The registration process for FDI can be time-consuming and complicated, and it is recommended to seek professional advice from local consultants or lawyers.

One of the advantages of FDI is that the foreign investor has full control over the business and can make strategic decisions based on their own business objectives. However, FDI also involves various risks and challenges, such as navigating the legal and regulatory environment, cultural differences, and competition from local businesses.

In summary, acquiring a local company and foreign direct investment are two ways to set up a business in Vietnam. Each method has its own advantages and challenges, and it is important for the foreign investor to conduct thorough research and seek professional advice before making any decisions.