Image source: Vuvuzela bar
Vietnam has a booming economy and is increasingly open to foreign activity — from trade, to business, to culture, and everything in between.
However, many foreign executives and leaders come to Vietnam with big ambitions, only to get demoralized and leave within a few years.
Why? Part of the problem is a misunderstanding about the etiquette and norms of doing business in Vietnam. In this post, we explain some key-points about Vietnamese business culture, especially common things that Westerner get wrong and inadvertently hurt themselves when interacting with Vietnamese clients and partners. The following is based on our personal experience working with both international and domestic companies within Vietnam, some of which are still thriving, and one that had to shutdown and leave.
- Relationships Are Key to Vietnamese Business
- Meetings and Medium of Communication
- Small Talk in Business
- Schedule Important Meetings Around Lunch or Dinner
- Last Minute Changes are Common in Vietnamese Business
- Handshakes in Vietnam
- Being Seated – An Important Aspect of Vietnamese Business
- Vietnamese Negotiating – Tips About Bargaining
- Vietnamese Overtime Work
- Executives Move as a Team
- Gifts During Tenders for Service/Supply Agreements
- Tet Holiday Gift
- Superstition is Pervasive in Vietnamese Business
- Gatekeepers in Business
- Indirect Speech in Vietnamese Business
- “I’m going to sue you” – A Common Bluff
- Regional Differences in Business Culture in Vietnam
- Vietnamese Business Consultants
Relationships Are Key to Vietnamese Business
Knowing the right people vs. best people
Relationships are incredibly important in Vietnamese business. This manifests in a lot behaviours that may confound foreigners. In particular: i) relationships drive a lot purchasing and servicing decisions; ii) getting things done through official channels may often fail, unless you have a personal contact on the inside.
For example, when deciding between two suppliers — one of which is a friend of a friend, while the other is demonstrable more meritorious — Vietnamese will generally pick the former rather than the latter. They are more likely to trust the friend of a friend rather than the unknown (and perhaps better) option.
This also explains why Vietnamese business leaders (and their attractive underlings) must spend a lot of time drinking, dining and entertaining a large network of trusted contacts, as well as join expensive private clubs and mastermind groups. Such expenses are often referred to as the “lube expense” (bôi trơn in Vietnamese).
Meetings and Medium of Communication
Lots of extended meetings at all hours
The Vietnamese love in-person meetings, and allocate a lot of time to them. If there is a potential client or partner, a good meeting will be one that extends into dinner/lunch and beyond. This is all part of a culture of trust that relies on personal relationships and less on contract- and civil-law. Meetings and their peripheral socializing are all for the sake of parties to get to know each other and build the foundations of trust.
Tip: Make sure you have business cards — the Vietnamese love them.
For electronic communications, there is a wider panoply of options to use than in the West. Therefore, you must verify the other party’s preferred method of communication. Don’t assume the default of email and telephone.
For example, many small businesses rely on Zalo (a Vietnamese social media plus messenger plus file-sharing app) or even Facebook for their important communications and file-transfer.
Tip: Get another phone for installing Zalo, in case your security department doesn’t sanction such apps.
Standard trading hours don’t really apply in Vietnam — so get ready to deal with clients’/partners’ communications in the evenings, on weekends, even holidays. The fact of the matter is: if you want a client’s business, it is a given that you should be available 20 hours a day 7 days a week, no matter what your schedule says.
Small Talk in Business
Don’t “Get down to business”
In meetings with different business parties (clients, prospective partners, suppliers, etc), the expectation is that there should be a lot of small talk and icebreakers at the start of the meeting — How was your trip here? How was your latest vacation? Have you had breakfast already? Then, after a connection is made, you may proceed to the official business of the meeting.
It it not good to be very direct and get right to the point. Neither is it good to be too personal, like talking about the intimate details of someone’s family. Keep the topics light and fluffy and friendly.
Schedule Important Meetings Around Lunch or Dinner
Most important decisions are made over food and drink
For business meetings with important partners, be sure to schedule the meetings before meals so that, if things go well, the meeting can extend into lunch or dinner, a.k.a the “third shift”.
This is because important business decisions & negotiations are rarely concluded during the meeting in which time it is allotted. Often, crucial decisions happen during meals, drinks, and sometimes even karaoke (depending on the boss). This is all part of a broader culture of business that cares a lot about relationships and trust, instead of leaning on civil-law and contracts.
Be prepared for long meetings and long meals. If fact, if the meeting and meal is short and nothing important happens, then the other party probably doesn’t like you and is not going to do business with you. If the meal is getting late and extended, that is a good sign that they like you.
Learn more about dining etiquette in Vietnam
Who pays for the meal/drinks in Vietnam?
Generally, the host or the person who invited the other party to a meal is the one who should pay for the meal. There is no 50/50 paying for meals in Vietnam.
Who decides where to go?
In Vietnamese business meetings, the host should merely suggest where to go for meals and other important venues. The guest/invitee generally has the final decision about where to go — and they are the ones who gets treated.
Not surprisingly, the guest will often select a super-expensive place, and the host must smilingly swallow the cost. In other cases, the guest may pick a place based on other motives, such as a familial connection with the restaurant, etc, even if the venue is not that great.
In either case, if you are hosting a business meeting, you should expect to pay a lot for food and have little control over where you will be going.
Freelancers and Meetings
The exception to the above is when dealing with (or operating as) a freelancer. Freelancers and other creatives generally like to meet in work-friendly coffee shops. For example, “The Coffee House”, or “Highlands Coffee”, or “Starbucks” (the latter being considered a luxury in Vietnam) are all relatively quiet and considered suitable for work-meetings. It shouldn’t be a place with screaming kids, but lots of people working studiously on their laptops.
One of our favourite places to meet is Hanoi Coffee House — a quiet, atmospheric, discrete place with delicious Yogurt Coffee near St. Joseph’s Cathedral.
Last Minute Changes are Common in Vietnamese Business
Expect last-minute over-hauls in everything
Change of venue for a meeting; time change for an event; participants backing-out at the last minute; an overhaul of the agreed-upon details of a contract; new scope-of-works for a project that starts tomorrow: you should always expect major sudden changes for business meetings, events, and agreements/contracts, etc, when doing business in Vietnam.
Such changes are not considered rude. People demanding the change don’t need a good reason. Sudden and explosive changes are just part of the culture and need to be expected.
Handshakes in Vietnam
A slight nod, not a bow
Unlike other East Asian cultures, bowing is not common in Vietnam, and especially not in business. Instead, handshakes are the norm in greetings and formal farewells, regardless of sex.
Being Seated – An Important Aspect of Vietnamese Business
Host on the left. Guest on the right
Who sits where and when is a big deal in Vietnamese business. There are a lot of little rules to consider. For instance, when you first enter an office as a guest, you must always wait to be seated, much like in other Asian cultures. Similarly, when you and your associates enter a room, you cannot just sit anywhere — to do so would be shocking to a Vietnamese team!
One point is especially confusing to most foreigners: the unspoken layout of seating during board-room meetings with multiple parties. Put most simply, the host-party should sit on the ‘right’ and the guests should sit on the ‘left’. But what does ‘left’ and ‘right’ mean in the context of Vietnamese business meetings? There is no formal definition, and usually people just know.
Generally, however, left/right are based on the relative position of some anchoring focal point — like a big screen or podium or other obvious head of a table. The ‘left’ is the left of the audience facing the anchor point, and vice-versa for the ‘right’.
Pay attention to how everyone is seating around each other in a Vietnamese team: often, it is like a triangle formation, with the most-important person in the middle, at the head of a triangle, and key-personnel seated left and right in descending order of importance. Physical proximity often mirrors an organization’s executive importance.
Pay Attention! You should know who is the boss’s key-personnel, and who is in close physical proximity to them. Knowing such key-people will be useful to get things done if/when official procedures and communications get bogged down.
Vietnamese Negotiating – Tips About Bargaining
You are always haggling
The Vietnamese are always negotiating and haggling, and are quite adept at it. When it comes to business agreements, you must always haggle a little bit. Here are some tips:
- First price: Never accept the first price; likewise, never open with your best price.
- Compliments: Never say “Oh I love what you guys do!” or “We really admire your work” (even if you do). The Vietnamese never say such things; instead, they will say something like “I think there is good potential for us to work together” as the most explicit form of compliment.
- Negging: Always find some fault or deficiency with the counter-party’s offer (even if you genuinely like it), and use it to extend negotiations.
- Decisions over drinks: The most important negotiating decisions happen after the main meeting over food and drinks.
- Patience: Never use time as a weapon or negotiating tactic (e.g. “if you sign right now I can get you an X discount!”). All important decisions will take time, and will rarely be made impulsively (especially in Hanoi, which is famous for its own slow and deliberate cadence).
- Handshake means nothing: Spoken agreements with a handshake are meaningless — get it in writing asap.
You may not be ready for the mental jujitsu of Vietnamese negotiations, so be sure to practice on some small, unimportant contracts first.
Vietnamese Overtime Work
What work-life balance?
The Vietnamese have weak boundaries between one’s private life and time for work. For example, employees are expected to reply to work-messages during their off-hours. Likewise, staying late for work is more common than not, even for low-profile positions and low-stress jobs.
In business, this means you should be ready to service clients’ needs and communications at any time — even on holidays or if you are sick. If you don’t, you probably won’t have them as a client for very long.
RELATED: Vietnamese work culture — what is like to work in Vietnam?
Executives Move as a Team
Lose a key-leader = losing best staff as well
Turnover is high in booming economies like Vietnam (some companies actively encourage it through a culture of fiery baptism). When an executive changes jobs, they will often take their whole team with them, rather being hired individually.
This makes high-performing leaders doubly valuable, both for recruitment and retention. The extra (low) salary of well-functioning underlings is peanuts compared to the benefits of their chemistry and mutual history as a team.
On the flip side, losing a manager may also mean losing all your best staff as well.
Gifts During Tenders for Service/Supply Agreements
One of the biggest hurdle to international businesses succeeding in Vietnam
In Vietnam, if you are soliciting tenders for a service or supply contract, you must keep an eye on the employees making the decision. Why? Because it is the norm that the decision-maker will get a little gift from the bidders. This could lead to sub-optimal purchase-decisions. You must make it clear that no gifts should be accepted during procurement processes (however, this means you must compensate your best employees in other ways in lieu of such gifts).
For small contracts in the range of a couple thousand dollars or a dozen thousand dollars, the gift could be 5%-10% of the purchase-value. For million-dollar contracts, the gifts could still be as high as 1% of the contract value.
On the flipside, if you are a foreign-business in a competitive bidding process in Vietnam, you must be aware that your competitors are throwing gifts at the purchaser. You will need to be creative if you want to remain competitive. First, if you think your bid is meritorious on its own, but want to hedge the risk of a low-quality competitor snagging the contract away based on their gift-giving prowess with the decision-maker, then you should think of creative ways to reach the purchaser’s senior-management and make sure they know about the quality of your bid. Find someone who has a vested interest in the quality of the procurement rather than the gift, and then find ways to get an audience with them.
Some gift will always be necessary during the bid, no matter your moral scruples with the gift. Consider some luxury whiskey, wine, or resort-packages that can be safely expensed as part of the normal process of doing business in your home country. These are obviously token-gifts compared to what your local competitors are offering.
To learn more about such “informal fees”, check out the Provincial Competitiveness Index. You can learn which provinces are more business-friendly on this metric.
Tet Holiday Gift
Key relationship management
It is an absolute must for businesses to send Tet holiday gifts to their important clients, partners and government regulators. If you don’t, don’t expect them to treat you fairly in the future.
Here are some ideas for Tet gifts:
- Luxury wines and whiskeys imported directly from abroad (forgeries are rampant within Vietnam).
- Fountain pens.
- Luxury hand-bag.
- Rare flowers and plants, like Orchids.
- Vases, wine glasses, English tea sets (should be made in the West, and not China)
- Ornate and fancy calendars (e.g. made from wood, or some other creative process)
- Sweets, nuts, dried fruit, sausages, exotic teas and coffees in a gift basket — especially from Western brands.
- Silk products (e.g. scarves, table cloths).
Remember to research the recipient’s lucky colours and don’t send them gifts in their unlucky colours (see notes on Gatekeepers below). Don’t send gifts in the color black (a very unlucky colour in Vietnam). If you don’t have time to research someone’s lucky colours, then a safe alternative is to use the colours of their business logo for the colour of their gift.
Superstition is Pervasive in Vietnamese Business
Business-people are some of the most superstitious people in Vietnam
While Western businesses will not even wish you a Merry Christmas, Vietnamese businesses are steeped in quasi-religious superstition. In all of Vietnamese society, business-persons are the most superstitious. These manifest in a number of uncountable ways
- Hiring based on the compatibility of teams’ zodiac signs;
- Careful research of clients’ lucky colours to appropriately colour-code their gifts;
- Prayer rituals at the launch of big projects;
- The all-pervasive Cóc Ngậm Tiền (lucky toad statue) who attracts wealth and fortune;
- Unlucky block-out times when business cannot be conducted;
… and much more.
Some industries, like real estate development, basically require a staff fortune-teller to act as a Feng Shui consultant.
If you are a foreigner doing business in Vietnam, your Vietnamese partners won’t necessarily care about your personal superstitions and whether you worship Cóc Ngậm Tiền. However, there are a few faux pas that can be easily avoided by learning some of the basics of Vietnamese superstition and religion, for example:
- Pregnant women are considered bad luck, so don’t bring your pregnant wife to important events.
- If one of your family members passes-away, you should not visit other Vietnamese people during holidays, for 3 years.
- Avoid travelling or doing launching parties or having important meetings on the 7th day of the month.
- Avoid making big decisions and starting major initiatives during the 7th Lunar Month (~July) — this is the month in which ghosts are released from Hell and everyone is especially susceptible to bad luck.
These are obviously for the morale of your Vietnamese staff and partners, even if they earnestly profess that they are not religious and not superstitious.
Similarly, if you hire Vietnamese staff, be prepared to have them expense you for the costs of maintaining a little Toad alter (e.g. incense and fruit offerings)
Gatekeepers in Business
How to gather intel
There are many situations in which you will need to get close to key decision makers within an organization (for example, to bypass the lower-level procurement staff, or to get some intel, or to simply press for a meeting), and doing so directly may be ineffective.
You may need to finding the “gatekeepers” who can connect with and/or influence the decisions of senior leaders. This is an important skill. Such gatekeepers are likely to be people in close physical promixity to senior execs, including personal assistants, security guys/doormen, chauffeurs, and, of course, right-hand men who sit next to the boss at meetings.
Indirect Speech in Vietnamese Business
100 ways to say no, none of which are “no”
Vietnamese think that Westerners are too direct in their speech. In contrast, the Vietnamese, having lived through experiments in central-planning and government control in everything, have a confusing variety of coded-language to say things indirectly. Some examples:
- “I’m busy. That will be difficult. I’m not so sure about that” – These are just a few ways to say “no”.
- “I’m not sure we can do that on time. But, we’ll think about some ways to save time” – Official channels will be too long and difficult; you’ll need to persuade some interviewing party.
- “That person is very difficult. But, we’ll think about some ways to change his mind” – Someone needs to be paid-off.
- “I know someone who can solve that for us” – You’ll need to know someone internally in order to get something done. The normal process will be too slow and difficult (e.g. have to compete with all the other people with an inside connection).
- “You need to say thank you to him” – You need to give him a gift, perhaps even cold-hard cash.
“I’m going to sue you” – A Common Bluff
The strength of the West’s legal system is also your weakness
If you are a foreigner doing business in Vietnam, don’t be surprised if minor disputes result in someone saying to you “I am going to sue you!”
Vietnamese know that Western companies/organizations have strong civil-law traditions, and that they take such statements very seriously. So, Vietnamese agents often do this as bluff — such bluffs are almost entirely ignored by Vietnamese operators and so should you.
Regional Differences in Business Culture in Vietnam
The South has a longer history of international capitalism
These exist slight differences in the business cultures and norms of different parts of Vietnam, especially North vs Central vs South Vietnam. Many of these differences parallel the broader cultural differences between these regions, as we detail in this post.
In general, the business culture of the South is more flat, less formal, less hierarchical, less superstitious, faster, and has a longer legacy of dealing with international partners. Otherwise, a full enumeration of such differences would require an entire thesis.
Vietnamese Business Consultants
Get help, or learn by trial and error
If you are serious about doing business in Vietnam, or do large scale trading with Vietnamese parties, you should enlist the services of a local liaison and consultant, especially someone with personal and/or familial connections within government.
Partly, this role could overlap with the official ‘local representative’, or secretary, as required by Vietnamese corporate law for foreign companies. But even getting that far will probably require some local consulting.
If you have some simple questions and concerns about Vietnamese business culture, you can send us questions via the Contact Us form, and we’ll do our best to give some helpful pointers.
Thankfully, a maturing ecosystem of business consultants are blossoming right now in Vietnam, and are becoming very adept at formalizing a lot of the tacit informalisms.