Understanding Vietnam

Cultural intelligence is key to achieving sustainable business outcomes. Being able to read cultural clues and respond appropriately helps develop relationships, communicate effectively and build trust. While cultural and communication norms are changing as virtual modes of engagement increase, core cultural values remain an important factor in business. Not understanding the particularities of doing business in Vietnam can lead to missed opportunities, delays and lost engagements.

Communication

Traditionally, Vietnamese stakeholders avoid confrontation to preserve face, maintain harmony and prioritise relationships. These strong cultural priorities mean that a direct ‘no’ in early dealings will be unlikely, even when something may not be immediately possible. As open criticism or disagreement can cause a loss of face, it is important to remain calm, considered and diplomatic in commercial interactions.

In broad terms, a more direct communication style is observed in the southern regions of Vietnam, owing to the significant share of entrepreneurs and startups based there. As the centre of government and national politics, northern Vietnam is known for a more reserved communication style.

Staying connected with Vietnamese stakeholders through multiple communication channels is key to building relationships and understanding cultural context. The use of instant messaging apps, particularly Zalo and Messenger is widespread in Vietnam.

Navigating culture in business – the importance of core cultural values

Relationships

The strength of relationships will have a significant impact on commercial outcomes in Vietnam.

Business relationships tend to be more social and personal than in Australia, which means suitability for a business partnership may be judged accordingly. In early communications, expect questions that are not directly related to business, such as family details and interests. Embrace invitations to eat and drink with counterparts and, when appropriate, reciprocate. Avoid pushing too soon or too hard to initiate serious business conversations; build the relationship first.

Doing business in Vietnam can involve forming relationships with elderly owners of well-established businesses. Limited English proficiency among this generation can present challenges when building a commercial relationship. Utilising other family members or younger members of a business team can help, but care should be taken to maintain respect for hierarchy. Learning basic Vietnamese phrases, including hierarchy pronouns for men and women, can help forge a positive business relationship.

Hierarchy

Hierarchy can be relevant when navigating Vietnamese business culture, particularly as it relates to status and age. Vietnamese businesspeople may expect to meet and interact with Australian counterparts at the same level of seniority. This is particularly important in the context of meetings that include personnel at different levels. An understanding of individual roles and ranks within an organisation – and how those roles influence interaction – can be useful.

The importance of partnerships

Successfully navigating the Vietnamese business landscape often requires local talent, knowledge and expertise, and partnerships form an important model for doing business.

Building a partnership requires having relationships in place that can facilitate introductions. After identifying a potential partner, it is essential to conduct due diligence. This includes understanding their customers and clients, reach across Vietnam, support for product localisation and in-market reputation. It is essential to undertake reference checks and risk assessments before formalising any local partnerships. Australian businesses can review Vietnam’s centralised Tax Registration Portal and the Ministry of Justice’s National Registration Agency for Secured Transactions as part of a comprehensive company background check.

The strength of a local partnership brings advantages across multiple aspects of a commercial operation – from procurement and contracting to gaining credit. Importantly, a local partner can often assist with bureaucratic requirements, including company and product-specific registration processes. Building a long term and sustainable partnership takes time and patience. Austrade and AusCham Vietnam can help identify potential partners in Vietnam.

For a more detailed understanding of business culture, business etiquette and building long term and sustainable partnerships to deliver strong business outcomes visit the Asialink Business Academy.

While Vietnam offers opportunities for informed and well-prepared Australian businesses, doing business overseas can involve a range of new risks. These should be identified and mitigated as much as practicable – and managed carefully once business operations are established.

Economic - including the potential for government default (sovereign risk), fiscal, monetary and exchange rate risk.

Vietnam’s economic outlook is stable, with a BB+ rating from S&P and a BB+ from Fitch. This reflects the country’s robust economic prospects, moderate debt levels and strong foreign direct investment flows. However, Vietnam’s modest GDP per capita, relatively weak banking sector and evolving institutional settings are vulnerabilities.

Although the growth outlook in Vietnam is stable, using foreign currency always carries potential risks. Be aware of your exposure levels and seek advice when considering potential mitigations.

Political – including the potential for political instability and restrictive government policies.

While domestic politics can be a sensitive issue in Vietnam, there are few incidents of political instability and public dissent.

Consolidation of power by the current General Secretary will ensure policy continuity, and a change in leadership is unlikely to generate political instability.

For significant investments, businesses should consider conducting political risk due diligence to understand the political exposure and affiliations of potential partners. You may also wish to explore political risk insurance as a potential mitigation.

Corruption – including the potential for bribery, embezzlement and conflicts of interest.

Despite improvements in recent years, public sector corruption in Vietnam remains an issue. Vietnam ranked 91st of 180 countries in Transparency International’s 2024 International Corruption Index. Anti-corruption is a central feature of the General Secretary’s policy agenda, and the prosecution of high-profile corruption cases is boosting investor confidence. However, graft at lower levels of the public sector remains a concern.

You should familiarise yourself with Australia’s foreign corruption and bribery legislation and ensure you have a robust anti-corruption strategy.

Regulatory – including the potential for regulations that increase the cost of doing business, reduce the attractiveness of an investment or change the competitive landscape.

Ongoing efforts to simplify and streamline legal and bureaucratic processes have helped drive record levels of inbound foreign investment in Vietnam in recent years. However, the regulatory framework remains under- developed. Property rights, judicial effectiveness and government integrity all scored below the world average on the Heritage Foundation’s 2024 Index of Economic Freedom.

A trusted local partner can help you understand, navigate and secure complex regulatory processes.

Intellectual property – including the potential for weak or underdeveloped IP protections and enforcement mechanisms.

Vietnam has relatively strong intellectual property (IP) protections but gaps in the framework remain. Basic IP protections and enforcement mechanisms are in place and progressive amendments to the main IP Law were introduced in 2022. However, inadequate protection of patents, high physical counterfeiting rates and generally poor enforcement practices remain ongoing issues. The 2025 Global Innovation Policy Centre’s International IP Index scored Vietnam 39th out of 55 countries across nine IP protection categories.

Registration for patents, trademarks and copyrights can help mitigate IP risk. Continual product development and brand updates can deter counterfeiting. There are also technology solutions such as RFID tags and QR codes to authenticate products.

Geopolitical – including the potential for trade relationships, security partnerships and territorial disputes to impact business activities.

Despite ongoing territorial disputes with China over the South China Sea, Vietnam will likely enjoy favourable geopolitical conditions in coming decades.

Ongoing efforts to progress regional integration and bilateral free-trade agreements will cement Vietnam’s position as a key regional actor.

Boards and leadership teams should familiarise themselves with geopolitical issues that may impact your business and, if relevant, develop plans in response to potential scenarios. You may also wish to seek external advice.

Supply chain – including the quality of infrastructure, levels of corruption, corporate governance, supply chain visibility
and timeliness.

Supply chain risk is moderate given the state of Vietnam’s infrastructure and logistics networks, control of corruption, level of corporate governance and supply chain visibility and timeliness. FM Global’s 2025 Global Resilience Index ranked Vietnam 109 out of 130 countries for supply chain resilience.

Potential mitigations include supplier diversification, holding additional inventory, and implementing new operating models and processes. Technology is also providing improved analytics, sensors and automation.

Climate – including the potential for extreme weather events and rising sea levels to impact trade routes, supply chains and infrastructure.

Much of Vietnam’s southern and Mekong Delta regions are low-lying and highly vulnerable to flooding caused by extreme weather events.

They are also key economic regions, accounting for over one third of Vietnam’s GDP and over 40 per cent of foreign investment inflow. Significant industries are at risk - notably fisheries and agriculture - but all business operations could be affected. The World Bank has estimated that climate change could result in losses of 12 to14.5 per cent of GDP by 2050.

Identifying and mitigating climate change risks should be embedded in all elements of your strategy and operating model.

← Back to Why Vietnam |  Go to How to enter the Vietnamese market →