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- Business Formation -
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Read about   WHAT IS ....VIETNAM?

Business Formation

We provide meaningful guidance to help you choose the best path for your project, and then do everything you need to cost-effectively complete the task. A project in any third world country, including Vietnam, can seem daunting.   Whether a  100% foreign-invested project, a joint-venture or the construction process, building a distribution network or preparing a bid for an EPC contract, V V G is able to engineer every critical step towards establishing your needs in Vietnam. This includes advice on the best business arrangement, writing and submitting the application for a license and a business charter, contract negotiations and drafting, site location and selection, bidding, construction permits, and representation before all government agencies.

If you need market research and analysis, we too have done that for others and are available to work with you.

Representative Offices

A good way to start doing business in Vietnam is to come here, open an office and learn your own way about.  Many elect to visit for a week every few months. We know some who claim to visit every month. Few actually take the time and effort to take that route, even if the their offices are in southeast Asia.  However, there are folks make that claim.

In our eleventh (11th) consecutive year located and working in Vietnam, we know best way to be here is to be here. It is not a difficult or a costly procedure to start. In many ways, establishing a Representative Office is easier than seeking an investment license. The formerly large fee ($5,000) has been reduced to VND 1 million (about $62).  The costs come in the being here, depending on where you place your priorities.

It is said that some Representative Offices need as much as US$ 500,000 a year for rent of house and office, payment of foreign staff salary packages, and local costs.

The two price system (where foreigners pay multiples of what domestic folks are charged) is officially sanctioned by the government and more often abused to the great distress of foreign investors. It is being phased out. But it still exists.

We will help you achieve your goals for much less than others.  We can help you complete the application process for about $1,000.

You can accomplish most of the paperwork yourself.  V V G is always available to help should you need our expertise.   Two copies of the current official application form are to be submitted to the Ministry of Trade containing:

• The original or notarized copy of the charter or other founding documents of the company;
• A certificate from the applicants bank, or Annual Financial Statement from the company’s accountant confirming the prescribed capital of the company;
• Project or other documents executed and sealed by Vietnamese companies;

Include a summary of your home company. It should show financial and strategic data   and information about company leaders. This report can be your annual report to shareholders, or written just to impress the State with the substance of the home company's operations for the past several years.

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100% Foreign Invested Enterprise (V V G's recommended investment form)

This is becoming the favored approach for many investors who have not found success in joint venture projects. More than 70% of all new enterprises in year 2003 were of this form.

1. The paper process of making the application. 
(The political process will be discussed)

• Application Form
• Charter of the new, proposed Vietnamese 100% foreign Invested Enterprise
• Economic-Technical Study of the new, proposed Enterprise (investment project)
• Documentation verifying the legal and financial status of the investor Legal Formation Documents (foreign to Vietnam) of the parent organization (corporation, partnership, joint venture, etc.) Original or Notarized Copy.

2. Key elements of the Economic-Technical Summary 
(Prepared by CLIENT and V V G)

Products and their markets Business and Production Program Choice of Investment Form Technology and Equipment to be used Consumption of Raw Materials and partially manufactured products Consumption of fuels, water and services Source location of goods and materials Architectural design drawings and plans

Organizational structure Staff (foreign & domestic) and salary Total capital and sources Financial analysis (projection of competition/viability Economic analysis (projection of profit and loss) Requests for special tax incentives/privileges Conclusion

3. Procedures necessary after a license is approved and issued.
To the extent you need, these can be coordinated and supervised by V V G:

• Post public notices of formation of Enterprise (newspapers); Register Enterprise Seal (Interior); Register residence of foreigners working in the Enterprise (People’s Committee and Police)
• Define programs for production & importation of materials and equipment; register list of imported equipment and raw materials; obtain import license (Trade)
• Plan for labor recruitment; negotiate, draft and implement labor contract (Labor)
• Plan for required services; negotiate, draft and implement service contracts (electric, water, waste)
• Open a bank account: if in a branch of a foreign or JV bank operating in Vietnam, obtain approval (State Bank)
• Register the accountancy system and accounting books (Finance)
• Apply for and register necessary documents for communications systems (phone, fax, telex, e-mail)
• Apply for and register necessary documents for cable television in residence or business.
• Register plan of recruitment (Provincial or City Labor Management Office)
• Political work and report for ground work plan and population relocation (People’s Committee)
• Negotiate, draft and execute contract for employee/property insurance

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Joint Ventures

Historically, this was the favored business form by the State and taken up in the early days by foreign investors seeking easier entry into this lucrative market.  Due to the burdens placed upon this enterprise type, while almost 60% of all foreign invested projects were JVs, many of the large JVs are converting to fully 100% foreign invested projects.

1. The paper process of making the application.
(The political processes will be discussed)

• Application Form to start a joint venture between foreign investors and Vietnamese investors
• Charter of the new, proposed Joint Venture Enterprise
• Economic-Technical Study of the new, proposed Enterprise (investment project)
• Documentation verifying the legal and financial status of all the parties: Legal Formation Documents for both foreign & Vietnamese, Original or Notarized Copies.
• Recommendations for special tax incentives/privileges
• For Technology Transfers from Foreign Investor to JV, Contracts for appropriate licenses and trade marks.

2. Key elements of the Economic-Technical Summary
(Prepared by CLIENT and V V G)

Products and their markets Business and Production Program Choice of Investment Form Technology and Equipment to be used Consumption of Raw Materials and partially manufactured products Consumption of fuels, water and services Source location of goods and materials

Architectural design drawings and plans Organizational structure Staff (foreign & domestic) and salary Total capital and sources Financial analysis (projection of competition/viability Economic analysis (projection of profit and loss) Requests for special tax incentives/privileges Conclusion

3. Procedures necessary after a license is approved and issued.
To the extent you need, these can be coordinated and supervised by V V G:

• Approve the organization of the Joint Venture Executive Council, election of the President, Vice President, Board of Directors and other key posts with attention to the Vietnamese authority.
• Specify the plan for the contribution of funds for each side in cash and value-in-kind for each side; a timetable, and measures for receipt of each sides share.
• Post public notices of formation of Enterprise (newspapers); Register Enterprise Seal (Interior); Register residence of foreigners working in the Enterprise (People’s Committee and Police)
• Define programs for production & importation of materials and equipment; register list of imported equipment and raw materials; obtain import license (Trade)
• Plan for labor recruitment; negotiate, draft and implement labor contract (Labor)
• Plan for required services; negotiate, draft and implement service contracts (electric, water, waste)
• Open a bank account: if in a branch of a foreign or JV bank operating in Vietnam, obtain approval (State Bank)
• Register the accountancy system and accounting books (Finance)
• Apply for and register necessary documents for communications systems (phone, fax, telex, e-mail)
• Apply for and register necessary documents for cable television in residence or business.
• Register plan of recruitment (Provincial or City Labor Management Office)
• Political work and report for ground work plan and population relocation (People’s Committee)
• Negotiate, draft and execute contract for employee/property insurance

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THE CONSTRUCTION PROCESS

1. Environmental Protection Plan - Prepared by the CLIENT with the guidance of V V G, for the approval by the Provincial or City Environmental Department. Documents to be prepared and submitted include:

• Official Letter Request executed by the CLIENT for submission to the Environmental Department
• Environmental Protection Plan
• Eco-Technical (or Feasibility) Study of the Project
• Investment License
• Layout of the Project (include architectural plans and drawings)
• Land Allocation Map and Land Use Approval issued by the provincial or City People’s Committee

2. Fire Protection Plan - Prepared by the CLIENT with the guidance of V V G, for the approval of the Fire Protection Department of the Province or City. Documents to be prepared and submitted include:

• Official Letter executed by the CLIENT for submission to the Fire Protection Department
• Detailed design of fire-risk and safety solution for fire-explosion prevention plan. Details should include the type of business; inflammable grade of construction materials, raw materials, supplies, and equipment; location of emergency exits; elements and location of internal fire suppression equipment; elements and location of fire protection water supply; elements and design of electrical systems; elements and location of lightening-suppression systems.
• Investment License
• Layout of project
• Land Allocation Map and Land Use Approval issued by the provincial or City People’s Committee

3. Application of Design Details - Prepared by the CLIENT with the guidance of V V G, for submission to the Construction Department of the Province or City. The documents include:

1. Application letter executed by the CLIENT
2. Investment License
3. Eco-Technical (or Feasibility) Study of the project
4. Land Allocation Map and Land Use Approval issued by the provincial or City People’s Committee
5. Construction Project Design Plans (4 sets) consisting of:

• Geological Report
• Layout of the project and technology line
• Main structure drawings to include foundation
• General architectural drawings: construction block, cross-section, profile, layout of technology floors.
• System layout of waste water treatment plan, network plan of infrastructure support to include: water supply, drainage system, power supply, roadways, fence lines, etc.
• Fire Protection Plan
• General Report
• List of standards used in the design.

6.  The Vietnamese legal (juridical) status of the design organization confirmed by its business license, or the design permit granted by the Ministry of Construction if the designer is a foreign entity.

Upon receipt of approvals of (1) the Environmental Protection Plan and (2) the Fire Protection Plan, they are to be submitted to the Construction Department as part of the application process.

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Distributor and Dealer Networks

We firmly  believe in creating and then building upon a team effort to achieve market penetration and win substantial market share.  We can locate a distributor who will help you get your products to this lucrative market.

The population and industrial sectors are relatively small and geographically confined. Yet, the potential overall market in Vietnam is now 82 million and projected to grow to150 million people by the year 2010. Total funds committed for foreign investment over the next 40 years are now in excess of US$ 50 billion. 

Due to the dynamic nature of developments here, information that is both reliably gathered and reported is quickly outdated.  However, not all information is either reliably gathered or reliably reported.  It is not difficult to locate reliable information about Vietnam.  It simply requires effort, time, and a reliable research and reporting service.

Establishing a successful distributor network in the Frontier requires more than placing advertisements in local newspapers and shipping spot-lot containers. Looking for a  wealthy person with a pick-up truck and a large back yard to hold your goods for resale (as several failed suppliers have tried) in all probably will result in your finding a crook.  

The crooks purchase a container or two but rarely more.  They seek deep discounts from you and then mark-up prices that the market cannot sustain.  Or, without the knowledge or abilities you need for your products to achieve both penetration and sustained sales,  they will dump your products at  prices you cannot support. Worse yet, most will also immediately  seek to copy your packaging and insert materials that have only a small resemblance to your original product, selling the products as genuine and themselves as your "authorized" distributor.

Of course the package and product markings will carry your trademark and trade name.  The goods will be sold for a small  fraction of your fixed costs. And those products will be copied by others as well. There are now  several generations of forged products in direct competition with the originals that consumers are challenged to find 

V V G Makes the Difference.   We proceed on a more conservative approach.  For the cost of a trip to Vietnam to start your market discovery process, we who already know the territory so well undertake a short, focused search for a qualified distributor.

We help to educate you about this market. We also help to educate the market and political leaders about your company and its important products.  In outline fashion, consider some of the services V V G provides:

Our fees for these services are based upon the number of staff, skill level, and time needed to complete a business plan you and we agree upon before work begins.  When you have paid a small retainer in advance, our work begins.  We can generally locate and reduce a long list of candidate distributors to the top contenders in under 60 days.   With the active participation of our clients, many of these projects can be completed in less time.

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EPC (Engineering, Procurement & Construction) Contract bidding.

This is the prime area for infrastructure work  There are specific bidding procedures. Awards have been lucrative.  However, the process has been long.   This is the key area where Overseas Development Assistance from many foreign nations provide substantial opportunities for Power Generation Stations, Telecommunications, Highway-Bridge-Tunnel construction, and development of key economic sectors.

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Help us to understand your needs. We will be pleased to supply additional information about our resources. Of course, the more information you can provide to us about your interest and needs in Vietnam, the better prepared we will be to respond.  Please contact us by e-mail.

Following our consideration of your needs and your evaluation of the services we can provide, we will give you a project proposal with our fees.

Read about   WHAT IS ....VIETNAM?

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