Doing Business in Vietnam: Understanding the Cultural Differences

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Doing Business in Vietnam: Understanding the Cultural Differences

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Introduction

In today’s global business environment with your business it is important to have some understanding of the people and the culture that you have intentions of doing business.

The better prepared you are, the more successful your business negotiations are likely to be, “to be forewarned, is to be forearmed”, it’s your choice.

I have included some basic strategies and options that if properly used will enhance and improve your level of success. These suggestions are based on a number of years of personal business experience, in the real world with real people. Taking this approach works and I can assure you, it works well.

Topics

1. Family Culture
2. Reputation – “Saving face”
3. Name Structure
4. Greetings
5. Bribery and Corruption
6. Gift Giving
7. Standard Working Practices
8. Business Meetings – preparation
9. Business Meetings – what to expect
10. Business Culture – communication
11. Asking Questions
12. Festivals/Holidays
13. Compliments
14. Social Gatherings
15. Superstitions
16. Other – Traditional Vietnamese customs
17. Summary

Although with today’s technology we can conduct much of our business online, in this type of scenario, it can only take you so far. There is no substitute for actually being there, in person and immersing yourself in the local environment.

I believe we often lose sight of the fact that technology is just a tool that can help us to do our job, the true nature of business, is all about people.

1. Family Culture

The first step in getting a handle on how to do business in Vietnam is to understand what the prevailing dynamics are that defines the parameters of their social structure. By having some familiarity with these basic cultural aspects of Vietnamese society and by using a little empathy, we can start to understand the key elements that are the mainstay of their society and in turn how it defines and influences their business culture.

– Chinese Confucianism plays a very big role in their philosophical beliefs and in their daily life
– Elder’s are generally revered and their life experiences are held in high esteem within the family
– It becomes self evident why you see a number of generations of a family living under one roof
– The male makes the final decision for most, if not all matters, the traditional ideal of male superiority is still in place today
– The eldest son of a family is seen as the head of household, and in this case, the elder is usually seen as a role model
– Worshipping of ancestors is common place, as they are seen as the source of life, fortunes, and a key tenant that upholds their family culture
– Their ancestors are honoured and on the day of their death they often perform special ceremonies and rituals, to the Vietnamese their deceased elders are considered the wellspring of their very existence
– Birthdays are not generally celebrated by traditional Vietnamese families
– Vietnam is basically a collectivist society in which the needs of the group are often placed over that of the individual, this holds particularly true in the family values context
– Family and community concerns will almost always come before business or individual needs
– The family ethos plays a very important, central role in Vietnamese society
– Families, extended families and communities can have a major influence on an individual family members behaviour whether they be children or adults

The essence of “family” is one of the most important characteristics of Vietnamese culture, “family” is everything. And it’s worth keeping in mind that Vietnam is also a patriarchal type of society in regard to the family ethos. A similar sort of hierarchy is in place in most Vietnamese companies to varying degrees.

Vietnamese society is rapidly changing, as the country opens up, as the society becomes more affluent, the Vietnamese are over time becoming more “western-like” in nature. Some of the long held family traditions are starting to slip away.

As the younger generations are exposed to more and more western culture, some of those long-held traditional family values are being eroded and the western mind-set and culture is fast becoming more prevalent.

2. Reputation – “Saving Face”

The concept of saving “face”, occurs all over Asia, in some cases it is the overriding factor in everything they do. Today in some of the more developed Asian countries this mind-set is not as strictly adhered to as it once was.

– The concept of saving face is still extremely important
– Reputation confers dignity and the prestige of a person and by virtue that persons family
– Particularly with the Vietnamese it is ingrained into their very psyche, “reputation” is seen as the only thing that can be left behind for one’s family after death

As the younger, more educated generations, start to make their presence felt in their own cultures, these changes will become more pronounced. Some of these types of traditional beliefs are starting to take a small step back, however do not underestimate how much impact; “reputation” will have on your business negotiations in Vietnam.

3. Name Structure

– Names are written in the following order: 1. Family name. 2. Middle name and 3. Given name (Christian name)
– The family name is placed first because it emphasises the person’s heritage, the family, as mentioned previously, “family” is everything
– The middle name “Thi” indicates that the person is female, “Van” indicates that the person is male

4. Greetings

– For more important occasions, use the family name, middle name and finally the given name
– Using the word “Thua” which means “please” being polite rates you more highly in their eyes
– Addressing a person older or higher ranking than you just by name is considered disrespectful; even within the family or in relative relationships, always include their title with their first name
– Generally women do not shake hands with each other or with men; they bow slightly to each other
– If it comes to age versus rank, higher ranking people are usually greeted first

5. Bribery and Corruption

Be aware that various forms of it exist at all levels within Vietnamese society; it is an integral part of their culture and has been for a long time. One of the main reasons this occurs, is that the “standard” wages in a lot of business sectors in Vietnam is very low, this also includes government departments. At the lower end of the scale, monthly salaries can be as low as $100 (US) per month.

– Recommended resource: Transparency International
Corruptions Perceptions index for 2012, which covers 174 countries, the higher the number, the more corrupt a country is perceived to be:
o Vietnam – 123
o Cambodia – 157
o Laos – 160
o Myanmar – 172
– Recommended resource: Tuoitre News (English language news site for Vietnam)

This is generally acknowledged to be a sensitive area, from an ethics point of view, you will need to make your own decisions. Some sectors of business are different to others, it pays to be informed. All I can suggest is to do a decent amount of research, from that you can draw your own conclusions and make informed decisions.

I suggest that your research be focussed on understanding the “how” and “where” of commissions. Somewhere along the line, you will be paying commissions, whether you know it, or not. You need to know where this is going to happen, how it is going to happen, and most importantly, what it is going to cost, be prepared.

Ensure that when you do business in Vietnam you get as close to the source as possible, if you are sourcing products, only deal with the manufacturers.

The further away you are from the people that can actually do the job, the more it will cost, as everybody involved has to get their commission, which you will be paying.

6. Gift Giving

Gift giving is a common practice in Vietnam and is not seen as any sort of bribery; these thank-you gifts do not need to be expensive and should be seen as a small token of your appreciation.

It can be surprising how genuinely thankful the Vietnamese can be when you present them with small gifts, it puts you in good stead for further negotiations, there are a few options available.

– Flowers
– Chocolates/candy
– Fruit

One of the most effective gifts that you can give them, are small souvenirs that represent your home country. For example if you are from Australia buy a dozen or so, small key-rings, with kangaroo’s, koalas, boomerang’s etc, they only cost a few dollars each.

Go to the lengths of wrapping them up in a box with bright wrapping paper. This sort of approach will earn you loads of “brownie-points”, far more than what it cost you to purchase these types of gifts, it is a terrific investment for the future

7. Standard Working Practices

Standard business hours apply, 8am-5pm, Monday to Friday in the larger cities. Some corporate offices and Government departments are open for a half-day on Saturday. In regional areas, hours may differ and shops may close over the lunchtime period for an hour or more.

– When conducting your business in major cities in Vietnam, English is quite widely spoken by Vietnamese business people. Do not automatically make the assumption that their English is going to be good enough to give you the all information you require

– The further out you go into the regional areas and provinces, the more difficult it is to find these small family run businesses and the less English is spoken. Therefore plan your trip well to cover any eventuality

If in any doubt, hire a translator and save yourself a lot of headaches. Finding the right translator for you is very important and it is not an easy process. I would suggest here, that you get your translator to sign one of your company confidentiality agreements.

One copy in English and one in Vietnamese, get them to sign both copies and make sure you give them a copy of both and keep the originals for your records. You need to be absolutely certain that the translator you have hired is on your side, not theirs (commission).

8. Business Meetings (preparation)

Vietnamese business people prefer to schedule business meetings well in advance, several weeks ahead is not uncommon, this holds especially true when they know you are visiting from another country. They will do a lot of preparing for these types of meetings; you should be doing the same.


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