Vietnam´s fast economic growth and political stability make it one of the most potential B2B market in the world. But way too often, International companies fail to adapt their approach to the local market. Vietnam has its own culture and business etiquette. Overseas companies should acknowledge them and play by the local rules or else seriously compromise their chances of succeeding in Vietnam.
Hereunder are listed the most common one, they come up regularly when discussing with local business players involved in B2B markets.
Those are mistakes you definitely want to avoid making.
You don´t sell to Vietnamese like you would sell to your Western counterparts. Whereas you can “easily” close deals with European buyers while keeping a formal relationship, this usually doesn´t work in Vietnam.
Vietnamese tend to buy from the people and companies they personally trust. Before hoping to close any big deal, you must get to know each other.
Have a dinner with your business partner, show genuine interest in the person and his family. You will double benefit from this by better understanding Vietnamese culture and as bonus, you’ll have unique stories to tell when back home!
The first meeting is never a sales meeting, this is privileged time for Vietnamese to gauge are you a reliable partner for them or not. Only then you will be able to discuss business more seriously.
Foreign export managers should forget about the classic scheme:
- Attend a local tradeshow
- Shake hands with a potential customer
- Fly back home
- Wait for the order to come
This approach is doomed here. Having a continuous presence is mandatory to build a healthy business relationship based on trust with your prospects.
Expect much longer sales cycle than what you are used to in western markets.
Patience is the key, but it is worth it!
Selling with a higher price when emphasizing long-term return on investment will usually have little impact on the Vietnamese B2B buyer. It is true that more and more local companies are starting to consider quality as a primary buying factor.
But as of today, cost remains the critical one.
You need to come up with sharp arguments and Unique Selling Proposal to convince buyers to push for your solution in front of their top-management. Remember that you are often in competition with 3 times cheaper Chinese solutions. This issue is often encountered when the return on investment takes years.
Interest rates remain high in Vietnam, around 10-12% per year, limiting local businesses’ ability to borrow.
Flexibility regarding payment terms is often required when selling B2B premium solutions. Covering yourself with financing tool is not a bad idea.
B2B dual market (South/North)
A common mistake is to consider Vietnam as a single market as we would do in the West. To make it simple, you are dealing with 2 separate clusters: The southern and the northern, you need to ADAPT and customize your approach to each of them.
It is commonly considered that selling to the south is easier, companies are more business oriented and easier to connect with …Whereas the northern one is way more difficult to enter because of conservatism, importance of building trust relations and heavier bureaucracy regarding purchasing decision making.
Tip: Business development managers from the North do not face any particular struggle selling B2B solutions in the south. It is way more challenging for a southern one to succeed in the northern cluster.
When it comes to the sales force in Vietnam, DO NOT GO CHEAP.
2 reasons for that:
- As mentioned earlier, your relations play a crucial role in your ability to sell. Network in a specific industry is not built overnight. If you want quick results you will need someone with an extensive experience and knowledge of the industry.
- There is a strong competition in the labor market for talent in a fast growing and dynamic economy such as Vietnam. We could almost say that workers are in position of power.
As anywhere else in the world, quality has a price. One of the most notorious HR challenge in Vietnam is finding a top-level sales executive. To make things more difficult, appealing local and International corporations are putting high pressure on the market creation salary inflation.
The local labor force is more affordable compared to western markets. Nevertheless, you would be surprised by the top salesmen/marketing officers´ base salaries.
Tip: If the sales person is jobless, there are big chances that he is not the one you want to recruit.
“let´s show up at a trade fair and sign a 3 years exclusive representation contract with a local distributor” … You might get lucky, but this strategy almost never works.
Many local distributors have a reactive-only sales strategy, which consists in signing as many distribution contracts as they can and then…Just wait for a potential customer to give them a call. Of course with no intention of proactively selling your solution. They are basically building a portfolio of brands, just in case.
For sure, you will not exploit your solution´s full potential. You will lose 1 or 2 years of business development and a potential first-mover advantage in the market.
If you decide to go with a distributor, carefully selecting a trustworthy partner that will get the job done is crucial. It takes time, it takes shortlisting and a lot of meetings… It is the price to pay for a successful market entry. No shortcuts here !
Vietnam presents countless investment and business opportunities for B2B companies, but it doesn’t mean that entering and succeeding in the market will be easy. It takes time, it requires real implication and initial investment.