4 Things You Should Know Before Localizing In The Vietnamese Market
Over the past 30 years, Vietnam’s remarkable development has attracted many foreign businesses. The economic and political reforms under Doi Moi (Renovation), which began in 1986, spurred rapid economic growth, turning one of the poorest countries in the world into a lower middle-income country.
Investing is a long-term, non-stop process that requires businesses to have the right strategy and vision for the country in which they intend to invest. In today’s post, we highlight the factors that your business need to consider in order to conquer the Vietnamese market and how Vietnamese translation can help you achieve this goal.
Rich Human Resource And Young Labor Force Structure
In the context of international integration becoming more and more far-reaching, the requirement for the quality of Vietnamese human resources is to generate the workforce with marketable skills to meet the demands of the market economy, so that they can benefit from international commitments and investment.
Vietnam’s population is in a period of golden population structure, with the number of people of working age about twice as many as the number of dependents. With a wise investment of the Vietnamese government, especially in education and health, the labour force of the country will promote rapid and sustainable economic growth through their strengths and contributions.
According to the UN Population Division, in 2021, Vietnam had about over 98.17 million workers, of which the workforce aged 15 and over accounted for about 55.16 million people. The proportion of workers aged 15 and over having a job in 2018 was estimated at 54 million people, including 20.9 million people working in the agriculture, forestry and fishery sector (accounting for 38.6%); 14.4 million people in the industrial and construction sectors (accounting for 26.7%); 18.7 million people in the service sector (accounting for 34.7%).
Vietnam’s labour productivity has significantly improved in the direction of steadily increasing over the years, becoming a country with high labour productivity growth in the ASEAN region. Plus, the quality of Vietnamese labour in recent years has also been gradually raised, forming skilled labour forces that have met the requirements of the new economy market. The technical workforce has mastered science and technology and can hold most of the complex and senior positions in manufacturing and business that previously had to hire foreign experts.
English Proficiency Index Of Vietnam
In the period 2015-2018, Vietnam is classified into a group of countries with average English proficiency. Up to 2021, Vietnam continued to decline on the rankings and fell to the group of countries with low English proficiency (ranked 66 out of 112 surveyed countries), according to EF English Proficiency Index (EF EPI).
In Vietnam, the government budget for education in general and foreign language education, in particular, is still low. Specifically, in the period from 2010 to 2018, the budget for spending on education in Vietnam has decreased from 17.11% to 14.47%. The fact that Vietnamese people still pay too much attention to grammar when learning English along with the low-quality teaching staff has prevented Vietnam from rising up in the rankings of countries with good English proficiency.
Image source: MacroTrends
The poor English skills of Vietnamese people means that to be successful in the Vietnamese market, Vietnamese translation is an important task for international investors. Currently, there are many agencies specializing in translation and localization services on the market, so foreign entrepreneurs should set criteria to be able to choose the best one, supporting the journey of conquering the Vietnamese market.
Financial Incentives Policy
Some benefits that foreign companies can enjoy when investing in the Vietnamese market:
- For non-regional countries, the common tax rate for the withholding tax is 25% and the lower preferential tax rate of 10%, 15% or 20% applies to investment incentive projects.
- Enterprises operating under the Foreign Investment Law enjoy tax exemption for up to 4 years from the start of business, 50% reduction of tax for up to 4 subsequent years
- Currently, the highest priority tax rate is 10% for a period of 15 years and tax exemption for 4 years, 50% reduction of tax for the next 9 years for new projects in some special sectors.
In the early stage of the Doi Moi (Renovation), the tax incentives strongly attracted foreign companies to invest in Vietnam with highly competitive Corporate Incomes Tax (CIT) rates compared to other countries in the world. Besides, the government has quickly implemented incentives of tax rates, tax exemptions and reductions for sectors and areas where investment is encouraged.
A favourable and healthy investment environment has been created to attract foreign investors. To be specific, in August 2020, Vietnam attracted investment capital from 106 countries/territories. FDI projects are present in 63 provinces and mostly invest in Vietnam’s production and business sectors.
The Impressive Progress Of E-commerce And Mobile Game Market In Vietnam
In Vietnam, e-commerce is a promising land for entrepreneurs that would like to promote online shopping platforms because the consuming behaviour of Vietnamese people has changed a lot since the Covid-19 broke out. They exchange goods on online applications, and every transaction now can be done online by using banking accounts instead of cash as before.
A market research company – Nielsen has reported a significant increase in the demands for shopping online since the Covid-19 pandemic broke out. Up to 70% of Vietnamese people have access to the internet in 2020; 53% of users use e-wallet when purchasing online, up 28% compared to 2019. E-commerce activities in two big cities which are Hanoi and Ho Chi Minh City are enjoying a boom and they account for 70% of virtual transactions of the whole country.
Foreign investors should take this huge potential of Vietnam’s e-commerce segment into consideration if they would like to promote their brand. These aforementioned features of Vietnamese people’s consuming behaviours on e-commerce platforms facilitate foreign companies to gain profits from the Vietnam e-commerce industry by localizing their shopping applications.
Apart from the rapid growth of the e-commerce industry, Vietnam is one of the fertile lands for game companies. According to Statista, with the highest popularity of mobile games in the world, surpassing even populous countries such as China or the US, there were around 4.5 million eSports Vietnamese fans in 2018 and this number was estimated to increase up to 9.1 million in 2021. What’s more, the eSports revenue of Vietnam is expected to grow 11.6% over four years from 2019 to 2023, reaching $147 million over the next three years.
One of the reasons that Vietnam becomes a profitable market for the online gaming industry comes from its large gaming ecosystem. The rise of mobile games also opens a door for many brands to approach the target and potential customers. For popular mobile games in general and eSport games in particular, not only popular players but the media heat of professional tournaments is also a “gold mine” for businesses that want to promote their products.
Therefore, foreign game companies should focus on game marketing campaigns, taking advantage of the increasing progress of the mobile game market in Vietnam to localize their games into Vietnamese. The stage of carefully researching the language and culture of Vietnam is an inevitable task for international companies to become successful investors in this promising market.
In conclusion, foreign companies that have the ambition of expanding their business in the Vietnamese market should consider the 4 factors we mentioned above. Localizing content into Vietnamese will be straightforward if international investors seize the opportunity that the Vietnamese market brings. We believe that the investment in Vietnamese translation will open a new path for foreign companies to gain more and more profit and build an image of a successful company.
If you looking for high-quality Vietnamese translation services from a native Vietnamese agency, look no further than GTE Localize. Based in Vietnam, GTE Localize has years of experience in providing our clients with best-in-class Vietnamese translations at the most reasonable price thanks to our deep network of in-house and freelance translators.
Tell us more about your Vietnamese translation projects and get a free 1:1 consultancy from our Vietnamese localization experts.