Vietnam is one of the fastest-growing economies in Southeast Asia, and many companies are eager to establish a presence in the country. One of the most common ways to enter the Vietnamese market is by working with local distributors. While this can be an effective strategy, there are also many potential pitfalls that companies must be aware of to succeed. In this essay, we will explore five mistakes that companies often make when dealing with Vietnamese distributors.
1. Lack of Communication
Communication is key when working with Vietnamese distributors. Companies that fail to communicate effectively with their distributors may experience misunderstandings, delays, and other issues that can impact their business. In detail:
- Use only machine translation or do not use any translation tools at all
Machine translation can be used to translate documents in minutes or hours at a very low rate. Languages can be complex and highly flexible. Machines cannot understand factors such as Vietnamese context, culture, and social norms that affect word choice and meaning.
While machine translation tools have seen significant improvements in the last few years, they are still of questionable quality. Machine translation should be used only when the text is clear. Machine translation should not be used for important documents.
- Translators without Related Experience
Professional translators are required to ensure the highest quality in your Vietnamese distribution translation project. They must be native Vietnamese speakers and have extensive experience in translating distribution content. Your translators will be able to avoid common mistakes and traps in Vietnamese distribution translation. This will ensure that you get accurate results with the fastest turnaround time.
- Only Consider the Language While Ignoring a Locale
Vietnam is divided geographically into three main regions:
+ Northern Vietnam
+ Central Vietnam
+ Southern Vietnam
Each region has its spellings and vocabulary, both in written and spoken communication.
When developing a Vietnamese language plan, your business must pay particular attention to choosing the correct dialect. Northern Vietnamese vocabulary, considered the standard language, should be used for official documents such as agreements and contracts.
It is highly recommended that you tailor your messaging and content for marketing materials using the dialects of the targeted areas to give your audience a better experience.
2. Lack of understanding of the local market in Vietnam
No matter how well-prepared you find a local distributor in Vietnam, it will significantly influence your company if you don’t recognize the importance of the local business culture. Vietnam has a unique business culture, and it is important to understand the local customs, business practices, and regulatory environment to successfully navigate the market.
For example, Vietnamese businesspeople place a high value on personal relationships, and it is common for business partners to socialize outside of work.
Additionally, some specific regulations and requirements must be followed to do business in Vietnam. Companies that fail to understand the local market may find it difficult to establish successful partnerships with Vietnamese distributors.
A thorough preparation is necessary before traveling to Vietnam:
- Learn about the political and economic atmosphere and the nation’s history and culture.
- Speak with business people who have experience in Vietnam.
- Utilize the information and assistance offered by government agencies and branch groups.
3. Not providing enough support
Vietnamese distributors often require a significant amount of support from the suppliers including training, marketing materials, and technical support. That can include providing a database of product and marketing information that is always up to date. Ideally, this should be downloadable in an easily accessible and usable format. It could also include an API (application program interface) to allow the distributor to integrate the ERP system, thus avoiding mistakes with details about products.
Companies that fail to provide adequate support may find that their distributors are unable to effectively sell their products. It is important to work closely with distributors to identify their specific needs and to provide them with the resources that they need to be successful.
In addition, the eSales solution also provides a purchase feature, making it easy for distributors to place orders online for manufacturers. When there is a need, the distributor will actively order through the system. The manufacturer will then actively approve the order and ship the goods to the distributor. All orders will be strictly controlled and displayed according to the actual status.
4. Not flexible on Price
Another disadvantage would be that the retailers set the prices and Vietnamese distributor does not have much control in marketing their products to customers. Manufacturers that price too high won’t find distributors to buy from them. Distributors who price too high won’t find retailers willing to carry their products.
Consider changing that cadence. Implementing an enterprise policy to review or adjust prices quarterly – which may include price decreases on some items. It allows quick adjustments to change market conditions in Vietnam and reduces the downside of insufficient one-time increases
Making a mistake or disrespecting Vietnamese norms might lead to discomfort for the distributors.
- Brand messages and business operations should adjust to the local norms and culture. With a history that dates back more than 4,000 years, Vietnam is a very high-context country with its social norms. The local people prioritize their traditions, what they always do and feel and like. When working with local employees or pitching a product to local customers, foreign brands should be aware of these. Going against traditional cultural values can damage the brand severely.
- Be Ignorant of the Vietnamese Regulations
For smooth business operations, you should obey legal Vietnamese distributors to help you handle important legal papers such as business licenses, permits, contracts, agreements, etc. For product development, you should be aware of the Vietnamese regulations for product labels, ingredients, etc.
- Leaving things to the last minute
As with many other developing countries, the process of incorporation in Vietnam takes longer than in developed countries. Setting up a legal entity in Vietnam can take up to 3 months. This includes the time it takes to collect and submit all relevant documents.
Foreign companies tend to underestimate how long it takes to get all the supporting documents in order. The longest stage in the company establishment is usually getting the distributor’s documents ready.
In conclusion, working with Vietnamese distributors can be a challenging but rewarding experience. By taking the time to understand the local market, building strong relationships with distributors, communicating effectively, providing adequate support, and respecting cultural differences, companies can establish successful partnerships with Vietnamese distributors and tap into the growing Vietnamese market.
You can avoid the delay by overlooking the planning step in advance. GMA can help you prevent unnecessary setbacks by assisting you with collecting the relevant documents.
Contact us now for finding a local distributor in Vietnam. Don’t hesitate!
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