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Common Pitfalls American Companies Face When Expanding into Vietnam


Expanding business operations into Vietnam presents numerous opportunities for American companies. However, navigating this vibrant market also brings complex challenges, particularly in employment and payroll processes. Understanding these pitfalls and learning how to mitigate them can dramatically streamline operations. This guide offers insights into the conventional employment processes, highlights common missteps, and underscores the value of partnering with a specialized Employer of Record (EOR) provider like Gonex.


Common Challenges and Missteps


Legal and Regulatory Unfamiliarity:

Vietnam has a unique legal system, especially concerning labor and business laws. American companies may inadvertently breach these regulations due to unfamiliarity with local hiring processes, contract terms, working hours, and termination policies.

Example: An American tech company faced legal action and hefty fines for using U.S.-based labor contract templates in Vietnam without local legal consultations.


Ignoring Cultural Differences:

Cultural disparities can lead to significant misunderstandings in management and communication. Vietnamese business culture emphasizes relationships and hierarchy, which can be quite different from the more direct and egalitarian American approach.

Example: A U.S. marketing firm experienced a high turnover rate among its Vietnamese staff after applying Western management practices without considering local cultural norms, leaving employees feeling disrespected and misunderstood.


Complex Tax and Salary Structures:

The Vietnamese tax system, including personal income tax and social security contributions, is intricate. U.S. companies often struggle with accurate calculation and timely payment of these obligations.

Example: An American manufacturing company was subject to back taxes and penalties due to incorrect tax filings in Vietnam, significantly affecting their financial health.


Currency Fluctuation Risks:

Fluctuations in exchange rates can unexpectedly impact cost control and profit calculations, a critical concern in international trade.

Example: A U.S. company’s operational costs in Vietnam surged due to local currency depreciation, which they had not adequately anticipated or hedged against.


The Necessity of EOR Services

Facing these challenges, an EOR provider becomes a pivotal support system for U.S. companies. EOR services help overcome several critical hurdles:

Legal Employment and Compliance: EOR providers are well-versed in local regulations and legally registered to operate, ensuring U.S. businesses comply fully with Vietnamese laws.

Cultural Bridge: Understanding local customs and business practices, EOR providers can act as an intermediary, aiding American management in navigating cross-cultural landscapes.

Tax and Payroll Management: EORs handle all aspects of taxation and payroll, ensuring financial obligations are met accurately and on time.

Administrative Burden Reduction: EOR services reduce the administrative load on American companies, allowing them to focus on core business activities and market expansion.


Solution: A Legal and Accountant Team Lead by Gonex

Gonex has local entities and team in many countries. This is because each country has different laws and regulations for tax and labor law. As a service provider, Gonex must provide the most comprehensive services and supports to clients within one stop. We can handle the complex problems without considering time differences and languages.



Collaborating with a reliable EOR provider like Gonex can effectively shield American companies from legal risks, cultural conflicts, tax issues, and administrative burdens when entering the Vietnamese market. This partnership not only accelerates market entry but also ensures long-term operational stability and compliance. Thus, for American companies planning to expand into Vietnam, choosing the right EOR provider is a strategic decision critical to successful international growth.

This guide aims to equip HR professionals and decision-makers with the necessary understanding to navigate the complexities of expanding into Vietnam, emphasizing the essential role of specialized EOR services in achieving smooth and compliant operations.


Why Gonex?

Experienced Management Team: each member in the team has 10+ years experiences in Overseas Human Resources Management, composed of seasoned HR professionals.

Powerful connection: Gonex has established over 10 entities worldwide, along with more than 30 stable partners, together offering the most comprehensive overseas human resource services to our clients.

Strict compliance with laws and regulations: At every step in our service process, Gonex strictly adheres to local laws and regulations, ensuring our clients completely avoid any legal disputes.

Competitive price: Gonex’s services are 20% more affordable compared to other companies in the industry, allowing our clients to allocate more resources to their core business.


What Gonex offer?

Employment of Record: This service helps clients legally hire employees in countries or regions where they do not have a legal entity established.

Payroll BPO service: This includes payroll project implementation plan development, project deployment, payroll calculation, payment of funds, administration of statutory and supplementary benefits, customized reporting, and other comprehensive payroll services.

Mobility: Based on the company’s internationalization strategy, the company assigns employees to overseas branches/subsidiaries and handles visa and tax matters in accordance with local policies, while assisting in the compliance management of employees throughout their international assignment life cycle.


GONEX One-Stop Solution: Your strategic partner

In navigating these challenges, GONEX offers comprehensive solutions tailored to the needs of American companies expanding into Vietnam:

Compliance and Legal Adherence: GONEX’s Employer of Record (EOR) service ensures legal compliance in employing local staff.

Cross-Border Payroll and Tax Management: Streamlined payroll services simplify cross-border management.

Flexible Employment Solutions: Adaptable employment services cater to changing business needs.

International Talent Dispatch: Support services facilitate the dispatch of key talent to Japan.

Digital HR Management Platform: Technology-driven solutions enhance management efficiency and cultural integration.


Who do we serve?

Gonex served 70+ clients to expand overseas. The incomes of our clients like Mengniu, Kuaishou and CHINT are up to 192.4 billion.


Let Gonex assist you and your company with handling such complex overseas hiring processes! To access more information on corporate international expansion cases, global employment guidelines, worldwide compensation management, regulations for various regional countries, and factory establishment manuals in different nations, you are welcome to visit the GONEX official website at www.letsgonex.com to download these resources or view our company’s business introduction in PDF format (https://letsgonex.com/in.pdf).

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