Vietnam, an emerging force in the world of sourcing, has multiple legal structures. Businesses use these structures to ensure the success of their Vietnam sourcing strategy.
The availability of so many options, sometimes, makes it difficult for the companies to decide on a solution that can boost their sourcing activities.
In this country, several quality-control and trading agencies provide a bunch of trading services and business-to-business (B2B) online tools that enable the suppliers to opt for direct contact. Some people think that it could be beneficial only for a subcontracting agreement and intermediary parties to complete the tasks. Though it can be sometimes true and a perfect option to survive in the cut-throat global supply chain market, many small and mid-level companies are inclining towards an on-the-ground existence to achieve better control of their supply pipeline or provide the international customers with continuous services.
If you are interested in Vietnam sourcing and looking for a suitable approach to leverage the sourcing resources of the country, consider the following tips.
Analyze the registered capital and your business scope
Many conventional buyers prefer the RO structure. This trend is meant for those who do not want to deal with registered capital. This is why the RO structure is sometimes considered as the “safe” and “affordable” model. It mainly aims at exploring market scopes and adding more value to the purchases.
You can fund the expenditure directly for ROs by the overseas headquarters at continuous intervals. For a trading or service company, most of the funding comes from the registered capital that is committed right from the beginning.
Moreover, the costs of funding the ongoing activities of an RO structure are different than an LLC as it cannot reduce the VAT input while LLC can reduce the costs and enable paying tax only on the profits.
Compare supply chain control and human resources risks
If you want to gain a comfortable level of quality control and assurance, you should deploy reliable staff who can manage the quality control supply liaison activities with efficiency. With the advent of time, the Vietnam market is maturing and intensifying the price competition. Therefore, the foreign businesses have started comparing the supply chain control, opportunities, and risks in the current Vietnam market for present investment.
Consider complexity, compliance, and applicable taxes
In a global market, the trends of commerce are always changing.
If you are considering Vietnam sourcing for your US-based company, you must analyze the complexities, compliance, and applicable taxes. A clear insight into these facts can help you make the right decision.
The maximum choice of a structure depends on two facts- local hiring requirements and cost-efficiency. If you do not need employees based out of the mainland, you should deal from overseas to make the sourcing tax-efficient for your business.
On the other hand, if your business needs more from the local office, the trading company model would usually be the best bet for you.
These are the key tips that you should consider while sourcing from Vietnam.