Many of our customers have substantial business in China. They often describe their Chinese partners as “savvy”, “hungry for contract closures” and even “overselling themselves”. When going into Vietnam they soon realize the similarities with its northern neighbor. Both cultures are influenced by Confucianism, Mahayana Buddhism and Taoism, both economies are communist but integrating into the global market economy and both are developing into industrial powerhouses. Albeit, Vietnamese companies are not as easily approachable as their Chinese peers. There seems to be a certain lack of sales acumen despite their similar background. Following, we will try to examine this phenomenon through the concept of the “Circle of Trust”.
Challenges: Finding and Contacting Potential Partners
It is not easy to find Vietnamese companies on the internet. For western companies, the first step of business partner searches in most cases is a website query. However, often the searchers are not able to find suitable companies or contact persons. This typically plays out in three ways: 1) Partners do not offer websites at all or they are not findable, 2) websites are not in English, 3) relevant data, e.g. on products, is missing on the homepages.
If foreign companies nevertheless are able to find potential partners, they typically try cold calling them by phone. When calling central phone numbers in English local receptionists are reportedly just hanging up the earpiece without much further explanation. In other cases Vietnamese companies – admirably – display names and cell phone numbers of their staff. However – to no avail – we repeatedly hear that these personnel do not take calls. That most Vietnamese companies do not reply to e-mails from new contacts in this context seems to be almost a no-brainer.
So, why is finding and contacting Vietnamese partners so difficult? We will try to explain…
Sales Approach: The Circle of Trust
A Vietnamese customer once told me: “Within a business relation in Vietnam, it is believed that one party wins while the other loses.” In contrary to the western believe of mutual benefit of economic relationships this original tone would imply that in Vietnamese business one side would tend to fool the other when exchanging goods and services. And indeed, we hear of a lot of distrust in local business relationships. For this reason, a lot of local companies trust on a network of established contacts with whom they do business. We are informally calling this the “Circle of Trust”.
The Circle of Trust is quite effective for running business. Transactions may be carried out in a fast and smooth manner as concerned parties know each other well. New products/services can be introduced very efficiently into the network. For this reason, foreign companies will often experience that sales turnover is rising fast when entering the market through a local distributor which will activate its existing network. However, after some time sales will flatten out and not increase anymore. This typically occurs when the distributor has exhausted her existing sales network. “Cold calling” at new customers seems to be very difficult out of above-mentioned reasons. This effect also weighs on companies that want to source something from a new supplier. They will often not get access due to trust issues.
To alleviate concerns over potential trickery of new business partners many companies therefore try to employ trusted contacts to expand their network. When opening new business, they will ask or be asked by a trustee for a hint for a promising new relation. The trustee will act as kind of a guarantor for this entree; sometimes for an informal fee. Thanks to this trustee the Circle of Trust will eventually grow larger and include the outsider (who is now an “insider”). This concept explains why many local companies do not make use of modern “transparent” means of marketing such as websites and trade fairs.
Therefore, business in Vietnam - even more than in other places - is a “people´s business”. Foreign entities must put a lot of efforts not only into establishing a relationship but also to maintain and grow it. To sustain the Circle of Trust or to move closer to the partner a foreign business should personally meet their partners several times a year if possible. Within these visits joint customer meetings might be done as it always looks good if a foreign representative of the supplier pops in (sales side) or technical issues might be discussed (sourcing side). But this is just one part of the show. Typically, there will also be “entertainment” for the guests. Foreigners should therefore brace themselves for lavish dinners, heavy drinking bouts and extensive Karaoke sessions. These activities have the purpose to deepen the relationships between both partners. If a foreign entity wants to be successful in Vietnam it often cannot and should not “escape” being entertained by its host; at least to a certain degree.
If fully embraced, the Circle of Trust can be a wonderful thing. Many of our customers report of their fantastic relationship with their local partners and how well they are being treated in Vietnam. And of course, a functioning Circle of Trust may also be reflected in rising sales numbers and bonuses.
Our organization has played the role of a “trustee” numerous times. We have a great network and reputation that we are providing to our customers. By employing our services, a lot of companies have successfully found their way into the Circles of Trust of their partners of choice. More information: https://www.deinternationalvietnam.com/business-partner-search