DOING BUSINESS IN VIETNAM – HOW TO HIRE AN INTERMEDIARY

1:26 am | |

You are looking for a potential supplier in Vietnam and you wonder how to find the best one who you can trust, or whether you should hire a foreign go-between to do it for you. Of course, you trust more a person who comes from the same origin as yours than that of the local country. And like you, many foreign buyers doing business in Vietnam entrust a go-between with finding a Vietnamese supplier for them.

This could be risky!

Since asking for kickbacks is some kind of daily practice in business, the intermediary might not seek for the goods from the most suitable supplier, but from the supplier who promises the biggest kickback. Using a foreigner as an agent does not reduce this risk. It is not a crime in Vietnam to give or take kickbacks in private business. Bribery according to Vietnamese criminal law requires the involvement of a state official or senior manager of a State-owned company.

So before looking for a supplier, it is important to decide how you work with your intermediary. The Vietnam Commercial Code distinguishes between the following persons acting on your side (the buyer):

  • representative: conducts business in the name and under the instructions of the buyer; is (usually) paid irrespective of whether the buyer and the supplier sign a contract;
  • broker: brokers go between the buyer and the supplier; is (usually) paid only if the buyer and the supplier conclude the contract;
  • agent: conducts business in its own name, but on behalf of the buyer (which means that the buyer automatically becomes the owner of the goods purchased by the agent); is (usually) paid only if the agent concludes a contract with the supplier.

The Vietnam Commercial Code provides that, in some cases, the principal (foreign buyer) has to observe a notice period and pay compensation if it terminates the contract with the intermediary, but the parties may deviate from these provisions in the contract.