What Should International companies know about doing business in Vietnam?
Jul 11, 2023
People might suspect that the ‘Barbie’ movie (starring Margot Robbie and Ryan Gosling) ban in Vietnam is motivated by concerns of ridicule and consumerism. However, international geopolitical intrigue provides a better explanation.
This is just the latest example in which Vietnam has banned a film. Last year, the viewing of Sony’s action movie “Unchartered” was also banned. In October 2019, together with the Philippines and Malaysia, Vietnam banned the children’s animation movie “Abominable”, a joint production by American DreamWorks and China-based Pearl Studio about Yeti, the Himalayan Snowman.
The trigger: scenes that depicted China’s controversial nine-dash line which depicts China as owning around 90 percent of the South China Sea despite overlapping territorial claims from Brunei, Malaysia, the Philippines, Taiwan, and Vietnam.
So, in layman’s terms, Vietnam is upset over an American movie showing the preferred map of China.
This is a real conundrum, but it shows how delicate it can be to do business on a global stage. At our recent Centuro Global Expansion Conference, experts from the region advised that “one of the crucial things that anyone interested in doing business in the region should understand is the necessity to adapt to local business practices and culture”
The real fight is in the details. Keep reading to learn how to avoid similar incidents for your international company.
What is the nine-dash line and why is it controversial in the “Barbie” movie?
The “nine-dash line” is an arcane but sensitive issue for China and its neighbors that shows China’s maritime border extending into areas claimed by other governments and encompasses most of the South China Sea. That has brought it into tense standoffs with the ASEAN nations of Indonesia, Vietnam, Malaysia, Brunei, and the Philippines, with Chinese fishing boats and military vessels becoming more aggressive in the disputed waters.
In the context of this ongoing territorial dispute, the “Barbie” movie’s fictional map featuring The nine-dash line demonstrates an amplification of Vietnamese concerns over its maritime sovereignty and the ban, a resistance to any legitimacy that China’s ongoing South China Sea nine-dash line claims may generate, even in Barbie’s fictional world.
Restrictive Measures by the Vietnamese Government
Vietnam’s position on the ‘nine-dash line’ has been clearly and consistently stated and reiterated many times. The popularisation and use of publications and products with the “nine-dash line” in Vietnam are a violation of the law and are not accepted in the country, a Spokeswoman of the Vietnamese Ministry of Foreign Affairs Pham Thu Hang confirmed recently.
How can international companies doing business in the region avoid getting entangled in similar incidents in the future? Here are some key insights to keep in mind:
Employee Mobility
Companies that genuinely do not want to be perceived as taking sides in the South China Sea disputes should familiarise themselves with existing regional geopolitical sensitivities. For instance, the Chinese passport depicts the “nine-dash line” map. This can cause trouble for mobile employees who use the passport as evidenced recently in Hanoi where Chinese nationals applying for work permits and local police clearance certificates found it difficult to get a decision.
So far, it seems that other government authorities, including the Immigration Department, are continuing to accept applications as usual.
Branding
Moreover, Vietnam’s Ministry of Industry and Trade recently requested domestic importers to closely inspect and reject any goods that include the disputed map, after a domestic importer was found to be selling Chinese-made cars that had the nine-dash line in the default navigation system.
Companies might want to be more careful in marketing their products and services to avoid similar incidents in the future. A “technical” mistake on their part could become costly in business and financial terms. Perhaps the safest way is to avoid the depiction of any map on their products, but this is probably not practical for certain types of products, such as tourist promotional flyers, transportation brochures, and geographical indications.
An alternative solution is to refer to maps produced by the United Nations, such as the ones published by its Geospatial Information Section. The most authoritative international organisation in the world has as members all claimant states in the South China Sea and is completely neutral to the South China Sea disputes. Its world map takes no sides in any unresolved territorial and maritime dispute nor depicts any unilateral claim. This could be a reasonable way for international companies to avoid getting entangled in the complicated mapping problem.
Free trade agreements
There are a lot of factors at play in Vietnam’s business environment. More than 15 free trade agreements that the country has signed often overlap and trigger protections that international companies may not be aware of, such as limits on forcing firms to localize data. Familiarity with these agreements can make a huge difference to foreign companies entering the Vietnam market.
Regulations and laws
Laws in Vietnam are often vague with follow-up Decrees and Circulars used to fill in the finer details. Firms looking to operate in Vietnam not only need to understand the applicable laws as they are but need to constantly monitor for changes and respond as they occur. One effective way of keeping up with regulatory changes is our AI-Powered Global Blueprints tool where you’ll find all the insights and intelligence you need to make an informed decision on our platform.
Data security
International companies that open a local office in Vietnam need to ensure they protect their client’s data. They need to ensure their offices are secure and that storage of sensitive data complies with the provisions outlined in the PDPD. Handing over the personal data of a firm’s clients may come with international consequences from a public relations perspective. Before setting up in Vietnam, foreign companies should complete a thorough risk assessment of the business landscape in their sector.
That is to say, though there are challenges to operating in Vietnam, they can be overcome.
Our Advice
Employers who may be affected are encouraged to contact our immigration experts for case-specific advice. For general advice and information on company formation and immigration to Vietnam, please contact us. View source
