Potential risk of online transaction in Vietnam and its consequences

 

The 4.0 Industrial Revolution has developed significantly, which results in the transformation and breakthrough of all areas of the globe. Besides, the Internet and social network has got more popular and become an indispensable part of modern life. Online business, therefore, is formed and conducted the most frequently on social networking platforms. In the process of doing online business on this platform, many potential risks arise and depending on the situation, the people taking part in the transaction might need to involve the business consultant or risk management consultant to assist proving advice or consultancy service to address the matters.

First and foremost, it is very difficult and complicated to determine the identity of the subjects partaking in the social networking platforms in general and conducting business activities on these platforms in particular. Unlike e-commerce platforms which register operation with authorities, which require the sellers to verify their information before doing business, the social network environment allows anyone to participate in without revealing their true identities exposed. User will have an account that may or may not provide their true information after only a few basic registration procedures. As a result, many people have taken advantage of this feature of social networks to commit illegal acts in business activities. There are instances in Vietnam for fraud to appropriate property on a social network which the offender using an account on a popular social network with a fake name, using other people’s photos as his avatar.  Next, he bought a fake ID card and used it to set up some bank accounts to start committing fraud. Although he did not have products for sale, but he still posted ads with pictures of selling products at cheap prices on his social network account. If customers wanted to buy, he asked them to transfer money first and promised to send the products to them by post soon after. However, when receiving the money from the customer, he did not send the goods and temporarily locked his account.  Beside fraudulent activities, seller’s information is not checked or confirmed, allowing unscrupulous people to readily impersonate others for profit. It is not unusual for prominent business professionals or influencers to be faked on social networking platforms. This action jeopardizes the honor and reputation of those who are exploited while also affecting a large number of legitimate business people. Thus, the fact that social networks do not require business entities to verify their identities, despite helping conduct business procedures quickly and conveniently, causes many problems mentioned before, directly affecting the right to conduct business, benefit customers and stakeholders.

Secondly, no authorities have the possibility to guarantee absolutely the quality of items traded on social networks. The goods listed for sale are extremely diverse in quantity, type and design. Each business subject can sell hundreds of products per day and there are many business subjects on one social networking platform. Therefore, governmental agencies are unable to oversee and manage the origin and quality of each product and service. Many of goods for sales are prohibited or barred from trading. At the same time, sellers can sell fake goods, counterfeit, provide poor-quality ones or sell unknown-origin ones to customers in order to maximize profits. The most serious consequence of trading in unqualified goods is affecting the health of customers.

Thirdly, although Vietnamlaw imposes taxs on business subjects, it is difficult to collect taxes from organizations and individuals conducting business on social networks. That reduces state revenue and creates an unfavorable competitive climate for other sorts of enterprises. The reason is that business on social networks is based on technology, and it is easy to modify and delete information online, so it creates difficulties in identifying and verifying the number of business people and capturing transactions.  This situation can be characterized as unfair competition, which is upsetting and unstable for the economy.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

Research for the reputation of the company in Vietnam: Risk Management

Risk management is a vital element when doing business but so far, not many enterprises concern about it.  

Researching a company’s reputation in Vietnam is an essential component of risk management for several reasons. In an increasingly interconnected and competitive global business landscape, understanding a company’s reputation can provide valuable insights into potential risks and help organizations make informed decisions.

Why researching a company’s reputation in Vietnam is a crucial aspect of risk management?

Risk Identification and Assessment:

A company’s reputation reflects its standing in the market and among stakeholders. Conducting research on a company’s reputation can help identify risks related to ethical concerns, legal issues, financial stability, and other factors that could impact its operations. By understanding these risks, organizations can assess their potential impact on business objectives and formulate appropriate risk mitigation strategies.

Operational Risks:

A poor reputation can lead to operational disruptions. For example, negative publicity or consumer backlash due to a company’s unethical practices or subpar products can result in decreased sales, loss of customers, and regulatory scrutiny. Evaluating a company’s reputation in Vietnam can help predict and manage such operational risks.

Financial Risks:

Reputation plays a significant role in a company’s financial health. Negative news or controversies can lead to declining stock prices, reduced market capitalization, and credit rating downgrades. By researching a company’s reputation in Vietnam, investors and stakeholders can gain insights into its financial stability and potential risks to their investments.

Legal and Regulatory Risks:

A company with a tarnished reputation may be subject to increased legal and regulatory scrutiny. Researching the company’s reputation in Vietnam can help identify potential violations, litigation risks, and compliance issues that could lead to legal consequences and financial penalties.

Supply Chain Risks:

A company’s reputation can impact its relationships with suppliers and partners. If a company is known for unethical practices or poor corporate governance, suppliers and partners might reconsider their associations, affecting the company’s supply chain stability.

Market Perception:

A positive reputation can enhance a company’s brand value and market perception. Conversely, a negative reputation can lead to decreased consumer trust, hampered growth, and reduced market share. Researching a company’s reputation in Vietnam helps gauge how it is perceived by customers, investors, employees, and the public.

Employee Relations:

A strong reputation can attract and retain quality talent. Conversely, a company with a poor reputation may struggle to recruit skilled employees and experience higher turnover rates. Understanding a company’s reputation can offer insights into its workplace culture and employee satisfaction, which are crucial for talent management and organizational success.

Crisis Preparedness:

A company with a well-established reputation management strategy is better prepared to navigate crises. By researching a company’s past actions and responses to adverse events, organizations can learn from previous experiences and develop crisis management plans that protect their reputation and minimize negative impacts.

Strategic Decision-Making:

The reputation of a company can influence strategic decisions, including mergers, acquisitions, partnerships, and market expansions. A company with a strong reputation is more likely to attract potential partners and investors, while a company with a questionable reputation may face challenges in these areas.

Stakeholder Trust:

A positive reputation builds trust with stakeholders, including customers, investors, employees, regulators, and the public. Maintaining trust is crucial for long-term business success, and reputation research helps organizations understand how they are perceived by different stakeholder groups.

Vietnam companies concerning about risks and risk management practice?

Researching the reputation of a company in Vietnam is a critical aspect of risk management. It provides insights into potential risks and helps organizations make proactive decisions to mitigate those risks. A strong reputation enhances a company’s resilience, competitiveness, and long-term sustainability in a complex and interconnected business environment.

According to a recent survey with 522 companies, there are only 43 companies, accounting for about 8%, have the independent risk management department in their business. More noteworthy, the majority of these 43 companies operating in the banking and financial sector, which has nothing new to risk management. In fact, not all banks have independent and effective risk management departments. The negative problems related to the banking system in recent times somewhat showed the picture about the risk management of this sector.

Risk is understood as any events and situations that could harmful to the ability to achieve the business objectives of the enterprise. Risk management is organized in a formal way and is conducted continuously to identify, control and report the risks that may affect the achievement of the business objectives of the enterprise.

So why businesses are not interested in risk management? Part of this problem stems from the awareness of the leaders. In order to build and operate the risk management system in the enterprise, it needs the commitment of the senior leaders. If senior leaders do not aware of this problem, the administration process will be difficult to achieve the desired effectiveness.

Recently, there are many theories and systems of risk management but small and medium enterprises should be cautious when apply because system and theory are just general and they should be adjusted when applying to each business.

In order to form the culture of risk management, the leaders must along with the employees to implement it regularly and for each project. In theory, the risk management process is carried out in 5 steps: identify risk; evaluate its impact; determine the likelihood; action and measures; monitoring and evaluation.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

Risk assessment and management in enterprise

 

Risk assessment service in Vietnam helps identity risks for management

Conceptually, risk is any uncertainty that may be harmful to the ability to successfully implement the business objectives of the enterprise.  Especially, for business operating in Vietnam, a developing country, the enterprise might encounter potential risks that only local professional whom is aware of culture, local practice could identify and explain. 

In general, businesses can identify potential risks to manage them. Risk management is a process of a comprehensive review of the business operations to identify potential risks that may impact adversely to the operational aspects of the business taking into consideration of the environment it operates in. Based on that, the response solutions will be given corresponding to each risk.

We can also understand that the risk management process is a process that is organized in a formal way and ongoing to determine, control and report the risks that can affect the achievement of the business objectives of the enterprise.  This applies everywhere including Vietnam. 

Requirements for operational risk management

To ensure that risk management activities are carried out as planned, the implementation must ensure the following requirements:

• Raising awareness about the risks as well as the ability to cope with risks appropriately throughout the enterprise;

• Formalize the process of risk management;

• Develop unified risk management processes in the enterprise;

• Transparency risks;

• Including risk management process as part of the internal control system;

In fact, well organized and efficient risk management activities will contribute to add value to the enterprise, specifically:

• Help improving operational efficiency and create competitive advantage;

• Contribute to the allocation and efficient use of corporate resources;

• Minimize errors in all aspects of business operations…

Recently, with the powerful impact of high inflation rate and economic recession caused by the global financial crisis and pandemic to enterprises, people are concerning more about risk management activities.  Many experts believe that well organized and effective operated risk management system will help businesses withstand and overcome fluctuations.  Hence, when operating in Vietnam, risk assessment service in Vietnam might be needed. 

How to organize a complete risk management system is the fact that not many businesses are well understood. The worrying thing is many businesses supposing that with the use of insurance services, their businesses are making adequate risk management. That is completely incorrect.

Risk management policies and implementation

To establish risk management systems, enterprises should start from the development of risk management policy. This policy will define the approaching and managing of risk. In addition, risk management policies will clearly defined responsibilities for risk management throughout the enterprise to Board of Directors; The subordinate units; Departments; Risk management department (if any); the internal audit department – internal control. The implementation of risk management activities should be tied to business strategy, annual budget plan and the business cycle in the enterprise.

Risk Management Process

Basically, risk management processes typically include basic steps such as: confirmation of the business objectives, identify risks, description and classification of risk, assessment and risk ratings, response planning development, reporting an update on implementation, monitoring the process of implementation, review and improvement of risk management processes. Details of some of the main steps in the risk management process are as follows:

Confirmation of business objectives

Risk management activities are organized and implemented towards ensuring the successful implementation of the enterprise objectives. Therefore, at the beginning the risk management process, the first task that business leaders need to do is confirming the operational goals of the business. This will be the base to ensure that risk management activities are held in the right direction.

Identify Risks

There are many methods to identify risk. Each method has different advantages and disadvantages. However, the following methods are considered using to determine the risk:

- Organize risk assessment workshop;

- Organize “Brain Attack” meeting;

- Questionnaire;

- Audit and inspection;

- Based on industry norms;

- Situation analysis

In fact, the method of determining risk that are used most in organizations is organizing risk assessment workshop. Attending the workshop are the Board of Directors and leaders of all departments. Members at the workshop will exchange information to give a list of business risks. In many cases, the result of the risk identification process is a long list of potential risks. However, this should not be too worried, the implementation of the next steps of the risk management process will help identify clearly the risks that are really the great risk to enterprises.

Description and classification of risk

After identifying potential risks, the next step is to describe briefly but specifically about the origin, cause, consequence and impact of each risks to the enterprise.

Next, we will implement the risk classification. There are many different types of potential risks for enterprises. They can originate inside or outside the enterprise. Based on the nature of the risk, they are many way to classify risk. However, the most common way is to classify risk into 4 groups as follows:

- Financial risk: interest rate, exchange rate, credit source, cash flow and ability to pay…;

- Strategic risk: competition, customer changes, industry changes, risks for research and development activities, intellectual property…;

- Operational risk: the leaders, corporate culture, violation of management rules, financial control, information systems, hiring the wrong people;

- Dangerous risk: environmental risks, supplier, natural disaster, risks for assets, contracts, products and services…

The classification of risks as above will help enterprises to manage risk in a systematic way.

Assessment and risk rating

Enterprise resources are limited while the number of the risks is great. So, the next step is to organize, evaluate and ranking risks according to priority level of response. Enterprises will analyze, evaluate each risk according to two criteria: the possibility of risk and the extent of the risks affecting the business if happened. The risk that the businesses need to prioritize response and prevent is the risk with high likelihood and degree of influence.

Develop response plans

Develop response plans is an important stage in the process of risk management. At this stage, enterprise should given the preventive measures and specific control should be taken to prevent and minimize damage if the risk occurs. There are 3 contents that must be determined for each specific risk when developing response plans:

- Measures that should be implemented to prevent risks;

- The completion deadline for those measures;

- The person that responsible for managing that risk.

Monitoring the implementation of measures

In the process of implementation of response measures, businesses need to build a system of reporting regularly to ensure strict control of the implementation process. Enterprises also need to ensure that all shortcomings in the implementation of risk control measures must be timely reporting to leaders.

At the same time, business leaders must also build a culture of risk management to every staffs in the enterprise. It is high time that the corporate governance should seriously view the role of risk management activities, consider setting up and maintaining a risk management system in business. Practical experience shows that, once the risks are forecasted, enterprises can fully develop and deploy effective response plans for sustainable development.

How risk assessment service in Vietnam could help?

We are a local consulting company with understanding of business, legal, cultures and practice of doing business in Vietnam.  We could assist client to undertake risk assessment service in Vietnam through employment background check service in Vietnam, or conduct background check on company in Vietnam.  From our research, we produce report and highlight the potential risks level to the client for making informative decision on business and transaction in Vietnam.

7 Common Mistakes to Avoid When Hiring Remote Workers in Vietnam

Hiring remote workers in Vietnam has become a popular option for companies worldwide looking to tap into a diverse and skilled talent pool. Vietnam’s growing digital economy and its highly educated workforce make it a great destination for remote hiring. However, there are significant risks if you don’t approach the hiring process carefully.

In the following, we’ll explore seven costly mistakes that businesses often make when hiring remote workers in Vietnam and provide actionable strategies to avoid them. By the end, you’ll understand how to streamline your hiring process and ensure that your remote workforce operates smoothly and efficiently.

Underestimating the Financial Impact of a Bad Hire

Hiring the wrong remote worker in Vietnam can result in unexpected financial consequences. These include recruitment costs, onboarding expenses, and lost productivity when a hire fails to meet expectations. The cost of replacing a remote worker can be even higher due to the complexities of remote work management.

When hiring remote workers in Vietnam, it’s crucial to understand that the financial impact goes beyond the initial salary. Miscommunication, missed deadlines, and underperformance can derail projects, costing you both time and money.

How to Avoid It:

- Use a comprehensive vetting process to ensure you’re hiring candidates who not only have the skills but are also suited for remote work.

- Start with trial periods or freelance contracts before fully committing to a candidate. This allows you to assess their performance and compatibility with your company without significant financial risk.

Ignoring Red Flags During the Recruitment Process

One of the most common mistakes when hiring remote workers in Vietnam is overlooking red flags during the recruitment process. Candidates may have an impressive resume but fail to demonstrate essential remote work qualities like self-management, discipline, and strong communication skills. Red flags can include inconsistent work histories, difficulty meeting deadlines, or poor communication during the interview process.

How to Avoid It:

- Develop a structured interview process that tests for remote-specific skills. For instance, ask candidates about how they manage their time or handle communication challenges in a remote setting.

- Pay attention to responsiveness during the hiring process. If a candidate is slow to respond or unclear in their communication, it may indicate challenges in a remote work environment.

Overlooking Cultural Fit When Hiring Remote Workers in Vietnam

When hiring remote workers in Vietnam, cultural fit is just as important as technical skills. Even if a candidate is highly skilled, they may struggle to integrate into your company if their work style or values don’t align with your corporate culture. This misalignment can lead to misunderstandings, miscommunication, and, ultimately, underperformance.

How to Avoid It:

- Include questions during the interview process that assess cultural fit. Ask candidates about their preferred work environment, how they handle team collaboration, and what values they prioritize in the workplace.

- Involve current team members in the interview process to ensure that the new remote hire will be able to collaborate effectively with your existing team.

Failing to Provide a Comprehensive Onboarding Process

A strong onboarding process is essential when hiring remote workers in Vietnam. Without clear expectations, guidance, and support, even the most talented workers can struggle to perform. A well-structured onboarding program helps remote workers understand their responsibilities, the company’s expectations, and how to use the tools and platforms necessary for their role.

How to Avoid It:

- Develop a detailed onboarding plan that includes regular check-ins, training sessions, and a clear outline of the worker’s responsibilities.

- Use project management software to ensure that tasks are assigned and tracked efficiently, helping the remote worker stay aligned with the company’s goals.

Lack of Clear Expectations and Communication

When hiring remote workers in Vietnam, many companies make the mistake of not setting clear expectations upfront. Without clarity regarding deadlines, performance metrics, or communication channels, even a highly skilled worker may fall short of your expectations. Misaligned expectations can lead to frustration on both sides, resulting in lower productivity and higher turnover.

How to Avoid It:

- Clearly define the role, responsibilities, and performance metrics before the worker starts. This includes setting expectations for work hours, deadlines, and communication.

- Establish regular check-ins and feedback loops to ensure that both you and the remote worker are on the same page regarding progress and performance.

Negative Impact on Team Morale from a Poor Remote Hire

The ripple effect of a poor remote hire can extend beyond financial loss—it can also damage team morale. Remote teams rely heavily on trust, clear communication, and collaboration. When one team member fails to deliver, it can create friction, resentment, and frustration among the rest of the team, especially in a remote setting where interactions are already limited.

Hiring remote workers in Vietnam should involve careful consideration of how the new hire will integrate into the team and whether they will enhance or disrupt the team dynamic.

How to Avoid It:

- Conduct team interviews as part of the hiring process, allowing current employees to weigh in on the candidate’s fit with the team.

- Create an open line of communication within the team, so any issues that arise with new hires can be addressed quickly before they escalate.

Navigating the Legal and Logistical Challenges of Terminating a Remote Worker

One often-overlooked aspect of hiring remote workers in Vietnam is the legal and logistical challenge of letting someone go if things don’t work out. Employment laws in Vietnam may differ from those in your home country, and not fully understanding these regulations can expose your company to legal risks.

If you need to terminate a remote worker, the process can be even more complicated when they are based in another country, involving cross-border employment laws and contract enforcement challenges.

How to Avoid It:

- Before hiring remote workers in Vietnam, consult with a legal expert who understands both Vietnamese labor laws and international employment regulations.

- Structure contracts with remote workers to include clear terms about probation periods and employment termination procedures, ensuring that you can part ways smoothly if necessary.

Key Strategies for Successful Remote Hiring in Vietnam

1. Use a Rigorous Vetting Process: Take your time to assess candidates thoroughly, focusing on both skills and their ability to work independently. Also undertake employee background check to verify.

2. Prioritize Communication and Cultural Fit: Make sure candidates can communicate effectively in a remote setting and align with your company’s culture.

3. Provide Strong Onboarding and Clear Expectations: Set remote workers up for success by giving them the tools, training, and support they need from the start.

4. Create a Feedback and Support System: Regularly check in with your remote workers to ensure that they are meeting expectations and feel supported in their role.

5. Consult with Legal Experts: Understand the legal requirements and protections when hiring remote workers in Vietnam, particularly if you’re entering into long-term contracts.

Hiring remote workers in Vietnam offers many advantages, from cost savings to access to a highly skilled workforce. However, if not done properly, hiring the wrong remote worker can have serious financial, legal, and emotional consequences for your business. By avoiding these common mistakes and focusing on structured, thorough hiring processes, you can ensure that your remote team thrives.

As more companies embrace remote work, Vietnam is becoming a key destination for employers seeking top talent. Ensure that when you’re hiring remote workers in Vietnam, you’re setting your business up for success by following the strategies outlined above. The right hire can elevate your business, while the wrong one can set it back—so it’s worth taking the time to get it right.