Vietnam is a country that strongly believes in the power of education as a pathway to a better future. As a result, it has become a significant market for educational services, including studying abroad, teaching, training, and coaching programs. With a population nearing 100 million, predominantly made up of the younger generation, Vietnamese parents are increasingly willing to invest in their children’s education.
Many Vietnamese parents prioritize giving their children the opportunity to study in advanced countries over local education. This mindset often leads them to plan for their children to study abroad from a young age. As a result, there has been a growing demand for overseas study advisory and consulting services in Vietnam over the past few decades, a trend that shows no signs of slowing down.
The potential of Overseas Study Consulting business in Vietnam.
Research from HSBC in June 2017 reveals that Vietnamese parents highly prioritize their children’s education, dedicating an impressive 47% of their household expenditures specifically to educational expenses.
Additionally, families primarily self-fund a remarkable 90% of Vietnamese students studying abroad. The trend of Vietnamese students pursuing education overseas has surged significantly, growing by about 46%, from 130,000 to 190,000 students between 2013 and 2021. This commitment underscores the value placed on quality education in Vietnam and highlights the increasing number of students seeking international study opportunities.
How to open an Overseas Study Consulting business in Vietnam
Establish a Business Entity: The first step is to create a registered company with the appropriate business code for Educational Services. The Department of Planning and Investment (DPI) must approve this registration.
Obtain a Sub-License: Next, you’ll need a Certificate of Registration for Overseas Study Counseling Services. The Department of Education requires this sub-license before you launch your consulting business.
Following is a more detailed description of both:
Step 1 – How to establish a foreign-owned business entity in Vietnam for Educational service
To establish a foreign-owned company in the Overseas Study Consulting sector, whether it’s 1% or 100% foreign-owned, you need to obtain two essential licenses: the Investment Registration Certificate (IRC) and the Business Registration Certificate (BRC). It’s crucial that the IRC includes the appropriate codes for the Educational Services industry, specifically business codes 85600 and 85590.
The great news is that the educational business sector in Vietnam is fully open to foreign investors, thanks to Vietnam’s commitments under the WTO. This means you can own 100% of your educational venture in Vietnam! Setting up an educational entity follows the same requirements as any other company. If you’re interested in starting a business in Vietnam, be sure to check out our guide: 10 Steps to Open a Company in Vietnam.
You would need to prepare:
- Business Address: Companies had to maintain a physical office with specific rooms and sizes. However, under the new regulations, having an actual office is no longer necessary for incorporation or obtaining a sub-license. You can now set up a business using a Virtual Office, saving on rental fees and resources while staying compliant.
- Resident Director: Every company must appoint a resident director who can be either Vietnamese or a foreigner living in Vietnam for at least 183 days a year. This individual plays a crucial role in ensuring the company’s operations align with local laws.
- Company Capital: While the law does not specify a minimum capital requirement, it’s advisable to have a reasonable investment, especially if you plan to apply for the Overseas Study Consulting sub-license in the future. A starting capital of around USD 100,000 is generally considered practical and feasible.
The company must clearly outline its financial capability in relation to its business plan. Given the strict sub-license requirements, it’s essential to have a substantial amount of capital to successfully launch the business. Proper financial planning and investment are crucial for meeting these demanding standards and ensuring a strong start in the market.
Establishing a new business entity typically takes 3-4 weeks from the date of submission. Once the company is successfully registered, the next step is to obtain the necessary sub-license. This is a crucial step before launching the Overseas Study Consulting service.
Step 2 – Apply for the Certificate of Overseas Study Consulting service in Vietnam
To apply for this certificate, the company must prepare itself to meet the requirements as of following:
Requirements for the HR (staff)
Qualifications for Consultants:
- A minimum of a bachelor’s degree is required.
- Consultants must demonstrate proficiency in a foreign language at the 4th level or above, in accordance with Vietnam’s 6-level Foreign Language Competency framework.
Requirements for the head of business: must hold a bachelor’s degree or higher.
Financial capability: While the law does not specify a minimum amount, it is generally recommended to have at least USD 100,000 to start. This amount is often advised for those looking to launch a successful business or investment.
What are the alternatives?
Education-related businesses often require sub-licenses, which are subject to strict regulations. This can pose a challenge for small-capital investors or those hesitant to invest significant amounts in a new industry. If you find yourself in this situation, what alternatives can you explore to successfully launch your educational venture?
Running a nominal local company
Local businesses in Vietnam find it much easier to obtain the necessary Overseas Study Consulting business code and sub-license compared to foreign-owned companies. While both local and foreign firms are subject to the same legal requirements, local enterprises face significantly less regulation. This reduced regulatory burden enables local businesses to quickly and efficiently secure the licenses needed to operate in the competitive consulting market. For foreign firms, navigating the licensing process can be more complex and time-consuming. Therefore, leveraging the advantages of a local business model is essential for success in the Overseas Study Consulting sector in Vietnam.
One effective strategy for foreign investors is to establish a local company through a nominee arrangement. This approach allows you to operate your business while leveraging local expertise. It’s crucial to select a reliable local partner, ideally a corporate entity, to ensure a smooth partnership. Forming a legally binding service contract with your chosen partner can help protect your interests and streamline operations.
In the future, once your company’s performance stabilizes, consider organizing a transfer of ownership to yourself after securing all necessary licenses and permissions under the company’s name. This process represents a complete transfer of the business package. This mergers and acquisitions (M&A) which multinational corporations in various industries, including e-commerce, real estate, and hospitality, widely use this strategy.
Running your team through Employer of Record arrangement
Market penetration in Vietnam for Overseas Study Consulting can be achieved without forming a legal business entity. This alternative strategy is ideal for investors who are uncertain about entering the Vietnamese market. By establishing a dedicated team on the ground, you can test the market effectively while directing clients to your overseas headquarters. However, managing a team in Vietnam without a physical presence poses unique challenges. This approach allows you to explore opportunities and gauge demand while minimizing risk.
The Employer of Record (EOR) service is the perfect solution for businesses looking to streamline their operations. With the EOR service, a trusted service provider can host your team while effectively managing salaries and other HR-related expenses. By leveraging human resources in Vietnam, you can achieve your business goals more efficiently, entering the market at a lower cost and without compromising on market access.
How can Iris International assist with this?
Iris International is a leading business consulting firm in Vietnam, dedicated to supporting your business journey. Our expert team can assist you in incorporating your company and securing the necessary sub-license to operate smoothly. We also specialize in establishing local arrangements, ensuring strict legal guarantees for your control over the business. Additionally, we offer Employer of Record (EOR) services to host your team, regardless of size or operational level.
In the past four years, Iris International has assisted thousands of businesses in obtaining essential licenses, including business licenses and investment licenses. Our comprehensive services go beyond just licensing; we also provide support in recruiting and managing employees, as well as handling key operational tasks. This includes accounting, tax compliance, and finding the perfect location for your business.
Iris International offers the most efficient and cost-effective business solutions in Vietnam. With a deep understanding of the Vietnamese business environment and extensive experience supporting thousands of companies, we provide tailored services that help businesses thrive.
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