When selecting a warehouse site that will affect every aspect of a business, creating a balance between a convenient area and an affordable leasing price is crucial. The position of a warehouse has a significant influence on the performance, expenses, and overall customer experience of the organization.
It is tough to decide whether a firm should buy or lease a warehouse because both have advantages and disadvantages in the Vietnamese market. However, despite its attributes, the ideal warehouse location in Vietnam for any organization may improve a company’s efficiency.
As the number of firms in Vietnam grows, so does the need for huge warehouses, particularly in the growing logistics industry. Warehouse space is crucial and valuable since it enables a company to function and develop efficiently. In this blog, we will go through guides to learn how to run a warehouse in Vietnam and the services that Vietnam warehouses offer.
Introduction Of Warehouse In Vietnam
The global market for climate-controlled warehouses has increased in recent years. Because many consumable items are perishable but must be held for an extended length of time, the utilization of cold storage facilities helps to extend the shelf life of such items.
This also assists dealers and businesses in coordinating seasonal fruit and vegetable producers and consumers. Moreover, these warehouses are great for items that require specific care, such as flowers and pharmaceuticals.
Vietnam has a vibrant population, a booming economy, and a growing middle class. The rising Southeast Asian warehousing business helps the Vietnamese market. As one of the most vibrant emerging economies in South East Asia, Vietnam requires warehousing facilities such as public warehouses and private warehouses, container yards, cold chains, and many others to make sure its growth.
Furthermore, rising public-private partnerships enable firms to broaden their services to include inventory management, customer support, and transportation. Along with the increasing penetration of major firms, this is assisting the expansion of the Vietnam warehousing industry. GLD, for example, has just announced a USD 1.5 billion joint venture in Vietnam, marking its first foray into the nation.
Warehouse market segmentation in Vietnam is divided into 7 main segments including consumer goods, textile and footwear, retail, food and beverage, wooden products, healthcare, chemicals, and others.
Besides, warehousing is critical to the proper operation of a supply chain network and the fulfillment of domestic and international market needs. Because Vietnam is a developing country with rapid urbanization, warehouse facilities have greatly increased throughout the area.
Warehousing promotes mass manufacturing and lowers mass manufacturing and lower tariff barriers, resulting in advantages such as economies of scale and scope, technical integration, cost competitiveness, lower labor costs, and so on.
Additionally, rising e-commerce penetration in the country is boosting the market growth. Over the projected period, the country’s rising automation and the installation of automated warehouses are predicted to considerably contribute to the expansion of the Vietnam warehousing sector.
Conditions To Establish A Warehouse In Vietnam
The first factor to consider is location, which is determined by your company’s needs, like budget and accessibility. Then in order to successfully open your warehouse in Vietnam and adapt to local regulations, you must first decide what criteria you must meet. There are two significant operation procedures to create a warehouse in Vietnam, including the administrative procedure and the legal procedure.
Documents For The Initial Establishment
For the establishment and procedure of their large warehouse in Vietnam, all company owners must have the following necessary paperwork, including Enterprise Registration Certificate (ERC), Investment Registration Certificate (IRC), and tax code registration stamp and certificate.
IRC and ERC are the most important documents and they can be written in hand or printed in electronic format. An IRC is essential for firms that provide a warehouse or factory for lease or those that lease a warehouse or factory. An IRC shall involve information about the investors and projects. The ERC is required for businesses that rent or own a ready-built factory or warehouse.
Departments That Are Required
Businesses should have these three sections set up before they can manage a warehouse in Vietnam:
- Recruitment department: Employees are required for any business to function and develop. This is why a recruiting department is vital as it gets your hiring moving and fills jobs with personnel having the proper abilities and expertise. A recruiting department also develops and distributes human resources as part of the company’s long-term production goals.
- Administrative department: To maintain a smooth administrative department employs professional receptionists. A fluid administrative operation will in turn contribute to greater overall warehouse effectiveness and productivity.
- Accounting and Legal department: It is one of the departments that must not be omitted from a corporation with a huge warehouse. This vital section assists businesses in avoiding all legal ramifications. Legal compliance results in greater opportunities and less waste of resources.
Advantages Of Establishing A Warehouse In Vietnam
There are many benefits to warehousing in Vietnam. The country has a strong infrastructure, which makes it easy to store and transport goods. Additionally, the cost of labor and land in Vietnam is relatively low compared to other countries in Southeast Asia. This makes it an attractive option for companies looking to save on their logistics costs.
Let’s go into detail about some main benefits of warehousing in Vietnam.
Bonded warehouses are government-licensed entities that accept products from other countries for warehousing until customs duty is paid, giving additional benefits. Keeping imported items or resources to be shipped in a bonded warehouse aids in cost savings by paying import taxes proportionally.
Besides the primary goal of keeping things, warehousing aids in the preservation of items from water, theft, climate change, and fire. Warehouses, owing to technology advancements, safety precautions, and computerization, prevent spoilage, blunders, accidents, omissions, quality deterioration, breakage, and other things.
A strategic location of the warehouse creates opportunities and provides ease of access to different markets. The concentration of industries in an area also offers a chance to develop business-to-business (B2B) relationships with other companies. Additionally, a good location can help you take advantage of economies of scale and expand your customer base.
Processing And Packaging
This will give you an advantage in terms of efficiency. You can save time since this procedure removes all unnecessary middlemen. Your items do not need to be recovered from several locations and reassembled in a single warehouse to be boxed and labeled. Your customer’s order has been completed as soon as possible. It will also assist you with cost control. This technique is applicable for purchases of various quantities, thus the minimum delivery fee is not imposed.
Considerations For Warehouse Location In Vietnam
The proper warehouse site may make or break a company’s efficacy, productivity, and profitability. Renting or purchasing a warehouse is a huge decision, and choosing the right site may make or break a company’s ability to compete and service customers successfully.
When it comes to choosing a place, it is critical to consider all of the following elements, take notes, and then compare your notations to all or any of the current requirements. The final decision should be made only after all of the information has been acquired and examined. To choose the ideal warehouse site in Vietnam for the warehouse sector, company owners must examine several things.
Because of the proximity to key transportation networks, the shipping process will be expedited. The best warehouse location will find a balance between client proximity and distance from the manufacturing plant. The objective is to be close to the shipping region, with quick access to main roads or highways, while also decreasing traffic congestion, which becomes increasingly difficult as population density increases. All of these carrier issues will have a substantial impact on total shipping costs.
Available Work Force
Every location does not have the same amount of labor quality, cost, or stability. In highly populated locations, low labor supply and high demand will drive up wages and increase turnover rates. The optimum location in terms of workforce availability is one that finds the right balance between income levels and education levels.
It is vital to place your warehouses as close to your consumers as feasible in order to give the best customer experience possible, which is quicker delivery times and reduced transportation costs will increase customer happiness and loyalty.When choosing a warehouse location, emphasize densely populated and wealthy locations, as e-commerce demands are likely to be higher there than elsewhere. Therefore, population density correlates positively with last-mile delivery.
Rates Of Taxation And Rent
There is still a hidden cost that has a negative influence on the cheap lease rates, therefore, cost concerns should always be considered in any aspect of the business. Tax breaks, government regulations, and tax structures should all be considered. Government-sponsored special programs targeted at supporting certain industrial segments may potentially benefit your firm.
Bonded Warehousing Service In Vietnam
Vietnam’s warehouse services are among the most efficient and reliable in the world. The country has a large number of modern, well-equipped warehouses that can store a wide range of goods. These warehouses are located in major cities such as Hanoi, Ho Chi Minh City, and Hai Phong.
Vietnam’s bonded warehouse system is one of the most efficient in the world. It allows businesses to store their goods in Vietnam without paying import duties or taxes. This system is particularly beneficial for businesses that import large quantities of goods.
The bonded warehouse system is administered by the Vietnam Customs Department. Businesses that want to use this system must apply for a license from the department.
Warehouse location is critical to business effectiveness in every element of a corporation. As a result, a company should spend more time planning and locating the finest warehouse in Vietnam that meets its needs.