Da Nang, as the economic center of Central Vietnam, possesses unique geographical advantages and policy support. However, opportunities and challenges coexist. Companies investing in Da Nang need to thoroughly understand the potential local risks and develop feasible mitigation strategies. This article provides investors with a detailed action guide, covering response measures from natural disaster risks to changes in tax policies, along with specific policy explanations, contact information for relevant agencies, and related cases and statistical data.
1. Geographical Location and Natural Disaster Risks
1.1 Issues and Risks:
Da Nang is located in the coastal area of Central Vietnam. Although its strategic location makes it an important transportation hub connecting the north and south, it also faces natural disaster risks, especially typhoons and floods. These natural disasters can lead to logistics disruptions, production stoppages, and even damage to infrastructure.
1.2 Action Guide:
1.2.1 Disaster Warning and Emergency Plan:
Specific Actions: Cooperate with the Vietnam Meteorological and Hydrological Administration to regularly obtain the latest weather warning information. Companies can install early warning systems and apps to receive real-time disaster information.
Agency Contact Information:
Vietnam Meteorological and Hydrological Administration
website: http://www.kttvqg.gov.vn/
Phone: +84 24 3826 3356
Case Study: In 2017, an electronics manufacturing company in Da Nang successfully avoided significant losses by activating its emergency plan before Typhoon Damrey, adjusting inventory, and reinforcing factory facilities.
1.2.2 Insurance Coverage:
Specific Actions: Partner with insurance companies to purchase natural disaster insurance for factory facilities and equipment. It is recommended to contact BIDV’s BIC Insurance Company.
Agency Contact Information:
BIC Insurance Company website: https://www.bic.vn/
Phone: +84 24 2220 8888
Policy Explanation: The Vietnamese government encourages companies to purchase disaster insurance under the “Law on Insurance Business” (revised in 2019) and offers tax incentives to enterprises.
1.2.3 Logistics Diversification:
Specific Actions: Develop backup transportation plans, such as using land transportation to transfer goods inland to Hue or by rail to Hanoi, to avoid logistics disruptions caused by port closures.
Case Study: In 2020, a textile company successfully avoided delays by shipping finished products by rail to Hanoi in the north and exporting through Haiphong Port during the typhoon season in Da Nang.
2. Dependence on Tourism and Market Volatility
2.1 Issues and Risks:
Da Nang’s economy heavily depends on tourism, which presents significant opportunities but also makes the city’s economy vulnerable to international tourism market fluctuations. For example, global pandemics or regional political situations can lead to a sharp drop in tourist numbers, affecting related industries’ revenue and employment.
2.2 Action Guide:
2.2.1 Industry Diversification:
Specific Actions: Expand investment into manufacturing and high-tech industries to reduce dependence on tourism. Entry into the high-tech field can be supported through the Da Nang Hi-Tech Park.
Agency Contact Information:
Da Nang Hi-Tech Park Management Board website: http://dhpiza.danang.gov.vn/
Phone: +84 236 389 5565
Policy Explanation: The Vietnamese government provides a 10-year corporate income tax exemption for high-tech companies in the Da Nang Hi-Tech Park and offers equipment import duty reduction policies.
2.2.2 Market Analysis and Early Warning System:
Specific Actions: Regularly obtain tourism market analysis reports by cooperating with the Vietnam National Administration of Tourism to adjust business strategies in time. Companies can subscribe to the “Vietnam Tourism Market Dynamics” quarterly report.
Agency Contact Information:
Vietnam National Administration of Tourism website: http://www.vietnamtourism.gov.vn/
Phone: +84 24 3942 3760
Case Study: A hotel group maintained an occupancy rate of over 80% after the outbreak of the COVID-19 pandemic in 2020 by focusing on market warnings and timely adjusting room rates and promotion strategies.
3. Competition in the High-Tech Industry and Talent Retention
3.1 Issues and Risks:
Da Nang’s government actively develops the high-tech industry, attracting numerous domestic and foreign companies. While this brings opportunities for technological innovation, it also leads to fierce competition for high-quality technical talent. Talent shortages may result in higher recruitment and retention costs, impacting R&D and production efficiency.
3.2 Action Guide:
3.2.1 Collaboration with Universities:
Specific Actions: Sign cooperation agreements with the University of Da Nang and Da Nang University of Science and Technology to set up scholarships and internship programs to secure high-quality graduates in advance.
Agency Contact Information:
University of Da Nang website: https://www.udn.vn/
Phone: +84 236 382 2593
Da Nang University of Science and Technology website: http://dut.udn.vn/
Phone: +84 236 384 1220
Case Study: An electronics company successfully recruited over 100 software engineers through cooperation with the University of Da Nang and established internal training programs to ensure the stability of its technical team.
3.2.2 Establishing Talent Incentive Mechanisms:
Specific Actions: Design and implement equity incentive plans and career development paths by cooperating with human resource companies to increase employee loyalty. It is recommended to contact Navigos Group, which provides professional talent recruitment and management services in Vietnam.
Agency Contact Information:
Navigos Group website: https://www.enworld.com.vn/
Phone: +84 24 3944 6688
Policy Explanation: According to the “Labor Code” (revised in 2020), companies can offer non-cash incentives, such as equity incentives, which can be deducted from the total salary before tax.
4. Changes in Tax Incentives and Dependency Risks
4.1 Issues and Risks:
Da Nang provides substantial tax incentives for high-tech and manufacturing companies, which reduces operating costs and increases investment returns. However, relying too heavily on these incentives may increase a company’s long-term operational risk. Changes or withdrawals in policy may lead to a sudden increase in costs, affecting profitability.
4.2 Action Guide:
4.2.1 Long-Term Financial Planning:
Specific Actions: Conduct regular financial audits and risk assessments to ensure sufficient financial flexibility in case of tax policy changes.
4.2.2 Policy Consultation and Government Relations:
Specific Actions: Actively participate in policy interpretation and corporate forums organized by the Da Nang People’s Committee and the Da Nang Investment Promotion Center to stay informed of policy changes and seek support.
Agency Contact Information:
Da Nang People’s Committee website: https://danang.gov.vn/
Phone: +84 236 3822 329
Da Nang Investment Promotion Center website: https://ipc.danang.gov.vn/
Phone: +84 236 356 1607
Policy Explanation: The Vietnamese government assesses and adjusts corporate income tax policies annually, and companies are advised to regularly participate in policy consultations to ensure timely responses to policy adjustments.
5. Logistics and Supply Chain Dependency
5.1 Issues and Risks:
Da Nang, as an important logistics hub, has significant logistical advantages, but there is also the risk of relying on a single logistics channel. For example, companies that rely too heavily on maritime transport may face severe logistics delays and rising costs during the typhoon season.
5.2 Action Guide:
5.2.1 Building Supply Chain Resilience:
Specific Actions: Collaborate with local logistics service provider Gemadept Logistics to establish diversified logistics channels, including sea, land, and air transport, and develop contingency transportation plans.
Agency Contact Information:
Gemadept Logistics website: http://www.gemadept.com.vn/
Phone: +84 28 3829 5643
Case Study: A manufacturing company maintained raw material supply during the typhoon season through air and rail transportation by partnering with Gemadept, ensuring continuous production.
5.2.2 Localization of Production and Procurement:
Specific Actions: Gradually increase the proportion of local production and procurement in Da Nang to reduce dependence on imported raw materials and establish long-term cooperation with local suppliers. Contact the Da Nang Department of Industry and Trade for local supplier resources.
Agency Contact Information:
Da Nang Department of Industry and Trade website: https://socongthuong.danang.gov.vn/
Phone: +84 236 382 2992
Policy Explanation: According to Vietnam’s “Localization Development Plan,” companies can receive tax incentives and subsidies for procuring local products, encouraging local production and supply chain development.
Investing in Da Nang offers numerous opportunities but also comes with a set of challenges. By thoroughly understanding local risks and policies and actively collaborating with relevant agencies, Chinese companies can achieve long-term success in this emerging investment hotspot. We hope the guidelines provided in this article help you leverage Da Nang’s unique advantages, mitigate potential risks, and achieve new heights in global development.
