Challenges for Vietnamese SMEs Expanding to the US and EU: Key Barriers and Strategies to Succeed

Intro 

Vietnamese small and medium-sized enterprises (SMEs) are playing an increasingly vital role in both the domestic and global economy. With rapid growth, many SMEs are expanding into high-purchasing-power markets such as the United States and the European Union (EU). 

This article examines the key challenges Vietnamese SMEs face when entering these markets and outlines practical strategies to help businesses prepare more effectively for global integration.

Why the US and EU are Attractive but Challenging for Vietnamese SMEs 

The United States and the European Union (EU) are the world’s largest consumer markets, accounting for more than USD 170 billion of Vietnam’s exports in 2024. Within this total, exports to the U.S. reached USD 119.3 billion, while exports to the EU were nearly USD 52 billion. Supported by the EU–Vietnam Free Trade Agreement (EVFTA), Vietnam’s exports to the EU increased from EUR 35 billion in 2019 to EUR 48 billion in 2023, creating new opportunities in textiles, agriculture, and electronics. With more than 76 percent of EU consumers shopping online, e-commerce has also emerged as a highly promising channel for Vietnamese SMEs.

Despite these opportunities, the U.S. and EU markets impose complex legal and trade requirements, enforce strict sustainability standards, and present intense competition from established global brands. These challenges, however, can be addressed if businesses adopt well-prepared market entry strategies.

Key Challenges Vietnamese SMEs Face in the US/EU

Regulatory & Compliance Barriers 

The United States and the European Union (EU) are highly regulated markets with strict standards that exporters must meet to gain market access.

• In the U.S., exporters are required to comply with the regulations of the Food and Drug Administration (FDA) for food, cosmetics, and pharmaceuticals, as well as the U.S. Department of Agriculture (USDA) for agricultural products. Product liability laws also apply, and goods must carry labels that provide full ingredient information and safety certifications.

• In the EU, industrial goods must obtain CE Marking, while food exports are subject to stringent safety regulations. The EU Green Deal further enforces sustainability requirements, and the General Data Protection Regulation (GDPR) requires companies to manage customer data with strict oversight. The EU places strong emphasis on product traceability, requiring systems that track goods from raw materials through production to distribution. Without standardized and transparent supply chains, many Vietnamese enterprises risk being excluded from the EU market, where compliance is a non-negotiable requirement.

According to the Vietnam Institute for Economic and Policy Research, nearly 56 percent of Vietnamese SMEs lack sufficient knowledge in business management, corporate governance, financial management, and legal compliance. Limited resources leave many Vietnamese SMEs unable to fully meet international standards, exposing them to operational disruptions and higher compliance risks. This gap is a key barrier to scaling in markets like the US and EU.

Taxation & Trade Policies

In addition to legal barriers, Vietnamese SMEs face complex tax systems in both the United States and the European Union (EU). Without sufficient knowledge of international taxation and finance, businesses may incur higher costs and increased financial risks.

• In the U.S., the tax system varies by state, with separate import duties and customs procedures. Vietnam and the United States signed a Double Taxation Avoidance Agreement (DTA) in 2015. However, the agreement has not yet taken effect because it is still pending U.S. ratification. As a result, Vietnamese companies doing business with the U.S. remain exposed to potential double taxation. To mitigate this risk, firms need a clear strategic plan from the outset.

• In the EU, the market applies multiple types of taxes, including import duties and Value Added Tax (VAT), ranging from 17 to 27 percent depending on the country. In contrast, the EU–Vietnam Free Trade Agreement (EVFTA) supports SMEs by eliminating 85.6 percent of tariff lines, covering 70.3 percent of Vietnam’s total exports to the EU. Although Vietnamese SMEs benefit from substantial tariff reductions under the EVFTA, these advantages can be undermined by the EU’s demanding technical and compliance standards.

Moreover, during the Trump administration, the U.S. implemented strong protectionist policies, raising import tariffs on various product groups to protect domestic industries. Although Vietnam was not a primary target like China, Vietnamese businesses were indirectly affected by stricter rules of origin and the risk of additional tariffs. 

Due to their small scale, many SMEs lack comprehensive business plans, resources, and expertise to seize opportunities and navigate challenges in these major markets. In practice, numerous SMEs are unfamiliar with Double Taxation Agreements (DTA), increasing the risk of overlapping taxes. Moreover, companies operating in the EU or the U.S. must comply with International Financial Reporting Standards (IFRS) to ensure transparency and gain recognition from partners and regulators. Understanding EVFTA benefits and preparing for potential tax policy changes in the U.S., as well as related agreements, can help businesses reduce financial risks and lower costs.

Market Competition & Consumer Behavior 

Consumer behavior in the United States and the European Union (EU) differs significantly from that in Asia. In these markets, established brands and large corporations dominate, and consumer expectations are considerably higher.

• In the U.S., consumers often prioritize convenience, value, and innovation. They rely heavily on online reviews, expect prompt responses, and demand high-quality customer service. Payment preferences are diverse, ranging from credit cards (Visa, Mastercard) to digital wallets (PayPal, Apple Pay, Google Pay) and increasingly popular “buy now, pay later” (BNPL) solutions. 

• In the EU, consumers place strong emphasis on sustainability, quality, and product traceability. Production and supply chains must meet strict standards for safety, ethical sourcing, and ESG compliance. Payment behaviors also diverge from those in the U.S. and Asia, with a higher reliance on debit cards, digital wallets, and real-time payments (RTP) under the SEPA framework.

These differences highlight the limited competitiveness of many Vietnamese SMEs in global markets, particularly in business planning and execution. Therefore, Vietnamese SMEs need to undertake a comprehensive restructuring that emphasizes product and service innovation, technological advancement, and thorough market analysis in order to compete effectively with established players.

Supply Chain & Logistics 

For Vietnamese SMEs, transportation, warehousing, and delivery costs represent a major challenge. When starting, SMEs can collaborate with cross-border e-commerce platforms such as Amazon. However, to optimize costs in the long term, businesses need a well-planned logistics strategy.

• In the U.S., SMEs face direct competition with Amazon FBA and other major e-commerce platforms, where fast delivery and hassle-free returns are the standard. As a result, Vietnamese businesses often struggle to hold inventory locally, resulting in slower delivery times and higher return costs.

• In the EU, the market is fragmented by diverse languages, regulations, and logistics infrastructures. Beyond differences in transportation and warehousing costs across countries, cross-border returns are often complex and expensive, particularly for perishable goods or products requiring certification.

With limited capital and international experience, many SMEs are unable to establish inventory management and logistics systems that meet global standards. As a result, they face higher cancellation rates, elevated operating costs, and reduced customer trust. A practical solution is to leverage fulfillment services offered by e-commerce platforms or partner with professional logistics providers to optimize inventory, minimize return costs, and enhance customer experience.

Financial & Operational Capacity

For Vietnamese SMEs, limited capital and restricted access to international financing remain major barriers. Exchange rate fluctuations between the USD and EUR further amplify risks, putting direct pressure on already narrow profit margins.

On the operational side, many companies lack experienced management teams capable of overseeing cross-border activities. They often rely on historical financial metrics and a domestic-oriented outlook, while overlooking critical indicators such as innovation capacity, product quality, and international customer satisfaction.

These limitations weaken competitiveness and make it difficult for enterprises to adapt to global market volatility. To succeed in the U.S. and EU, Vietnamese SMEs must strengthen their financial capacity, invest in managerial expertise, and establish performance measurement systems aligned with international standards.

Real-Life Examples of Market Entry Challenges

While Vietnamese SMEs have significant opportunities to enter the U.S. and EU markets, they face constant challenges from complex regulations and stringent standards. The following cases illustrate some of the key risks.

1. Vietnamese shrimp exporter STAPIMEX hit by “shock” tariffs in the U.S.

Many Vietnamese companies have encountered major obstacles when exporting to the U.S. due to unstable tariff policies. In 2025, the shrimp exporter STAPIMEX faced a preliminary anti-dumping duty of 35.29 percent during the 19th review period, while some other companies were subject to zero tariffs. This discrepancy created a significant shock, causing financial strain for many small and medium-sized seafood exporters as costs surged and export contracts were affected.

This case highlights that SMEs cannot focus solely on production; they must also invest in legal documentation, maintain transparent export data, and proactively collaborate with industry associations. Without sufficient resources and knowledge in international taxation and finance, businesses are vulnerable to the risks posed by U.S. trade policies.

2. Agricultural exports and EU warnings on low-quality products

The EVFTA provides Vietnamese agricultural and food products with tariff advantages in the EU, but compliance remains challenging. In the first two months of 2025, the EU issued 624 alerts on global agricultural products, including 16 concerning Vietnamese exports such as cashews, processed shrimp, and basil leaves. Non-compliance can result in product recalls, destruction, or official warnings, generating significant costs for exporters.

To succeed in the EU, SMEs must standardize products, maintain transparent quality checks, and adhere to international standards. Comprehensive business planning and professional teams are essential to meet market requirements and navigate regulatory demands effectively.

Strategies to Overcome Market Entry Challenges

To succeed in the U.S. and EU, Vietnamese SMEs cannot rely solely on cost advantages or product quality. They must adopt a comprehensive strategy to navigate regulatory, cultural, and commercial barriers. The following practical approaches can help businesses adapt proactively, minimize risks, and strengthen long-term competitiveness. 

1. Market Due Diligence

Entering the U.S. and EU requires SMEs to actively navigate a complex landscape of regulations, tariffs, and consumer behavior. Businesses should thoroughly assess the market by analyzing: 

• Regulations and taxes: Understand requirements such as FDA and USDA (U.S.), CE Marking and GDPR (EU), as well as VAT and customs procedures.

• Customers: Study buying habits, acceptable price ranges, and the growing demand for sustainable products.

• Competitors: Identify the strengths of large international brands and local suppliers in the market.

2. International Standards and Certifications

SMEs should prioritize quality standards as a key factor in building customer trust. Achieving international certifications such as FDA approval, CE Marking, or ISO helps Vietnamese products overcome technical barriers and enhances brand credibility.

• Register for food safety, environmental, and traceability certifications.

• Stay updated on evolving standards, particularly in ESG and food safety.

3. Financial Planning

SMEs must prepare for long capital cycles, high operational costs, and exposure to currency fluctuations. A well-structured financial plan ensures they can enter the market and remain resilient against volatility.

• Manage cash flow and working capital effectively.

• Partner with logistics providers to reduce costs and speed up delivery.

• Use cross-border payment solutions to secure transactions and retain customers.

4. Expert Advice and Consultation

SMEs should actively seek guidance to handle the complex regulatory environment of the U.S. and the EU. Engaging experts and advisors helps mitigate risks and optimize resources.

• Collaborate with international consulting firms for tailored guidance on compliance, taxation, and market-entry strategies.

• Connect with industry associations to stay informed about regulatory updates and technical requirements.

• Participate in training and mentoring programs to strengthen management capabilities and international operational expertise.

Conclusion & Next Steps

The U.S. and EU offer significant growth opportunities for Vietnamese SMEs, but they also present numerous challenges in regulations, tariffs, logistics, and quality standards. By prioritizing compliance, managing supply chains effectively, and building a strong brand, businesses can secure success and maximize their long-term growth prospects.