The Kickback Problem Lurking in Vietnamese Business
This article provides an accessible explanation of the "kickback problem" that companies operating in Vietnam may face, from the perspective of business custom, legal assessment, and risk management. It offers concrete guidance on preventive measures against fraud risk, establishing internal whistleblowing systems, and compliance responses, supporting transparent business operations. NEXORA LAWFIRM has extensive experience helping Japanese companies build local governance frameworks, assess bribery risk, prepare response manuals, and deliver internal training. Its strength lies in providing concrete solutions grounded in Vietnamese law and practice.
01 -「Kickbacks」and the Problem of the Unwritten Rule
One day, a neighbor from my hometown came to visit and told me about his son. His son worked in the purchasing department of a company, and while his base salary was only a few tens of millions of dong, his "flexible income" — that is, kickbacks — was substantial. Every year at Tet (Lunar New Year), he would return home with a car full of gifts, and the whole extended family benefited. The neighbor spoke of this with pride, saying things like "this is the result of the upbringing his parents gave him and the wisdom life has taught him," and "only with cleverness can one operate this flexibly."
【The Current State: Kickbacks Accepted as an Unwritten Rule】
Kickbacks spread from even the most basic situations. For example, a tour guide brings tourists to a shop, and once a sale is made, the guide receives a pre-agreed percentage as a kickback from the shop owner. This is a common "unwritten rule" in the tourism industry worldwide and typically benefits both sides. In Vietnam, however, some guides push this rate up to 30%–40%, which harms service quality and places a heavy burden on the business.
Within companies, it is not unusual for staff in the purchasing department to receive kickbacks — ranging from small contracts for stationery, periodic health checkups, event planning, or short-term staffing, to recurring contracts for office and vehicle leasing, material procurement, and catering. Such practices are widely regarded as "just how things are done" — the attitude being that "anyone in that position would do the same." As a result, unless a kickback develops into a full-blown corruption case, it rarely draws social criticism.
The problem is especially pronounced in tendering. When selecting a supplier for event planning, travel arrangements, or material procurement, it is common for the person in charge to receive a kickback of around 10%. In some cases, the rate reaches 15%–20%, which for a mid-sized company can exceed the profit margin on the contract itself. In such situations, companies are often forced to find ways to cover taxes and other additional costs. If a company refuses to pay a kickback, it will almost certainly lose the contract to another supplier willing to pay.
Companies from the United States, Europe, and Japan have long maintained a practice of refusing to pay kickbacks. Because bribe-givers are also subject to strict penalties in these countries, it is difficult for such companies to conform to Vietnam's kickback culture even while operating within the country. As a result, there are many cases where a company with a superior proposal, technology, experience, or service quality still fails to win a tender and walks away empty-handed.
02 - Concrete Examples of Kickbacks
Examples of Kickbacks in Daily Life
Taxi driver referrals:
When a passenger asks "which restaurant is good?" or "which souvenir shop is good?", the driver eagerly recommends a shop they are "affiliated" with. After bringing the customer, the driver receives a kickback from the shop as a token of appreciation.
Prescriptions by doctors:
When prescribing medicine or health supplements, a doctor gives preference to products from a pharmaceutical company with which they have an arrangement, receiving a kickback from that company in return.
Examples of Kickbacks in Business Relationships
A manager at a business-support organization:
A person working in the management department of a business-support organization listens to the difficulties faced by client companies and introduces an appropriate service provider. If the introduction results in a contract between the client and the service provider, that person receives a kickback from the service provider.
Examples of Kickbacks Within a Company
Kickbacks in the purchasing department:
A purchasing officer receives money or goods from a business partner — typically a cash kickback of around 10% of the contract value, along with gifts, entertainment, service vouchers, airline tickets, or travel packages.
Quid pro quo for information in a bidding process:
When Company A holds a tender for the design and construction of a factory, the person in charge leaks bidding information to a vendor in advance, in exchange for money or gifts.
Relationship-building in M&A negotiations:
When Company X is considering acquiring a factory owned by a Vietnamese company, the owner of the financially struggling factory frequently gives the person in charge at Company X expensive gifts to build a favorable relationship. Offers such as "if the deal closes, we will pay you 1% of the contract value as a thank-you kickback" are also actively made — in the hope that the person in charge will convey favorable information to Company X's senior management.