Vietnamese American Daniel Nguyen founded Sông Cái Distillery in Vietnam in 2019 as a way to give back to his ancestral homeland. By producing the country’s first home-grown gin using botanicals from local farmers, Nguyen hoped to add value to their goods and increase their profits. Vietnam offered an attractive investment environment, a skilled workforce, a stable political system—and a rapidly expanding middle class that favored high-end alcohol. But it was also a developing country with a nascent market economy, an authoritarian government, and a weak legal system. As Nguyen sought to fulfill his vision, he faced regulatory challenges that tested both his resolve to continue and his company’s ability to survive. The case offers a unique window into Vietnam’s evolving foreign-investment and regulatory regimes and the factors at play for investors in one of world’s most dynamic regions. It highlights the differences in the regulatory environment of a country in transition and of developed market economies. Though Sông Cái’s story, the case shows the concrete impacts that a different regulatory system can have on opportunities and challenges facing investors. Building the distillery involved delays due to unclear jurisdictional authorities of agencies overseeing production and fire-safety regulations. Corrupt officials wanted payments to act, and onerous tax laws discouraged companies from paying their share. Even as Nguyen sought to operate within the law, informal businesses thrived in the gray market. Some undercut Sông Cái on prices by selling counterfeit goods or dodging taxes. But the biggest question for the young distillery lay ahead: Should Sông Cái export its gin to the potentially lucrative U.S. market? Nguyen was sure U.S. consumers would welcome it, but he would have to navigate a complex, new regulatory system without any trade support from Vietnam’s government. Mastering this new market and its regulatory requirements could be Sông Cái’s next challenge.
