U.S. streaming giant Netflix Inc (NASDAQ:NFLX) is preparing to open an office in Vietnam after years of negotiations with authorities and completing a risk assessment, according to two sources with knowledge of the matter.
A local office would make Netflix the first major U.S. tech company with a direct presence in the fast-growing Southeast Asian country of 100 million people increasingly seen as too lucrative to ignore, despite distrust of its strict internet rules.
Netflix declined to comment in response to questions from Reuters about its plans and current operations in Vietnam.
The company is in the initial planning phase of a local entity in Vietnam after completing an assessment in late 2022 that assessed both the security and political risks of operating an office in Vietnam and the handling of user data and sensitive content, the sources said.
The sources declined to be identified as confidential preparations.
The office could open its doors by the end of 2023, but it will require a lengthy regulatory process that could drag on, according to one of the sources.
The authorities announced a new decree, in place since January, requiring video-on-demand service providers to apply for licenses from the Vietnamese government to operate, which in turn would require setting up a local office, though the details of its application remain unclear.
Vietnam has proven to be a complex country for tech companies, in part because of a lack of clarity about the specific requirements and enforcement mechanisms of its often strict regulations, according to foreign executives familiar with operations in the country.
Although Vietnam’s 2018 cybersecurity law requires all foreign companies earning revenue from online activities in Vietnam to open a local office, only TikTok’s owner, ByteDance, has met the standard so far, despite several other social media providers counting Vietnam as one of their top 10 global markets.
However, as Vietnamese authorities become more confident in the country’s growing consumer power, they have begun to increase pressure on tech companies to comply with the rules.
Regulators threatened to shut down Facebook (NASDAQ:GOAL) in 2020 for the platform’s political content, and in 2022 introduced new rules requiring tech companies to store user data locally and social media companies to remove what authorities consider false content within 24 hours.