Conditions and Procedures for Establishing a Chinese Company in Vietnam

Establishing a Chinese-invested company in Vietnam is becoming a significant investment trend due to the growing economic relations between the two countries. Vietnam offers advantages such as strategic location, abundant labor force, competitive production costs, and attractive investment policies. However, to ensure a successful and legal investment process, Chinese enterprises must understand the conditions, procedures, and legal requirements involved in establishing a company in Vietnam.

Legal Framework Governing Foreign Investment in Vietnam

Key legal documents that Chinese investors should be aware of include:

• Law on Investment 2020 (No. 61/2020/QH14): This law regulates investment activities in Vietnam, including the conditions for foreign investors to establish business entities and the procedures for obtaining investment registration certificates .

• Law on Enterprises 2020 (No. 59/2020/QH14): This law governs the organization, operation, and management of enterprises in Vietnam, particularly the establishment of foreign-invested enterprises .

• Decree No. 31/2021/ND-CP: This decree provides detailed guidance on the implementation of the Law on Investment, including procedures for granting investment registration certificates .

• Decree No. 01/2021/ND-CP: This decree outlines the procedures for business registration in Vietnam .

Forms of Investment for Chinese Enterprises in Vietnam

Chinese investors can choose from several investment forms in Vietnam:

Wholly Foreign-Owned Enterprise (WFOE): This is the most common form, allowing Chinese investors to have full ownership and control over the business operations in Vietnam.

Joint Venture (JV): In this form, Chinese investors partner with Vietnamese enterprises, sharing ownership, profits, and responsibilities.

Branch or Representative Office: Chinese enterprises can establish branches or representative offices in Vietnam to conduct market research, promote products, or liaise with local partners without engaging in direct commercial activities.

Each investment form has specific legal requirements and procedures that must be followed.

Conditions for Establishing a Chinese-Invested Company in Vietnam

Chinese investors must meet the following conditions:

• Legal Status and Financial Capacity: Investors must provide documents proving their legal status and financial capacity, such as business registration certificates, financial statements, or bank statements .

• Investment Project Proposal: A detailed proposal outlining the investment objectives, scale, capital, location, duration, and expected socio-economic impacts of the project .

• Compliance with Market Access Conditions: Investors must ensure that their investment complies with Vietnam’s market access conditions for foreign investors, as specified in Article 9 of the Law on Investment 2020 .

• Land Use Rights: Investors must have legal rights to the land where the project will be implemented, either through land allocation, lease, or other legal means .

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Procedures for Establishing a Chinese-Invested Company in Vietnam

The process involves several key steps:

Apply for Investment Registration Certificate (IRC): Submit an application to the Department of Planning and Investment, including the investment project proposal, legal documents, and financial capacity evidence. The processing time is typically 15-20 working days .

Apply for Enterprise Registration Certificate (ERC): After obtaining the IRC, submit an application for the ERC, which includes the company’s charter, list of shareholders or members, and legal representative information. The processing time is usually 3-5 working days .

Public Announcement of Business Registration: Within 30 days of receiving the ERC, the company must publicly announce its business registration information on the National Business Registration Information Portal .

Obtain Company Seal and Register Sample: The company must create a seal and register its sample with the Department of Planning and Investment .

Open Bank Account and Register Tax Code: Open a bank account in Vietnam and register for a tax code with the local tax authority .

Comply with Post-Establishment Obligations: Ensure compliance with labor laws, environmental regulations, and other legal requirements .

Key Considerations for Chinese Investors

• Profit Remittance: Investors must fulfill all tax obligations before remitting profits abroad .

• Tax Compliance: Adhere to local tax regulations, including corporate income tax, value-added tax, and other applicable taxes .

• Environmental Protection: Comply with environmental laws, especially for projects with significant environmental impact .

• Labor Regulations: Prioritize hiring Vietnamese employees and comply with labor laws, including employment contracts and social insurance contributions .

Risks and Legal Challenges

Chinese investors should be aware of potential risks:

• Non-Compliance with Investment Conditions: Failure to meet market access conditions or sector-specific requirements can lead to project rejection or delays .

• Incomplete or Invalid Documentation: Submitting incomplete or invalid documents can result in application rejections or processing delays .

• Capital Contribution Issues: Not fulfilling capital contribution commitments can lead to legal consequences .

• Tax and Financial Reporting Non-Compliance: Failure to comply with tax and financial reporting obligations can result in penalties or legal actions .

Professional Legal Assistance

For comprehensive legal support, Chinese investors can consult with law firms specializing in foreign investment in Vietnam. These firms can provide assistance with:

• Investment Project Preparation: Drafting investment proposals and ensuring compliance with Vietnamese laws.

• Regulatory Compliance: Navigating legal requirements related to business registration, tax obligations, and labor laws.

• Dispute Resolution: Offering solutions for potential legal disputes or challenges during the investment process.

• Post-Establishment Services: Assisting with ongoing legal compliance and operational matters.

One such firm is BKC Law, which offers a range of services to assist Chinese investors in establishing and operating businesses in Vietnam.

Contact us today for a free consultation:

Phone: 0901 3333 41

Email: info@bkclaw.vn

Head Office (District 1): 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, HCMC

Branch Office (Bình Tân): 41 Tên Lửa, Bình Tân District, HCMC

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