China is a nation having strongest influence in the world, not only in defense, culture or international relations but also economic. Regarding South-East Asia as well as Vietnam, China is affecting widely and deeply. In accordance with statistics reports from the Foreign Investment Agency, in the first quarter of 2017, new registered investment capital of Chinese investors is 823.6 million USD, making up to 10.68% of the total capital. Business sectors to which Chinese pay much attention are construction, industrial zones construction, manufacturing, export-processing and outsourcing. As South-East Asia is a strategic partner of China, on November 2002, this nation and ASEAN signed the Framework Agreement on Comprehensive Economic Co-operation, paving the way for further negotiation and signing free trade agreements, including:
Free trade agreements are made for the purposes of investment promotion and establishing a transparent and effective investment regime, elimination of tariff and non-tariff barriers… However, foreign investment is a sensitive issue as it shall affect local investors and domestic production. Although the general economic trend is trade liberalization, it is hard to avoid invisible barriers when investing in a country. With many years of experiences in investment consulting, Viet An Law Firm realizes that foreign investors often get into troubles when performing investment procedures in Vietnam. In order to give Chinese investors a hand in researching information about investment in Vietnam, Viet An Law Firm collects and provides some information as follows:
Two common methods Chinese investors may choose are establishing Chinese companies in Vietnam and capital contribution/purchase shares/purchase capital contributions to Vietnamese companies. Depending on financial situation and investment purpose, Chinese investors shall consider and choose the most suitable method.
Procedures for establishment of Chinese companies in Vietnam:
Step 1: Apply for the Investment Registration Certificate
Submit the application at: The Department of Planning and Investment.
The process: Within 15 days from the receipt date of the valid application, the Department of Planning and Investment will grant the Investment Registration Certificate to foreign investors. If the Department of Planning and Investment refuse to grant, they will respond in notices and explain the reasons.
Step 2: Establish Chinese companies in Vietnam
Apply for the Business Registration Certificate:
An application includes:
Submission place: The Department of Planning and Investment.
Duration: 03 – 06 working days.
Announce the business registration contents:
Engrave the seal and publish the seal sample:
Notices on foreign capital limitations and business conditions:
The question is whether or not Chinese investors can own up to 100% capital of a company. The answer is depending on investment fields, business sectors foreign investors intend to conduct. International agreements as well as local laws does not completely eliminate barriers for all sectors. Chinese investors should refer to the Schedule of Specific Commitments in Services along with the Agreement on Trade in Services between ASEAN and China.
For example, if investors intend to provide “Construction and related engineering services” (CPC 511, 512, 513, 514, 515, 516, 517, 518), they can establish 100% Chinese companies in Vietnam. However, regarding “Maritime transport services” (international transport, including passenger and freight transport with CPC 7211, 7212), Chinese investors shall establish a joint venture with Vietnamese partners. In the joint venture, foreign capital shall not exceed 51% of the total capital; if the company operates a fleet under the national flag of Vietnam, the maximum foreign capital shall not exceed 49% of the total charter. Besides that, there are several conditions have to be followed such as the number of foreign seafarer working in any ship flying the national flag of Vietnam shall not exceed 1/3 of the total employees there. When Clients provide more detailed information, Viet An Law Firm can research and give advice on investment method, foreign capital limitations and business conditions of each sector.
Besides directly establishing Chinese companies in Vietnam, the process of capital contribution/shares purchase/capital contributions purchase is simpler and save time. By that way, investors shall not apply for the Investment Registration Certificate except for register to contribute capital/purchase shares/purchase capital contributions at the Department of Planning and Investment. After being granted the approval, the company shall change shareholders, members as stipulated by the laws. However, it does not mean Chinese investors can own up to 100% of the capital in a Vietnamese company in order to convert it into a 100% Chinese company but depending on business sectors as explained above. If in the commitment packages in the Agreement on Trade in Services and the laws of Vietnam stipulate on foreign capital limitations, foreign investors shall comply with these regulations. Moreover, business conditions of each sectors must be satisfied.
Procedures for capital contribution, shares purchase capital contributions purchase:
Step 1: Foreign investors register to contribute capital, purchase shares/capital contributions to the company
Submission place: The Department of Planning and Investment.
The process: If the capital contribution, shares purchase, capital contribution purchase of foreign investors comply with the regulations on investment forms and foreign capital contribution, within 15 days from the date of receipt of the valid application, the Department of Planning and Investment will grant a written announcement. If the application does not satisfies conditions, the Department of Planning and Investment will grant a written announcement providing reasons and explanation.
Step 2: Transfer the shares, capital contributions and change the shareholders or members of the company
Foreign investment services in Viet An Law Firm:
If you are looking for advice about regulations and procedures to establish Chinese companies in Vietnam as well as others issues related to enterprises and foreign investment in Vietnam, please feel free to contact Viet An Law Firm for more information!
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