Are you considering setting up a trading company in a thriving market with remarkable opportunities? Look no further than Vietnam!
This guide covers the ins and outs of starting a trading company in Vietnam, including important considerations such as procedures, required documents, the pros and cons of setting up a trading company in Vietnam, and the best business structure to ensure success.
Pros and cons of setting up a trading company in Vietnam
Starting a trading company in Vietnam involves both challenges and rewards. As a foreign investor, it is important to consider both the advantages and disadvantages before starting a trading company.
|– Setting up a trading company in Vietnam provides an advantage for foreign investors to access the large, young, and growing labor force with economical wages in the country. |
– Foreign investors can benefit from the country’s growing consumer market with an increasing middle class and large population.
– Another important advantage is the country’s strategic location in Southeast Asia making it an ideal hub for exports to other countries in the region.
– Favorable business environment with reforms implemented by the government
– Increased business opportunities with expanding economy and global connections
|– As a foreign investor starting a trading company in Vietnam, you have to rely on your local partner to provide and develop the products you want to sell. This reliance on the local partner results in a lack of control over the quality and timing of product delivery. |
– The registration process for setting up a trading company in Vietnam takes months which makes it a little complex for foreign investors.
Choosing the right business structure for your trading company
The most common business structures for foreign-owned trading companies in Vietnam are 100% foreign-owned enterprises and joint venture companies.
- 100% Foreign-owned enterprise
A foreign-owned enterprise is a business that is fully owned and run by foreign investors.
- It allows full business operations, including importing and exporting goods and services, and gives control to foreign investors
- By choosing this structure, the foreign investor minimizes the involvement of local partners, reducing the risk of disputes or misunderstandings
- Joint venture company (JVC):
A JVC is a business that is jointly owned and operated by foreign and local partners.
- By partnering with a local partner, the foreign investor gains access to local networks and knowledge that help the trading company succeed in the Vietnamese market.
- A JVC structure allows for a sharing of resources, knowledge, and expertise between the foreign and local partners, and also allows for a sharing of risk and reward. This helps to mitigate the risks involved in establishing a trading company in a new market.
The choice between a foreign-owned enterprise or joint venture for a trading company in Vietnam depends on the specific needs and goals of the foreign investor.
Foreign-owned enterprises are better for trading companies that are seeking complete autonomy and limited involvement of local partners. On the other hand, joint venture companies are better for trading companies seeking local assistance and are willing to share control and profits with a local partner.
Setting up a trading company in Vietnam – The process and requirements
To successfully set up a trading company in Vietnam, foreign investors must have a thorough knowledge of the registration procedure, which includes the legal framework, necessary licenses and permits, and industry regulations. The process for setting up a trading company (whether foreign-owned or a JVC) in Vietnam involves the following steps:
- Investment license issued by the Department of Planning and Investment (DPI)
- Business registration certificate issued by the Department of Planning and Investment (DPI)
- A retail license issued by the department of industry and trade (DOIT)
- Product registration for sale
Step 1: Investment license
The investment license, also known as the investment registration certificate (IRC), is an important document for foreign investors looking to establish a trading business in Vietnam. To start the process of setting up a trading company in Vietnam, a foreign investor must apply for an investment registration certificate (IRC) by submitting their business plan, passport copies of the company’s owners and directors, proof of address, proof of financial capacity to the department of planning and investment (DPI).
Upon approval, the DPI issues the IRC, which enables the company to obtain its investment license and legally operates its business activities in the country.
Timeline: The time frame for this process is one month.
Step 2: Business registration certificate
The next step in the process of setting up a trading company in Vietnam is to secure a business registration certificate (BRC). The department of planning and investment (DPI) issues the business registration certificate. It is an important document that confirms the legal existence of a business and serves as proof of the company’s registration with the government.
To set up a trading company in Vietnam, the company must choose a name and check availability, prepare required documents such as the company charter, list of shareholders and directors, and personal identification of company representatives, and submit these documents to the department of planning and investment (DPI).
Timeline: BRC is issued in 7 – 10 days from the date of getting IRC.
Step 3: Retail license
A Retail License in Vietnam is a permit issued by the department of industry and trade (DOIT) that allows a trading company to engage in the retail distribution of goods to end users.
To obtain a retail license in Vietnam, a company must prepare a set of required documents including the BRC, tax registration certificate, and a list of products to be sold, and submit the completed application along with the required documents to the department of industry and trade (DOIT) for review.
Once the review is completed, the DOIT issues the retail license.
Timeline: Retail license is issued in 4-6 months.
Step 4: Product registration for sale
The final step before beginning any import or export operations in Vietnam is to register your products and secure approval for sale. To register your products for sale in Vietnam, you need to submit the required documents to the relevant government agencies, such as the Ministry of industry and trade or the ministry of health. These agencies are responsible for evaluating and approving products for sale in the country.
Partnering with an experienced service provider such as Emerhub assists in understanding and managing the complex process of registering your company in Vietnam and ensuring compliance with local regulations.
Additional licenses and requirements for setting up a trading company in Vietnam
In addition to the business registration license, a trading company may be required to obtain additional licenses/permits depending on the specific business activities and products.
- Outlet establishment license issued by the Ministry of Industry and Trade: If a company sells the product directly to end-users at a specific outlet facility, the company must obtain both a retail license and an outlet establishment license.
- Procedures for notifying the Ministry of Industry and Trade about the establishment of a sales e-commerce website if the website has an online ordering function.
- Certificate of origin: This certificate is issued by the chamber of commerce and certifies the origin of the goods being imported or exported.
For example, The chamber of commerce of Ho Chi Minh City has issued a certificate of origin for the shipment of coffee beans exported by ‘Vietnamese coffee trading co.’, certifying the origin of the goods.
- Quality inspection certificate: This certificate is issued by the Vietnam authority of quality inspection and certifies that the goods meet the required quality standards.
Example: The Vietnam authority of quality inspection issued a quality inspection certificate for the shipment of handicrafts imported by ‘Southeast asian art and craft trading co.’, ensuring that the products meet the required quality standards.
- Customs declaration license: This license is issued by the customs authorities and authorizes the company to engage in customs declaration activities.
Example: The customs authorities issued a customs declaration license to ‘Vietnamese textile trading co.’, authorizing the company to handle customs declaration procedures for its imported and exported goods.
Unlock the Potential of Your Trading Business in Vietnam with Emerhub’s Expert Support
Emerhub is a professional consultancy company that specializes in helping foreign investors manage the legal and regulatory requirements of doing business in Vietnam. We offer a range of services to help you launch your trading venture, including company registration, market research, and logistics support.
By choosing Emerhub, you benefit from our in-depth knowledge of Vietnam’s business environment and its extensive network of local partners. With our expert support, you focus on growing your business while we handle the administrative and compliance aspects.
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