A foreign investor entering Vietnam usually faces two gateways: build a company from scratch, or pay for one that already has licences, premises, customers and staff. Both routes end at the same destination, a lawful presence in Vietnam, yet the money spent, the speed to market and the kind of risk carried are entirely different. Choosing wrongly at the start can cost a year in land procedures, or saddle the investor with a tax debt the seller never mentioned.
The Legal Framework You Need
Under the Law on Investment 143/2025/QH15, both routes are recognised forms of investment: an investor may establish a new economic organisation, or contribute capital and buy shares or capital contributions in an existing one. For a greenfield project, the investor obtains an Investment Registration Certificate under Decree No. 96/2026/ND-CP and then registers the enterprise under the Law on Enterprises 59/2020/QH14 and Decree No. 168/2025/ND-CP. For an acquisition, the deal only needs capital contribution registration with the investment registration authority in statutory cases, such as conditional market-access sectors or transactions taking the foreign investor above 50 percent of charter capital.
The core legal difference is history. A newly established company starts with a clean record: no tax arrears, no labour disputes, no hidden obligations. An acquirer, by contrast, inherits the entire past of the target, including doubtful receivables and sub-licences about to expire. In exchange, the target already owns legal personality, a tax code, bank accounts, a land lease and sometimes an Investment Registration Certificate for a running project, assets that a greenfield investor needs many months to build.
Applying the Rules to a Real Deal
On cost, greenfield is cheaper at the transaction stage because there is no purchase price and capital transfer tax falls on the seller, but total ownership cost swells during construction: land rental, building permits, recruitment and training from zero. An acquisition costs more on signing day, purchase price plus due diligence fees, yet revenue can start in the first month after closing. On timing, a new manufacturing project in an industrial park often needs many months of preparation before the plant runs, while a tidy acquisition can close within weeks if the target files are clean.
On risk, greenfield carries execution risk: construction delays, planning changes, difficulty hiring technical staff in a new locality. Acquisition carries legacy risk: two sets of books, social insurance arrears, land disputes of former shareholders, abnormal related-party contracts. The deciding question is therefore not which route is cheaper in the abstract, but what the investor is actually buying. If the most valuable asset is speed to market and an existing customer network, acquisition wins; if it is absolute control over operations and a spotless legal record, greenfield is the safer choice.
Illustrative example: A Singapore logistics group wanted a bonded warehouse near the northern border gates before the peak season. Instead of leasing vacant land and building, it bought a 70 percent stake in a Vietnamese warehouse operator whose facility was running at half capacity. Due diligence uncovered an expired fire safety acceptance for one block, so closing was split: the price for that block was retained until the seller renewed the acceptance, and the group started serving clients eleven weeks after signing.
Procedure and Documents to Prepare
First: define the strategic purpose of market entry: speed, a scarce sector licence, or absolute operational control, because that purpose decides which route wins. Next: build a full life-cycle cost comparison for both routes, covering transaction costs, construction or diligence costs, and the opportunity cost of waiting. After that: if acquiring, run legal, tax and labour due diligence on the target before signing any binding agreement. Then: check the market-access conditions of the business lines and whether the deal falls into a case requiring capital contribution registration. Finally: fix a closing timetable tied to conditions precedent, a retention of part of the price, and seller warranties on the state of the company.
- define the strategic purpose of market entry: speed, a scarce sector licence, or absolute operational control, because that purpose decides which route wins.
- build a full life-cycle cost comparison for both routes, covering transaction costs, construction or diligence costs, and the opportunity cost of waiting.
- if acquiring, run legal, tax and labour due diligence on the target before signing any binding agreement.
- check the market-access conditions of the business lines and whether the deal falls into a case requiring capital contribution registration.
- fix a closing timetable tied to conditions precedent, a retention of part of the price, and seller warranties on the state of the company.
Common Risks and How to Prevent Them
The first risk is understating the hidden cost of greenfield, especially the time needed for investment policy approval and land procedures outside industrial parks. The second risk is acquiring a company with an unclean tax history; assessments issued after closing still belong to the company, meaning the buyer. The third risk is that a target licence cannot survive the new ownership structure, for example a licence conditioned on a domestic capital ratio. The common safeguard is to price every risk in the financial model, retain part of the price as security, and refuse to close while any condition precedent remains unclear.
Experience from comparable deals shows the buyer gains the edge not by winning a single clause, but by pricing every identified risk and retaining part of the price as security. Close only when every condition precedent is evidenced in writing, and file that evidence in the transaction record before any funds move.
Frequently Asked Questions
Which is better, incorporating a new company or acquiring an operating business?
Neither route is absolutely better for every investor. Greenfield suits sectors with open market access, investors who have time to build a team, and anyone wanting a clean legal record from day one. Acquisition suits targets holding assets that are hard to recreate, such as prime land, a scarce sector licence, a stable customer base or a skilled technical team. The right decision comes after the investor answers clearly whether the money buys time, licences or control, and after diligence confirms the price matches the value received.
How do the two routes compare on cost, time and risk?
On direct cost, acquisition is usually more expensive because it includes the purchase price, diligence fees and counsel fees for the transaction documents, while greenfield mainly costs modest state fees. On timing, acquisition shortens the pre-revenue phase considerably but stretches if diligence surfaces issues to fix before closing. On risk, greenfield bears future execution risk while acquisition bears somebody else past. An honest comparison places all three factors side by side on the same timeline of at least three years before any conclusion is drawn.
In which cases should an investor buy an existing business instead?
Buy an existing business when the target owns something that building cannot reproduce in time, typically a conditional-sector licence that is no longer issued, land in a fully allocated industrial park, or a brand already recognised by Vietnamese consumers. Acquisition also makes sense when a competitor is negotiating with the same target and speed decides the outcome. Conversely, if diligence shows liabilities that cannot be quantified, or the target culture clashes sharply with the parent group, starting fresh is safer than inheriting those problems.
