Taking on contract manufacturing for a Chinese brand in Vietnam is not just a production contract — it is a contract under which the brand entrusts you with its trademarks, designs, and technical know-how. This article is a contract checklist from the angle of protecting the Chinese brand owner’s brand, under the newest legal framework.
Applicable legal framework
- Commercial Law 2005 — Articles 178–196 on processing contracts; Article 301 on contractual penalties (capped at 8%).
- Decree 292/2026/ND-CP — effective 5 September 2026, replacing Decree 69/2018/ND-CP. New points: clear rules on processing of components/semi-finished goods, handling of surplus goods, and material-consumption-norm appendices.
- Intellectual Property Law — Article 148.3 after Law 131/2025/QH15 (effective 1 April 2026): trademark licence contracts are not required to be registered to take effect.
1. Processing scope and technical standards per the brand’s specs
- Describe the processed products precisely per the Chinese brand’s technical specs (drawings, quality standards, technological processes) — attached as an inseparable appendix.
- Any spec change requires the brand owner’s prior written approval — no unilateral changes to materials or processes.
2. Materials, consumption norms, and scrap handling
- State which party supplies materials (brand owner or processor).
- Material consumption norms — a norms appendix per the new points of Decree 292/2026.
- Scrap, defective goods, and surplus handling: who owns them, whether they may be destroyed/sold or must be returned — Decree 292/2026 tightens surplus-goods handling, especially for components/semi-finished goods bearing the brand’s marks.
- Bar the processor from using leftover materials to make goods for the open market.
3. Intellectual property — the crux of the contract
- Scope of mark/design use: the processor may use the Chinese brand’s trademarks and designs only on the contract-manufactured finished goods — no off-scope use, no affixing the marks to other products.
- Ban on similar-mark registration: the processor undertakes not to register, or assist third parties in registering, identical or confusingly similar marks in Vietnam (or anywhere).
- Trademark licence: under IP Law Article 148.3 after Law 131/2025, a trademark licence contract is effective without registration with the IP office — but registration is still recommended to protect the brand against third parties.
- Know-how and design confidentiality: confidentiality surviving termination (typically 3–5 years), with specific penalties.
4. The brand owner’s inspection and supervision rights at the factory
- The Chinese brand owner has the right to inspect and supervise processing at the processor’s factory (Article 181, Commercial Law).
- Specify inspection frequency, advance notice, and access scope (production lines, material and finished-goods warehouses) — to avoid disputes when inspection teams arrive.
5. Exclusivity and non-competition
- No processing for the brand’s competitors during the contract term (and a post-termination period if agreed).
- Territory- or product-line exclusivity may be agreed — the processor works only for this brand within the defined scope.
- Set specific penalties for non-compete breaches (beyond the general 8% cap, via damages).
6. Remuneration, schedule, acceptance, and claims
- Processing fees: unit price per conforming product, clear payment method and terms.
- Delivery schedule: batch timetable, delivery place, handover conditions.
- Acceptance: acceptance criteria per the brand’s specs, acceptance period, handling of non-conforming goods (repair, rework, fee deduction).
- Claims: deadlines and procedures for finished-product quality claims.
7. Tax incentives for the processor
- The processor is exempt from import duty on temporarily imported materials for processing within registered norms — the single most important tax incentive of the processing model.
- Note: the exemption is tied to norms and customs declarations; surplus materials or misuse can trigger duty recovery and penalties.
8. Penalties, liquidation, governing law, and arbitration
- Penalties: capped at 8% of the breached obligation’s value (Article 301, Commercial Law); damages beyond the penalty may be agreed.
- Contract liquidation: final settlement, handling of leftover materials/finished goods, and surviving confidentiality and non-compete duties.
- Governing law and arbitration: agree expressly on governing law and dispute resolution (VIAC/SIAC/HKIAC arbitration recommended for Vietnam–China deals).
FAQ
Q: Must a contract licensing the Chinese brand’s trademark be registered in Vietnam?
A: No — under IP Law Article 148.3 after Law 131/2025 (effective 1 April 2026), a trademark licence is effective without registration. Registration is still recommended to protect the brand against third parties.
Q: May the processor use the brand’s moulds and designs for its own goods?
A: No — unless the contract allows it. The IP clause must expressly bar off-scope use of marks and designs and bar “same-mould, different-label” production.
Q: What did Decree 292/2026 change versus Decree 69/2018?
A: Notably, clear rules on processing components/semi-finished goods, surplus-goods handling, and material-norm appendices — old templates citing Decree 69/2018 should be updated.
Legal sources
- Commercial Law 2005, Articles 178–196 (processing in commerce), Article 181, Article 301 — thuvienphapluat.vn
- Decree 292/2026/ND-CP (effective 5 September 2026, replacing Decree 69/2018/ND-CP) — thuvienphapluat.vn
- Intellectual Property Law, Article 148.3 (after Law 131/2025/QH15, effective 1 April 2026) — thuvienphapluat.vn
This article provides general legal information and is not legal advice for any specific case. Content has been reviewed by the AI Legal Council before publication, not by a human lawyer.
Contact FLAT Law Firm
If your company manufactures for a Chinese brand (or places processing orders in Vietnam) and needs a processing contract drafted or reviewed with brand, trademark, and design protection clauses, contact our lawyers at contact us.
