Present in both China and Vietnam — but each country allows different models, with different rights and duties. This article compares side by side three models: rep offices, subsidiaries, joint ventures. Chinese-law details are reference only — check with Chinese counsel before deciding.
1. Rep offices in Vietnam: permitted and prohibited
- Permitted: trade promotion, market research, liaison;
- Prohibited: profit-making business — no sales contracts;
- Prohibited: issuing invoices — no revenue;
- Tax: no corporate income tax (no income) — but PIT for staff;
- Fit: the market exploration phase.
2. Rep offices in China: comparison
- Common: also limited to non-profit activities — liaison, research;
- Different: registration and administration have their own points — ask local counsel;
- Staffing: rules on hiring local staff — via designated organisations;
- Tax: tax duties under Chinese rules — check current regulations;
- Compare: both countries restrict — details from counsel in each.
3. 100% subsidiaries in Vietnam
- Procedure: IRC (Investment Law 143/2025) — then ERC;
- Rights: full business rights — like a Vietnamese enterprise;
- Liability: limited — the parent not jointly liable;
- Tax: CIT and VAT — in full like domestic businesses;
- Fit: real manufacturing and business in Vietnam.
4. 100% subsidiaries in China (WFOE)
- Overview: a common model for foreign investors in China;
- Conditions: the sector must be outside the restricted list — check the negative list;
- Procedure: business registration — details from Chinese counsel;
- Compare: similar in principle to Vietnam — different procedural details;
- Warning: don’t infer Chinese procedures from Vietnamese ones.
5. Joint ventures in Vietnam: pros and risks
- Pro: a local partner — land, relationships, market;
- Pro: shared capital and risk;
- Risk: strategic disagreements — decision deadlocks;
- Risk: valuation disputes when one side wants out;
- Prevention: a tight charter and shareholder agreement.
6. Joint ventures in China: comparison
- Overview: once mandatory in many sectors — now liberalised;
- Pro: similar to Vietnam — the local partner;
- Risk: technology transfer — clauses must be tight;
- Compare: hard to compare mechanically — each country has its own practice;
- Advice: Chinese counsel — for your specific sector.
7. Tax per model in Vietnam
- Rep office: no CIT — PIT for staff;
- Subsidiary: full CIT and VAT — like domestic businesses;
- JV: same as a subsidiary — an independent entity;
- Transfer pricing: dealings with the parent — transfer-pricing documentation;
- Reporting: audited annual financial statements.
8. Reporting duties per model
- Rep office: periodic activity reports — simple;
- Company: investment, tax, labour and statistical reports — comprehensive;
- China: separate reporting duties — ask local counsel;
- Forgotten: missed reports — administrative fines;
- System: build a compliance system — from the start.
9. Converting models in Vietnam
- Rep office to company: terminate the rep office — establish a new company;
- Adding a partner: transfer capital portions — the company becomes a JV;
- Buyout: buy the partner’s stake — becoming 100% owned;
- Procedure: amend the IRC — register changes;
- Tax: compute capital-transfer tax — on sales.
10. Converting models in China
- Overview: conversion possible — procedures under Chinese law;
- Details: ask Chinese counsel — case by case;
- Rule: don’t assume it’s like Vietnam;
- Time: allow time — procedures can be long;
- Plan: factor this in when choosing the initial model.
11. Choosing models by objective
- Exploring: a rep office — in both countries;
- Manufacturing: a 100% subsidiary — if the sector allows;
- Needing a partner: a JV — when locality matters;
- Restricted sectors: mandatory JV — or another structure;
- Long term: consider convertibility — from the start.
12. Two-country model checklist
- Objective per country — clear?
- Sector restrictions — checked in both?
- Tax and reporting per model — compared?
- Partner — yes or no?
- Conversion path — mapped?
- Counsel in both countries — consulted?
13. Maintenance costs per model
- Rep office: the lowest — office rent, a few salaries;
- Subsidiary: high — full accounting, audit, compliance;
- JV: similar to a subsidiary — plus partner-governance costs;
- China: ask in practice — costs vary by city;
- Compare: 3-year total costs — not just year one.
14. Staffing each model
- Rep office: a chief representative plus a few staff — lean;
- Subsidiary: a full apparatus — director, accounting, HR;
- JV: shared positions with the partner — agreed clearly;
- Representative: choose someone trusted — big legal liability;
- Plan: hire before you need them — don’t wait.
15. Closing or converting: procedures
- Closing a rep office: notify — tax finalisation, seal return;
- Dissolving a company: long — liquidation, tax, deregistration;
- Exiting a JV: transferring equity — partner buyback or third party;
- Time: allow 6–12 months — for closure procedures;
- Plan: factor closure costs — when choosing the model.
16. Bank accounts per model
- Rep office: limited accounts — no revenue;
- Company: full accounts — capital and current;
- FX: foreign-exchange rules — per model;
- Parent flows: document parent funding — properly;
- Advice: bank with international experience.
17. Choosing advisers in each country
- Lawyers: local counsel — licensed in that country;
- Accountants: familiar with foreign-invested businesses;
- Coordination: one coordinating firm — across borders;
- Language: Mandarin-speaking teams — where possible;
- References: ask for Chinese-client references.
18. Setup timelines per model
- Rep office: the fastest — weeks;
- Subsidiary: months — IRC, ERC, sub-licences;
- JV: longer — plus partner negotiation;
- China: ask in practice — by city and sector;
- Buffer: double the time — in planning.
19. Work permits under each model
- Rep office: chief representative — work permit rules;
- Company: standard work-permit procedures;
- Numbers: quotas — approved foreign-labour demand;
- China: separate work-permit system — ask local counsel;
- Plan: start early — permits take time.
20. Choosing the first hire
- Profile: bilingual — Mandarin and Vietnamese/English;
- Experience: foreign-invested enterprise background;
- Network: government relations — helpful;
- Trust: trust matters — the first hire sets culture;
- Recruiters: specialist recruiters — for the first roles.
21. Model review: annual health check
- Review: annual model review — still the right one;
- Costs: actual vs budgeted — per model;
- Growth: constraining growth — time to change;
- Compliance: clean record — or fix;
- Decide: keep, convert or close.
22. Digital setup: e-invoicing and e-signatures
- Vietnam: e-invoicing mandatory — from the start;
- China: separate e-invoice system — ask local counsel;
- Signatures: e-signatures — validity per country;
- Systems: choose compliant software — early;
- Training: train staff — on the systems.
23. Final checklist before choosing
- Goals: written goals — per country;
- Numbers: 3-year costed comparison — per model;
- Risks: ranked risks — per model;
- Counsel: both countries’ counsel — consulted;
- Decide: decide — and commit.
24. The 90-day launch plan
- Days 1–30: entity setup — registration, accounts;
- Days 31–60: people — hiring, work permits;
- Days 61–90: operations — first activities;
- Milestones: clear milestones — per phase;
- Review: a 90-day review — against plan.
25. Key takeaway
- Purpose: purpose first — then the model;
- Both: compare both countries — side by side;
- Counsel: local counsel — in each country.
26. After the choice: making it work
- Implement: implement decisively — half-measures fail;
- Review: review after one year — still right;
- Adapt: adapt as you learn — the model serves the business.
Contact us
FLAT Law Firm advises Chinese investors throughout the Vietnam investment cycle — from deal structuring and licensing to operations and compliance. Contact us for advice tailored to your project.
This article has been quality-reviewed by the FLAW AI Legal Council
