From 2025, China has sharply tightened export licensing for rare earths, rare earth magnets and many strategic minerals — and the risk of this policy falls directly on factories in Vietnam depending on Chinese material supply for motors, electronics, batteries and advanced materials. This article analyses China’s export control mechanism at framework level, the lawful alternatives when a supplier licence is delayed or refused, the contract clauses needed to allocate the risk, and the Vietnam-side duties when importing these minerals.
Applying the Rules
What a Vietnam-based manufacturer must anticipate first is uncertainty about the time and outcome of the China-side export licence. Under the control mechanism of China Export Control Law, a Chinese supplier cannot commit to deliver a controlled item like an ordinary commercial good: it must apply for a licence for each shipment or contract with a file on the end-user in Vietnam, and the licensing authority examines also the end-use purpose of the product the material goes into. Where the Vietnamese enterprise final product has a sensitive element (defence, advanced semiconductors, a supply chain for a market in trade tension with China), the risk of licence delay or refusal rises clearly. A 2026 production plan for product lines depending on rare earths and strategic minerals must therefore be built on the assumption that Chinese supply can be interrupted in rounds, instead of the continuity assumption of before 2025 — and the enterprise needs an honest, consistent end-user declaration in every file, because inconsistency is the most avoidable common reason for licence refusal.
When the supplier licence is delayed or refused, the Vietnamese enterprise has four lawful options to activate in time order. One, work again with the supplier to complete the licence file — many delays are because the end-user file is incomplete or unclear, and the Vietnamese enterprise supplies that part of the file so it can proactively fix it. Two, switch to another Chinese supplier with a better quota and licensing history for the same goods group, after verifying they can actually export that group during the tightening period. Three, diversify outside China: rare earths and some strategic minerals have production sources in Australia, the US, India and Brazil; and Vietnam has rare earth reserves among the world largest with mining and processing projects developing — an alternative source is usually more expensive and needs quality verification time, so this is a medium-term option that must start before a crisis occurs. Four, buffer stock and redesign: raise safety stock for controlled materials within capital limits, while reviewing product design to reduce controlled material content where technology allows. Absolutely avoid the “roundabout” option through a third country to conceal the end-user — that is export control evasion, handled on the China side and potentially drawing sanctions from other countries against the real end-user.
A strategic material purchase contract in this period needs a set of export control risk allocation clauses that an ordinary sale contract does not have. Needed: an export licence clause — the seller duty to apply, licence application milestones and a duty to notify immediately upon delay or refusal; a consequences clause — the buyer right to cancel the undelivered portion, to buy replacement goods and to allocate the price difference where the seller cannot deliver for licence reasons, separated from a generic force majeure clause; an end-user clause — the buyer commitment on use purpose and the duty to supply the end-user file, with a limit on the seller using that file beyond the licence purpose; and a control-law change clause — a mechanism to adjust price and delivery schedules where the control list expands to the contract material itself during performance. A Vietnamese enterprise signing a long-term contract without this clause set is keeping for itself the entire risk of a policy variable outside both parties control.
On the Vietnam side, an enterprise importing rare earths and strategic minerals for production in principle needs no separate import licence for these items: the procedure is ordinary import customs declaration with the correct HS code, nature and value of the goods. Sector duties arise by the nature of each specific goods type — for example goods in the chemical group must comply with chemicals law, mineral goods must follow mineral trading rules where the enterprise trades that item commercially, and safety and environment requirements in factory storage and use. The point enterprises often get wrong: needing no Vietnam import licence does not reduce the duty to prove the lawful origin of the goods when checked — invoices, contracts, transport documents and the shipment China-side export licence (if the item is controlled) are the document set the enterprise should fully retain, because this is also the input traceability file for the enterprise own export products when selling to the US or the EU.
Legal Foundations
- China Export Control Law (effective 1 December 2020) and the dual-use goods and technology control list system: a controlled item may be exported only with a licence from China export control authority (the Ministry of Commerce — MOFCOM — and authorised bodies), with examination by end-user and end-use purpose.
- China tightening round from 2025 on rare earths and strategic minerals: groups of rare earth elements, alloys, oxides and rare earth magnet products, together with minerals such as gallium, germanium, antimony and tungsten, were brought into or tightened under export licensing — the practical consequence is longer licence examination times, more detailed end-user files and refusals in some cases.
- The legal position of the Vietnamese enterprise in this mechanism: the export licence is the duty of the exporter in China; the Vietnamese enterprise as buyer and end-user is the examined object in the licence file (end-user declaration, use purpose commitment) and bears the delivery consequences when the licence is delayed or refused.
- Lawful alternatives for the Vietnamese enterprise: diversifying supply to countries producing corresponding rare earths and minerals (Australia, the US, India, and Vietnam domestic sources with rare earth reserves), stockpiling strategic materials within risk management limits, and redesigning products to reduce controlled material content where technically feasible.
- On the Vietnam side when importing: minerals and rare earths imported for production are not generally subject to a special import licence; the enterprise performs ordinary customs procedures, while complying with sector management rules where the goods are in a managed group (chemicals, precursors, safety-requiring materials) and the duty to declare the correct code and nature of the goods to customs.
Immediate Next Steps
- Build the 2026 production plan on the assumption that rare earth and strategic mineral supply from China can be interrupted in licensing rounds — drop the pre-2025 continuity assumption.
- Prepare an honest and consistent end-user file set (use purpose, final product, customers) for the Chinese supplier to use when applying — a weak file is the most common reason for licence delay.
- Activate supply diversification outside China (Australia, the US, India, domestic sources) and buffer stock now — an alternative source needs verification time, not to be started in a crisis.
- Add the export control clause set into strategic material purchase contracts: the seller licence duty, cancellation and replacement purchase rights, control list changes.
Frequently Asked Questions
When China controls exports of rare earths and strategic minerals, what should a Vietnam-based manufacturer dependent on this supply anticipate?
Anticipate uncertainty of the China-side export licence under China Export Control Law and the tightening rounds from 2025 on rare earths, rare earth magnets and minerals such as gallium, germanium, antimony and tungsten: the supplier must apply with an end-user file on the Vietnamese enterprise, examination times lengthen and refusal is possible by end-use purpose. The enterprise should build its production plan on the assumption of supply interruption in rounds, prepare an honest and consistent end-user file, diversify supply and raise safety stock for key controlled materials.
When the Chinese supplier export licence is delayed or refused, what lawful alternatives does the Vietnamese enterprise have?
Four options in activation order: complete the licence file again with the supplier (most licence delays are due to an incomplete end-user file — the part the Vietnamese enterprise can proactively supply); switch to another Chinese supplier with actual export capability for that goods group during the tightening period; diversify supply outside China — Australia, the US, India, Brazil and Vietnam domestic rare earth sources — with the necessary quality verification time; and raise buffer stock and redesign products to reduce controlled material content. Routing through a third country to conceal the end-user is export control evasion and is prohibited.
What clauses does a strategic material purchase contract need to allocate export control risk?
A separate clause set an ordinary contract does not have: the seller duty on applying for the export licence, milestones and immediate notification when the licence is delayed or refused; consequences where delivery fails for licence reasons — the buyer right to cancel the undelivered portion, buy replacement goods and allocate the price difference, separated from a generic force majeure clause; the buyer end-user and use purpose commitment with the duty to supply the file and a limit on using that file; and an adjustment mechanism where control law changes and the list expands to the contract material during performance.
Must an enterprise declare or seek Vietnam-side permission when importing controlled strategic minerals?
In principle no separate Vietnam-side import licence is needed for rare earths and strategic minerals used in production: the enterprise performs ordinary import customs procedures with the correct HS code, nature and value of the goods. Sector duties arise by each goods type nature (chemicals law for goods in the chemical group, mineral trading rules when trading that item commercially, safety and environment in storage and use). The enterprise must still fully retain documents proving the lawful origin of the shipment — including the China-side export licence if the goods are controlled — because this is also the input traceability file for the enterprise own export products.
This article has been quality-reviewed by the FLAW AI Legal Council