Cross-border marketplace selling and setting up a company in Vietnam are not two price tiers of the same model — they are two different legal structures with fundamentally different compliance costs. The marketplace model keeps the seller outside the border with tax obligations withheld at source and no on-site apparatus; the company model brings the investor inside the system with full market business rights but the entire compliance cost of a Vietnamese enterprise.
What does the compliance cost of the marketplace model comprise?
The marketplace model’s largest cost is channel cost: platform commission and service fees by category, in-platform advertising spend for visibility, and cross-border logistics costs. On tax, a foreign seller selling into Vietnam falls under the current cross-border e-commerce tax management regime: revenue from Vietnamese buyers is subject to the foreign supplier tax mechanism — with withholding at source through the management channels of platforms and tax authorities depending on the sales structure — without generating a domestic accounting and invoicing apparatus.
The hidden compliance cost of the marketplace model lies in rights limits: the seller cannot import as a domestic cargo owner in its own name, cannot sign labour contracts in Vietnam, depends entirely on platform policies and algorithms, and customer data belongs to the platform. For many Chinese sellers testing the market, this is a reasonable exploration phase: fixed costs near zero, low on-site legal risk, and the market itself answers the demand question before the investor commits capital.
What does the compliance cost of the company model comprise?
The company model begins with establishment and capital costs: investment procedures, enterprise registration, charter capital per the business plan, seal, investment capital and bank accounts. Recurring compliance costs include an accounting apparatus and monthly and quarterly tax declarations — value added tax, corporate income tax at the standard 20 percent rate, personal income tax and insurance for personnel — investment reports, statistical reports, annual audit where applicable, and office costs, management personnel and work permits for foreigners.
In return, a Vietnamese company gives the investor rights the marketplace model lacks: importing in its own name as cargo owner, multi-channel distribution beyond platforms, brand building and dealer systems, contracting with domestic partners as a Vietnamese legal person, and control of its own customer data. The decision to open a company should therefore be computed as a long-term market investment decision: it is economic only when revenue and margins in Vietnam are large enough to absorb fixed compliance costs and when the investor genuinely needs business rights only a domestic entity has.
When is a Vietnamese entity mandatory, no longer a choice?
An entity becomes mandatory when the operating model exceeds the scope of cross-border selling. Typical situations: the seller wants to self-operate a fulfilment warehouse, store or office in Vietnam with on-site personnel; wants to import and distribute as a domestic distributor instead of through entrustment; signs and performs service, construction contracts or activities in conditional business lines requiring a licensed domestic subject; or when the scale of on-site activity constitutes a regular business presence that the cross-border model no longer lawfully covers.
Another, less legal but highly decisive practical signal: when platforms or distribution partners require invoices and domestic legal status for large transactions, or when the investor wants to enter wholesale, project and business-to-business channels — channels that almost always require the partner to be a Vietnamese legal person issuing value added tax invoices. At that point the question is no longer whether to open a company, but in what structure: wholly owned subsidiary, joint venture, or acquiring an existing domestic company holding the needed sector licences.
The two-stage path Chinese investors often choose
Common practice moves in stages: stage one sells via cross-border marketplaces to validate demand, pricing and channels — with all cross-border tax duties and labelling and specialised inspection designed correctly from the start; stage two, once revenue proves the market, establishes a Vietnamese subsidiary to take over presence-requiring activities: official importing, self-operated or domestically hired fulfilment in the company’s name, on-site sales and customer care teams.
Mistakes to avoid at both stages: at stage one, treating the marketplace model as a no-compliance zone — foreign supplier tax, Vietnamese labelling and specialised management apply in full to goods sold into Vietnam; at stage two, keeping parallel unincorporated on-site activity after actual presence exists — risking tax arrears collection, sanctions for unregistered investment activity and loss of contract protection. Each stage has its own compliance set, and the stage-transition boundary should be decided by written advice, not operational intuition.
Frequently asked questions
Should a Chinese brand sell via platforms or open a company in Vietnam?
They differ fundamentally in structure. Marketplace selling: costs are mainly variable with revenue — platform commission, in-platform advertising, cross-border logistics — plus the foreign supplier tax duty managed through withholding and declaration mechanisms of the sales channel, with no fixed on-site apparatus cost. Setting up a company: the full fixed costs of a Vietnamese enterprise arise — accounting, value added tax and corporate income tax declarations (standard rate 20 percent), personnel, insurance, office, investment reports — in exchange for rights to import directly, distribute multi-channel and control customer data. The marketplace model is cheaper for market testing; the company model pays off only when revenue scale absorbs the fixed costs.
What are the approximate compliance costs of each model?
There is no single market-wide figure — the cost must be read through the structure of each model. Marketplace selling: costs are mainly variable with revenue, comprising platform commission and service fees by category, in-platform advertising and cross-border logistics, plus the foreign supplier tax duty managed through withholding at source by the sales channel; fixed on-site compliance cost is near zero because there is no domestic accounting or invoicing apparatus. Setting up a company: a one-off establishment cost arises — investment procedures, enterprise registration, charter capital per the business plan — followed by the recurring fixed costs of a Vietnamese enterprise: an accounting apparatus, value added tax and corporate income tax declarations at the standard 20 percent rate, personal income tax and social insurance for personnel, investment and statistical reports, annual audit where applicable, office costs and work permits for foreigners. In short: the marketplace model pays fees in proportion to sales, while the company model pays for a fixed apparatus every month regardless of revenue — which is why the company model pays off only when revenue scale is large enough to absorb those fixed costs.
When is it mandatory to establish a legal entity in Vietnam?
An entity is mandatory when activity exceeds cross-border selling scope: self-operating a warehouse, store or office with personnel in Vietnam; importing and distributing as a domestic subject instead of through entrustment; performing conditional business lines requiring a licensed domestic subject; or a presence scale constituting regular on-site business activity. In addition, wholesale and domestic business-to-business channels almost always require a Vietnamese legal person issuing value added tax invoices — at that point incorporation is a market entry condition, not a cost optimisation choice.
This article has been quality-reviewed by the FLAW AI Legal Council