Chinese Enterprises Investing in Vietnam’s Industrial Parks: Legal Framework and Typical Risks

Vietnam is receiving a wave of Chinese manufacturers relocating supply chains into industrial parks (IPs) in the north and south. But "following the wave" is not the same as "following the law": quite a few Chinese enterprises have hit legal risks that were entirely preventable with good preparation from the start.

This article presents the Vietnamese-side legal framework, the Chinese-side administration orientation and typical risks — from the perspective of a law firm accompanying many Vietnam–China transactions. For general context, see foreign investment in Vietnam.

Table of contents

• 1. The big picture: why Chinese enterprises choose Vietnamese industrial parks
• 2. The Vietnamese legal framework: six pillars
• 3. The Chinese side: do not forget outbound investment (ODI) procedures
• 4. Land and factory leases: the capital-structure decision
• 5. Investment incentives: available, but not automatic
• 6. Quick mapping: Vietnamese-side vs Chinese-side responsibilities
• 7. Terminology cross-reference Vietnam–China
• 8. Five typical risk groups and prevention
• 9. Frequently asked questions

1. The big picture: why Chinese enterprises choose Vietnamese industrial parks

Three main drivers: (1) supply chains — close to China, convenient two-way transport of materials and components; (2) costs — competitive land rental and labour costs compared with regional manufacturing centres; (3) markets — serving exports (leveraging the FTAs Vietnam has joined) while accessing a 100-million domestic market.

Industrial parks are the natural gateway: ready infrastructure, centralised procedures through the management board, a community of same-industry enterprises. But it is precisely this "convenience" that makes many enterprises complacent — signing leases and shipping machinery before legal obstacles emerge.

The practical consequence for planning is phasing: unlike a purely domestic project, a Chinese enterprise must run two approval tracks in parallel — the home-country ODI track and the host-country investment track. A delay on either side stalls the other, because capital cannot lawfully leave China without completed ODI procedures, and construction cannot begin in Vietnam without the IRC. The sections below follow that logic: what Vietnam requires, what China requires, and where the two tracks meet.

2. The Vietnamese legal framework: six pillars

Pillar 1 — Investment: the Law on Investment No. 143/2025/QH15 (effective 1 March 2026, replacing the Law on Investment 61/2020/QH14). Chinese enterprises implementing projects in Vietnam need: investment policy approval (where approval is required), the Investment Registration Certificate (IRC), then the Enterprise Registration Certificate (ERC). The FDI company setup roadmap in Vietnam should be drawn up from the start to tie into the land lease and factory construction schedule.

Pillar 2 — Land: the Land Law No. 31/2024/QH15. In industrial parks, enterprises receive land use rights by subleasing land from the infrastructure developer (Article 202): the term follows the project's operation term; projects over 50 years may reach 70 years (Article 172). The land rental payment form (lump-sum/annual) determines the "bundle of rights" — see section 4.

Pillar 3 — Construction: where self-building a factory, a construction permit and acceptance under construction law are needed; where leasing a ready-built factory, check the lessor's as-built and acceptance files.

Pillar 4 — Environment: environmental review before FDI project implementation is a mandatory step — environmental impact assessment files or environmental permits under the Law on Environmental Protection 72/2020/QH14, especially for manufacturing with wastewater and emissions.

Pillar 5 — Fire safety: the Law on Fire Prevention, Firefighting and Rescue No. 55/2024/QH15 effective 1 July 2025 — industrial factories are under strict fire safety management and need fire safety acceptance before operation.

Pillar 6 — Labour and tax: work permits for Chinese specialists and managers coming to work; tax compliance for FDI enterprises (CIT, VAT, contractor tax on cross-border contracts).

3. The Chinese side: do not forget outbound investment (ODI) procedures

This is the most common blind spot. China administers domestic enterprises' outbound investment (境外投资 — ODI) through a record-filing (备案) or approval (核准) mechanism under the Administrative Measures for Outbound Investment by Enterprises (企业境外投资管理办法, Order No. 11 of the National Development and Reform Commission — NDRC, issued 26/12/2017, effective 1/3/2018; Article 4 sets out the approval/record-filing procedures):

• The NDRC and the Ministry of Commerce (MOFCOM) are the two main contacts; the applicable procedure depends on capital scale and investment sector (some sensitive sectors face stricter administration).
• Completing ODI procedures is a condition for lawfully remitting investment capital overseas through the Chinese banking system.

What FLAT sees in practice: quite a few enterprises signed land leases and placed factory deposits in Vietnam before discovering that domestic procedures were incomplete, leaving them unable to remit capital on schedule and breaking financial plans. The rule: start ODI procedures in parallel as soon as the investment decision is made, not when the money needs to move. Note: new 2026 rules/drafts relating to Chinese ODI administration are emerging — the effectiveness of the measures should be cross-checked at implementation time.

4. Land and factory leases: the capital-structure decision

Two entry models into industrial parks:

Leasing a ready-built factory: fast, fewer procedures, suitable for the exploratory phase or production not requiring bespoke factories. The main risk lies in the lessor's legal standing and the contract terms — a full review checklist is needed before signing.

Leasing land to self-build: design control, suitable for specialised production and long-term plans. But it demands more capital and requires handling all construction, environmental and fire safety procedures.

For the land-lease model, the decision to pay land rental lump-sum or annually is strategic:

• Lump-sum: the full "bundle of rights" (transfer, mortgage, capital contribution with land use rights) — convenient when borrowing from Vietnamese banks to build factories; and it significantly reduces the risk of future State land rental unit price increases (note: infrastructure fees, industrial park service fees and sublease contractual obligations may still vary).
• Annual: lighter initial cash flow but limited rights; the unit price is adjusted periodically.

Under Clause 3, Article 202 of the 2024 Land Law, a subleasing enterprise is further limited by the infrastructure developer's own payment form on that land: land for which the infrastructure developer pays annually may only be subleased annually. Check the payment form of the exact land parcel being leased — do not assume the whole park is the same.

5. Investment incentives: available, but not automatic

The investment incentive framework for projects in industrial parks is set out in the Law on Investment 143/2025/QH15 and Decree 96/2026/ND-CP (the investment incentive articles), covering: corporate income tax incentives, land rental and land use fee exemptions/reductions under the land and tax laws.

Three practical notes:

1. Incentives attach to specific conditions — business lines, location, capital scale, technology. Not every project in an industrial park enjoys the same incentive level.
2. The incentive application mechanism under Article 24 of Decree 96/2026/ND-CP — drop the notion that "incentives must be recorded in the IRC and cannot be self-applied": (i) for cases under Clauses 1 and 2, the investment policy approval decision, the IRC or the investor approval document may record the form, basis and conditions of incentives; the investor completes incentive procedures at the applying authority; (ii) for cases not under Clauses 2 and 3, the investor self-assesses the investment incentive conditions and completes procedures at the applying authority (Clause 4). Under either mechanism, the enterprise should keep complete files evidencing the conditions for cross-checking during inspections.
3. The Vietnam–China double taxation avoidance agreement (signed in Beijing 17/5/1995, effective 18/10/1996, applicable from 1/1/1997) is a complementary tool at the cross-border cash-flow structuring level (dividends, loan interest, royalties), to be factored in when designing the investment structure rather than handled afterwards.

6. Quick mapping: Vietnamese-side vs Chinese-side responsibilities

A Chinese enterprise's project in a Vietnamese industrial park is governed simultaneously by two legal systems — the table below maps each axis so investors miss no workstream on either side:

The running principle: complete Chinese-side procedures (ODI, foreign exchange) in parallel with Vietnamese-side procedures (IRC, land lease) — phasing one side wrong is the most common cause of stuck capital and broken schedules.

7. Terminology cross-reference Vietnam–China

8. Five typical risk groups and prevention

Risk 1 — Capital stuck over incomplete Chinese-side ODI. Prevention: start NDRC/MOFCOM and foreign exchange procedures as soon as the investment decision is made; do not sign hard payment commitments in Vietnam while the capital cannot yet be remitted with certainty.

Risk 2 — Leasing land/factories without checking the park's legal standing. Prevention: verify the infrastructure developer's capacity, the land's legal status, the land rental payment form of the exact parcel, and the remaining land use term.

Risk 3 — Underestimating environmental and fire safety. Prevention: the new fire safety law (55/2024, effective 1/7/2025) and tightening environmental requirements — build compliance costs and timelines into the project plan from the start, especially for dyeing, plating, chemical and processing industries.

Risk 4 — Labour disputes. Prevention: management culture differences easily lead to conflict; fully comply with Vietnamese labour law on contracts, working hours and insurance — and build internal dialogue channels from the start.

Risk 5 — Tax structuring and transfer pricing not set correctly. Prevention: transactions with the parent/affiliates in China (material purchases, management fees, royalties) must comply with transfer pricing rules and tax compliance for FDI enterprises; prepare arm's-length documentation from the first year of operation.

9. Frequently asked questions

What key licences does a Chinese enterprise need to invest in a Vietnamese industrial park?

The core licence framework: investment policy approval (where required) and the IRC under the Law on Investment 143/2025/QH15 (effective 1/3/2026); the ERC; a land/factory lease contract in the industrial park; a construction permit (where self-building); environmental and fire safety files; work permits for foreign employees.

Can Chinese enterprises get investment incentives in Vietnamese industrial parks?

Possibly, depending on the project. The framework is in the Law on Investment 143/2025/QH15 and Decree 96/2026/ND-CP, including CIT incentives and land rental exemptions/reductions. On procedure: under Article 24 of Decree 96/2026/ND-CP, some incentives are recorded in the decision/IRC, but in other cases the investor self-assesses the conditions and completes procedures at the applying authority — not every incentive is "recorded in the IRC". Conditions attach to business lines, location, capital scale and technology.

How does China administer enterprises investing overseas?

Through record-filing (备案) or approval (核准) with the NDRC and MOFCOM depending on scale and sector, together with foreign exchange procedures. Enterprises should complete domestic procedures before or in parallel with project implementation in Vietnam.

Should a Chinese enterprise leasing land in a Vietnamese industrial park pay once or annually?

Lump-sum gives the full "bundle of rights" (mortgage, transfer) — suitable when borrowing to build factories — and significantly reduces the risk of future State land rental unit price increases (note infrastructure fees, industrial park service fees and contractual obligations may still vary). Annual payment is lighter on cash flow but rights are limited. Under Article 202 of the 2024 Land Law, the sublease form also depends on the infrastructure developer's payment form.

What are the typical legal risks for Chinese enterprises investing in industrial parks in Vietnam?

Five groups: (1) incomplete Chinese-side ODI, capital stuck; (2) leasing land/factories without thoroughly checking the park's legal standing; (3) underestimating environmental and fire safety requirements under the new laws; (4) labour disputes; (5) transaction structuring, transfer pricing and tax compliance not set correctly.

What does the Vietnam–China double taxation avoidance agreement mean for investors?

It avoids the same income being taxed in both countries, with preferential rates for dividends, loan interest and royalties in qualifying cases. Structure cash flows with the DTA in mind from the start.

Contact FLAT — hotline 0988424851 (Vietnamese, English and Chinese support) for full-process legal accompaniment of investment projects from China into Vietnam.

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References

• Law on Investment No. 143/2025/QH15
• Decree No. 96/2026/ND-CP guiding the Law on Investment
• Land Law No. 31/2024/QH15
• Law on Fire Prevention, Firefighting and Rescue No. 55/2024/QH15
• Law on Environmental Protection No. 72/2020/QH14
• Administrative Measures for Outbound Investment by Chinese Enterprises (企业境外投资管理办法, NDRC Order No. 11, effective 1/3/2018)
• Vietnam–China double taxation avoidance agreement (signed 17/5/1995, effective 18/10/1996)