Setting Up a Company in Vietnam vs China: A Complete Comparison for Investors

Investors looking at both markets — Vietnam and China — usually start with a Vietnam vs China company setup comparison: where do the real differences lie, and which ones truly affect the investment decision? This article compares the two systems in parallel across 9 axes: entity types, documents, capital, sectors, representatives, procedures, beneficial owners, post-incorporation duties and the foreign investor’s position — each grounded in the applicable legislation, so investors do not apply one country’s legal logic to the other.

Table of contents

• 1. Context: why compare
• 2. Overview comparison table
• 3. Detailed analysis of each difference
• 4. Similarities worth noting
• 5. Common investor risks
• 6. Practical recommendations
• 7. Frequently asked questions

1. Context: why compare

Capital flows between Vietnam and China run both ways: Chinese enterprises shifting production to Vietnam, and Vietnamese businesses seeking a commercial presence in China. Both groups need a reliable legal map before deciding where to incorporate, in what form, and with how much capital.

This article serves: (i) Chinese investors preparing an FDI company setup roadmap in Vietnam; (ii) Vietnamese businesses exploring China’s incorporation environment; (iii) lawyers and advisers handling Vietnam–China matters. It compares current legislative principles; specific filings always require checking original texts and local practice.

2. Overview comparison table

3. Detailed analysis of each difference

3.1. Entity types: Vietnam diverse, China unified the WFOE

In Vietnam, investors choose among single-member LLC, multi-member LLC, joint stock company, partnership and private enterprise under the 2020 Enterprise Law. Foreign investors typically pick an LLC (lean) or a JSC (easier fundraising and transfer).

In China, the turning point was the Foreign Investment Law (外商投资法) effective 1 January 2020: the three former FIE laws were replaced by a unified framework. The practical result: a wholly foreign-owned enterprise today is a limited liability company (有限责任公司) under the Company Law — no longer a distinct legal category. Vietnamese investors entering China should stop looking for a separate “WFOE law”; organisation and governance now sit entirely in the Company Law.

3.2. Core documents: Vietnam’s “two certificates”, China’s “one licence”

This is a structural difference. In Vietnam, a foreign investor tied to an investment project passes through two layers: (i) the Investment Registration Certificate (IRC) recording the investment project; (ii) the Enterprise Registration Certificate (ERC) recording the legal entity. Investors should understand the IRC and ERC differences when forming an FDI company from the outset to sequence filings correctly.

In China, an enterprise (including foreign-invested ones) registers directly for a business licence (营业执照) — a single document bearing the 18-digit Unified Social Credit Code (统一社会信用代码), used across tax, banking and customs. Company information is published on the National Enterprise Credit Information Publicity System. Chinese investors entering Vietnam are often surprised by two filing sets at two different authorities; conversely, Vietnamese investors entering China must adapt to all identification duties converging on a single code. Note: “one licence” covers enterprise registration only — it does not include sectoral licences or the foreign investment information reporting obligation (外商投资信息报告), which must be handled separately.

3.3. Charter capital: 90 days vs 5 years — the decisive difference

Neither country imposes a general minimum charter capital for ordinary sectors — but contribution deadlines differ fundamentally:

• Vietnam: members/shareholders must fully contribute committed capital within 90 days of ERC issuance (Art. 47 for multi-member LLCs, Art. 75 for single-member LLCs, Art. 113 for JSCs — 2020 Enterprise Law). Late contribution triggers charter-capital adjustment and corresponding member liability.
• China: under Art. 47 of the revised 2023 Company Law (effective 1 July 2024), LLC shareholders must fully contribute subscribed capital within 5 years of the company’s establishment, per the articles of association.

Practical consequence: Chinese investors used to “register big, contribute over 5 years” who keep that habit in Vietnam will breach the 90-day rule — a common and costly mistake to fix (capital reduction, ERC amendment, knock-on effects on the IRC). Conversely, Vietnamese investors entering China should understand that 5 years does not mean “declare ambitiously”: creditors may demand accelerated contribution when the company cannot pay its debts. When setting charter capital and investment capital of FDI companies, the figure must reflect a real financing plan, not a decorative number.

3.4. Sectoral barriers: two “list” mechanisms, one logic

Vietnam manages access through the conditional business lines list in two layers: the background is Appendix IV of the 2025 Investment Law (198 sectors); the governing layer is the 142-sector list under Government Resolution No. 66.17/2026/NQ-CP — effective 1 July 2026–28 February 2027, with priority application where it differs from related instruments (Article 6(3)). Alongside sits market access conditions under WTO/FTA commitments specific to foreign investors. China manages through the foreign investment negative list (外商投资准入特别管理措施/负面清单) — sectors outside the list receive pre-establishment national treatment.

The logic is similar: both operate on “open unless listed”. The detail differs: China’s negative list classifies “prohibited” and “restricted” (restricted often requiring joint-venture form or ownership caps), while Vietnam splits into two instruments (conditional list + international commitments). Investors must check each destination country’s own mechanism from original sources — no cross-inference.

3.5. Legal representative and company seal

In Vietnam (Arts. 12, 13, 2020 Enterprise Law), a company must have at least one legal representative resident in Vietnam; number and titles are set by the charter — a fairly flexible framework. In China, the 法定代表人 must be a director or manager who handles the company’s affairs — tied to an actual management title, not a nominal appointee.

On seals: Vietnam (Art. 43) lets the enterprise decide on its seal; in China the 公章 carries exceptional practical weight — a sealed document is presumed to express the company’s will, and seals must be carved by public-security-licensed providers. Vietnamese businesses entering China must build a strict seal custody and use procedure from day one; this is an operational risk, not mere paperwork.

3.6. Timelines, costs and digitalisation

Both countries have deeply digitalised registration: Vietnam accepts enterprise registration online via the National Business Registration Portal; China processes through market-regulation systems at each level, with many cities offering “one-window, one-day” service for clean files. Actual processing time depends on locality, sector and file quality — one city’s figure should not be applied to another province.

The substantive difference is total market-entry time for foreign investors: in Vietnam, foreign investors typically complete additional IRC procedures (project appraisal) before or alongside the ERC, lengthening total time versus domestic investors; in China, foreign-invested enterprises outside special sectors register directly for the 营业执照, with remaining foreign-investment procedures largely reduced to an information-reporting regime (外商投资信息报告).

Two guardrails under Article 72 of Decree No. 96/2026/ND-CP apply to the “incorporate first, complete IRC later” mechanism: an economic organisation incorporated beforehand may supplement its business lines only after the IRC is issued, and may deploy the investment project only after the IRC issuance/amendment procedures are completed — “incorporating first” does not mean “operating immediately”.

3.7. Beneficial owners: a compliance axis that cannot be skipped

On the Vietnamese side, the beneficial-owner concept is now codified in Article 17 of Decree No. 168/2025/ND-CP (effective 1 July 2025): an individual directly or indirectly owning 25% or more of charter capital or 25% or more of voting shares, or holding the power to control the enterprise’s material matters. Article 3 of Decree No. 296/2026/ND-CP (effective 23 July 2026) amends Article 17 to add the “ultimate de facto control” test, to aggregate ownership ratios within family groups (per Article 4(22) of the 2020 Enterprise Law), and to treat all general partners of a partnership as beneficial owners. Notably, Article 1(1) of Decree 296/2026 (amending Article 4(1) of Decree 168/2025) prohibits standing in another person’s name to contribute capital or purchase shares/stakes — the practice of using nominees for foreign investors now carries direct legal risk.

On obligations, Vietnamese enterprises must declare beneficial-owner information at enterprise registration (Article 18 of Decree 168/2025) and update it on changes. On the Chinese side, the beneficial-owner information filing regime (受益所有人信息备案) likewise requires enterprises to file information on the individual ultimately controlling the enterprise with the market-regulation authority.

Practical advice: (i) when designing the ownership structure — including via intermediaries in third countries — identify the ultimate individual meeting the 25% threshold or holding de facto control from the outset; (ii) never use nominees to circumvent market access conditions; (iii) keep the ownership-chain evidence ready (structure charts, identification documents), as the registry may ask for clarification at any time.

3.8. Post-incorporation duties: same framework, different detail

After incorporation, companies in both countries must: open bank accounts (a direct investment capital account for FDI in Vietnam), complete initial tax registration, issue invoices (e-invoices in Vietnam; 发票 in China), keep accounting books and file periodic reports. The detail differs: China requires periodic corporate information disclosure on the publicity system; Vietnam requires periodic investment-activity reporting for FDI projects. Businesses should build a separate compliance calendar for each jurisdiction from the first month of operation.

4. Similarities worth noting

• No general capital minimum: both removed the generally applicable minimum charter capital — but “no minimum” does not mean “declare anything”: capital must match project scale and real contribution capacity.
• Tightening substantive capital discipline: both systems now enforce real contribution (Vietnam: 90 days; China: 5 years plus creditors’ acceleration rights) rather than formal checks at registration.
• Same “list” logic for market access: despite different names, both operate on “open unless restricted”.
• The legal representative’s personal liability matters in both countries — not a nominal title in either.

5. Common investor risks

Risk 1 — Bringing the 5-year contribution mindset to Vietnam. Symptom: Chinese investors register large charter capital in Vietnam but fail to contribute within 90 days. Cause: habit from PRC Company Law. Consequence: forced capital reduction, ERC amendment, knock-on effects on IRC commitments. Prevention: set charter capital to what can actually be contributed in 90 days; raise capital later through increases.

Risk 2 — Mixing up the IRC/ERC sequence. Symptom: incorporating (ERC) then discovering the project requires an IRC, or vice versa. Cause: China’s “one licence” logic does not prepare investors for Vietnam’s “two certificates”. Prevention: determine upfront whether the project falls under IRC issuance, per the IRC and ERC differences.

Risk 3 — Cross-inferring sectoral barriers. Symptom: using China’s negative-list logic to assume a sector is open in Vietnam, or vice versa. Cause: same list logic, entirely different content, classification and instruments. Prevention: check each country independently from original texts.

Risk 4 — Underestimating seal governance in China. Symptom: handing the seal to operating staff without controls. Cause: Vietnam “lightened” the seal since the 2020 Enterprise Law, breeding complacency. Consequence: sealed documents may bind the company unintentionally. Prevention: issue a written seal management and use policy at incorporation.

Risk 5 — Missing post-incorporation reporting. Symptom: a healthy business penalised for missing periodic investment reports (Vietnam) or information disclosure (China). Cause: focus on operations, treating reports as secondary. Prevention: build a compliance calendar for each legal entity in month one.

6. Practical recommendations

Before investing:
1. Choose the incorporation country on target markets and supply chains, not on “where procedures are easier” — long-term compliance cost outweighs a few weeks of registration.
2. Set charter capital to what can actually be contributed within the statutory deadline (90 days in Vietnam; 5 years in China), tied to the project’s financing plan.
3. Independently check sectoral barriers in the destination country from original texts (142-sector list under Resolution 66.17/2026/NQ-CP + WTO commitments in Vietnam; 负面清单 in China).

While operating:
4. Maintain a separate compliance calendar per entity: investment reports, tax filings, disclosures — on time, on form, per country.
5. Standardise seal management, legal-representative arrangements and internal charters to the host country’s standards; do not “copy” from the parent.

On disputes or major changes:
6. Every change in capital, ownership or business lines requires change-registration procedures in the host country — nothing “syncs” automatically between two entities. For capital contribution and share acquisition by foreign investors in Vietnam, follow Vietnam’s full M&A sequence.

7. Frequently asked questions

Need counsel fluent in both systems?

Deciding to incorporate in Vietnam or China — or to operate two entities in parallel — should be designed on accurate comparative law, not instinct. See also Chinese enterprises expanding into Vietnam and the A–Z legal roadmap for investing in Vietnam, or contact FLAT’s China Desk — hotline 0988424851.

Language versions

References

• 2020 Enterprise Law (No. 59/2020/QH14); Law amending the Enterprise Law (No. 76/2025/QH15).
• Decree No. 168/2025/ND-CP dated 1 July 2025 of the Government on enterprise registration.
• 2025 Investment Law (No. 143/2025/QH15).
• 中华人民共和国公司法 (revised 29 December 2023, effective 1 July 2024).
• 中华人民共和国外商投资法 (effective 1 January 2020).