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Investing in Vietnam: What Should Chinese Investors Consider?

The investment landscape of China in Vietnam is currently experiencing many positive changes. As of April 2023, investment from China has seen a nearly 70% increase compared to the previous year. Chinese investment is diversifying across various provinces and cities in Vietnam, reaching from the North to the South, and extending from strategically important provinces to major industrial zones. This diversification is enhancing local economic development. Such expansive investment efforts position China as a leading source of foreign investment in Vietnam, even surpassing traditional investors like Korea, Japan, and Singapore. Furthermore, Chinese investment in Vietnam mirrors the broader trend of relocating supply chains from China to other nations like Vietnam to capitalize on lower costs and mitigate trade risks, particularly amidst US-China trade tensions. These positive trends underscore Vietnam’s growing significance in China’s global investment strategy, benefiting both countries by fostering a varied and interconnected business ecosystem that strengthens international supply chains.

KENFOX IP & Law Office provides the following valuable insights to assist Chinese investors in comprehending Vietnam’s market, legal framework, and business culture. This information is designed to maximize opportunities and effectively address any challenges that may emerge throughout the investment and business activities in Vietnam.

1. Bilateral agreement between Vietnam and China

More than 50 bilateral agreements have been signed between Vietnam and China. Below are some typical ones:

1991Vietnam-China Trade Agreement
1992Vietnam-China Bilateral Investment Agreement 
1992Economic Cooperation Agreement Between Vietnam and China
1992Agreement Between China Vietnam concerning the Encouragement and Reciprocal Protection of Investments
1993Payment Agreement on Cooperation Between the State Bank of Vietnam and the People’s Bank of China
1994Agreement on Transit of Goods
1994Agreement on Quality Assurance of Imported and Exported Goods and Mutual Recognition
1994Agreement on the Establishment of the Economic and Trade Cooperation Committee Between Vietnam and China
1995Agreement on Avoidance of Double Taxation
1996Agreement on Avoidance of Double Taxation and Prevention of Tax Evasion for Taxes on Income
1998Vietnam – China Agreement on Purchase and Sale of Goods in Border Areas
2007Agreement on plant protection and quarantine between Vietnam and China
2016Vietnam – China Border Trade Agreement
2017-2021Five-year development plan for Vietnam-China economic and trade cooperation for the period 2017-2021 (the two sides identified 7 key areas of cooperation, including: (i) Agriculture and Fisheries; (ii) Transportation; (iii) Energy; (iv) Minerals; (v) Manufacturing and Supporting industries; (vi) Services; and (vii) Cooperation on “Two corridors, one belt economy”)

2. Multilateral agreements including Vietnam and China

1996The Asia-Europe Meeting (ASEM)
2002Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China
2020Regional Comprehensive Economic Partnership (RCEP)

3. China’s substantial investment in Vietnam: Why?

[1] US-China trade tensions: To avoid the impact of US tariff measures (25%) on Chinese goods, many Chinese businesses have chosen to move production to other countries, including Vietnam, to continue exporting to the US without having to pay high taxes.

[2] Looking for new sources of supply: To reduce risks in the supply chain, many foreign investors, including Chinese businesses, are looking for new sources of supply outside of China. Vietnam, with its favorable geographical location, large raw material supply and proximity to China, has become an attractive choice.

[3] Stable political, investment environment, potential market: Vietnam is highly appreciated for its political stability and increasingly improved investment and business environment, attracting foreign investment, including from China. Vietnam has a large population and rapid economic growth

[4] Bilateral cooperation: Economic cooperation agreements between the two countries have created favorable conditions for investment and business cooperation. Vietnam and China are jointly developing cooperative projects in many fields.

[5] Benefits from new generation Free Trade Agreements: Foreign investors are increasing investment, looking for opportunities to set up production facilities to make exported goods at cheap costs (including low labor costs, low tax rates or 0%, reasonable transportation costs)

Vietnam has signed many free trade agreements (FTAs), including EVFTA, allowing goods produced in Vietnam to enter Europe with low or zero tax rates, creating favorable conditions for Chinese investors who want to export to Europe.

The Vietnamese government has promoted the investment environment by improving regulations, supporting infrastructure and creating favorable conditions for foreign businesses.

[6] Benefits from shifting supply chains: Moving manufacturing plants from China to Vietnam helps Chinese businesses reduce transportation costs, connect stable supply chains and take advantage of benefits from trade agreements that Vietnam has signed.

[7] Low labor costs: Vietnam has lower labor costs than China, making manufacturing and doing business here attractive for Chinese businesses.

4. Overview of China’s investment situation in Vietnam


  • Number of projects: 4,161 projects
  • Total investment capital: More than 27 billion USD
  • Investment ranking: Ranked 6th out of 143 countries and territories investing in Vietnam

Achievements in 2023:

  • Number of new projects: 632 projects in the first 11 months of 2023
  • Total registered capital: More than 3 billion USD
  • Position: Leading in the number of new projects; 2nd highest in total registered capital

5. Location of investment

Number of provinces and cities invested in: 42

Distribution: Throughout the country from North to South

Top investment destinations

  • Hanoi:
  • Bac Ninh
  • Bac Giang
  • Quang Ninh
  • Thai Nguyen
  • Ho Chi Minh City
  • Dong Nai

6. Typical Chinese investment projects in Vietnam

[1]   Wingtech Group, China’s largest smartphone assembler, commits to continue surveying and selecting investment in Phu Tho province

[2]   Goertek Group has just invested in a new project with an investment capital of USD 280 million and expanded an operating project in Bac Ninh province.

[3]   BYD Group, China’s largest electric vehicle company, has also invested in an auto parts project in Phu Tho province, with a total investment of USD 269 million

[4]   Jinko Solar Holding: established Jinko Solar Vietnam Industry Co., Ltd. project (with a total investment of USD 1.5 billion) of photovoltaic cell technology complex in Quang Ninh province.

[5]   Deli Group (China), a stationery manufacturer, has a total registered investment of USD 270 million located in Dai An industrial park, Hai Duong

[6]   BoWay Group (China), investing in a factory to produce solar photovoltaic cells (Total investment capital of about USD 120 million)

[7]   China Shandong Innovation Metal Technology Group will build an aluminum alloy factory with a total capital of 165 million USD in VSIP Nghe An industrial park;

[8]   Runergy built a $293 million semiconductor materials factory in Nghe An.

[9]   Trina Solar – a large corporation in the field of solar panels in China, is the largest investor in Yen Binh industrial park, Thai Nguyen province with two factories operating stably.

[10]   Shandong HaoHua Tire Co., Ltd has invested USD 500 million in the field of rubber and plastic products with a 423,560 m2 project in Binh Phuoc province;

[11]   Hainan Longi Green Energy invests USD 140 million in electrical equipment in Bac Giang province;

[11]   Thien Thi Industrial Co., Ltd invested USD 28 million in the field of wood and wood products in Bac Giang province;

[13]   Xiamen Sunrise Group invests USD 55 million in the metal sector in Quang Ninh province;

[14]   Nice Elite International Ltd. Investing USD 42 million in the field of leather and leather products in Thanh Hoa province;

[15]   Taizhou Huali New Materials invests USD 40 million in the field of rubber and plastic products in Thai Nguyen province;

[16]   Lixvisions Innovation Technology invested USD 29 million in computers, electrical equipment and optical equipment in Nghe An province;

[17]   Jiangsu Evertie Lighting Co., Ltd invested USD 27 million in electrical equipment in Dong Nai province;

[18]   KingKong Science & Technical Co. Investing USD 25 million in electrical equipment in Hai Phong province…

[19]   Vinh Tan 1 thermal power project worth USD 1.75 billion in Binh Thuan province contributed by China Southern Power Grid Company Limited, China Electricity International Company Limited and Electricity Corporation (Vinacomin) investment

[20]   SAILUN Group (China): Radian tire manufacturing project in Tay Ninh with additional investment capital of more than USD 600 million is from Sailun Co., Ltd. (Vietnam)

[21]   Chinese electric motorbike company Yadea: Will start construction on a new factory located in Tan Hung industrial park (Bac Giang) in the fourth quarter of this year with a total investment of USD 100 million.

[22]   HKC Overseas Limited Group (China) invested with registered capital of USD 10 million.

[23]   Midea Group has invested in building a robot vacuum cleaner factory in Binh Duong province, Vietnam.

7. China’s major investment sectors

In recent times, Chinese investment in Vietnam has expanded and can be categorized into specific sectors as follows:

Initial field: Restaurants, hotels, consumer goods

Expanding fields:

  • Processing and manufacturing industry
  • Electricity, electronics
  • Tire production
  • Textiles, footwear
  • Coating, printing ink

New investment trends:

  • Large Scale & High Technology:
  • Energy
  • Industrial park infrastructure
  • Social housing
  • Inland waterway port
  • Automobile manufacturing
  • Research & development
  • Building supply chain
  • Encourage investment (priority areas)
  • Innovation
  • Renewable energy
  • Smart urban
  • Electronics, technology
  • Supporting industries
  • High technology
  • Semiconductor materials
  • Products for green transformation
  • Clean energy

8. Form of Chinese investment in Vietnam

Chinese projects mainly invest in the following forms:

[1] 100% Chinese capital

  • Ratio: Accounts for about 67% of total capital
  • Characteristics: The project is fully owned and managed by Chinese investors.

[2] BOT, BT, BTO contracts

  • Ratio: About 18% of total capital
  • Characteristics: This contract often involves large infrastructure projects, with the participation of the government or Vietnamese partners.

[3] Joint venture and capital contribution

  • Ratio: 15% of total capital
  • Characteristics: Chinese investors contribute capital or establish joint ventures with Vietnamese partners.

9. Challenges for Chinese investors

  • Strict compliance with environmental regulations and technology assurance: Strict control mechanism and risk of sanctions if violating the provisions of Vietnamese law.
  • There is no ecosystem in the support chain from design, raw materials, mold making and production: from the initial idea to product launch very quickly, seizing market opportunities, accelerating progress. bringing the product to market. However, Vietnam relies heavily on imported raw materials, so costs are very high compared to investing in China.
  • Labor and management issues: Recruiting and managing high-quality human resources, as well as compliance with labor and working environment regulations, are also challenges for investors.
  • Language and cultural barriers: Language and cultural differences can complicate communication and understanding between Chinese investors and Vietnamese partners, as well as in the processing of disputes. business transactions and human resource management in Vietnam.
  • Understanding the market and legal regulations: Staying informed about the market, laws and regulations in Vietnam, including the latest changes and updates, can be a big challenge. This requires investors to continuously update and adapt.
  • Market and financial risks: Risks of price fluctuations, exchange rates and possible inflation. This requires investors to have careful financial planning and risk management.
  • Protection of intellectual property rights: Although Vietnam has made much progress in the field of protecting intellectual property rights, there are still challenges and risks related to the effective protection of these rights.

10. Recommendation for Chinese businesses in Vietnam

  • Learn and comply with Vietnam’s Investment Law and Enterprise Law: Vietnam has a special legal system on investment and enterprise, including the Investment Law and Enterprise Law. Companies should carefully study regulations related to company establishment, minimum investment capital, and encouraged or conditional investment areas.
  • Learn about international trade agreements: Vietnam is a member of many free trade agreements (FTAs) and international organizations such as the WTO. When establishing companies in Vietnam, Chinese companies should learn about incentives and commitments in FTAs that Vietnam is a member of to take advantage of preferential tariffs and trade regulations.
  • Professional legal advice: Because laws and regulations in Vietnam can change and are complex, it is important to accompany an experienced legal partner in Vietnam. A reputable lawyer or law firm can provide accurate advice and establish optimal legal strategies, thereby helping to avoid unnecessary legal risks.
  • Compliance with tax and import-export regulations: Companies should clearly understand their tax obligations, including corporate income tax, VAT, and other taxes. In addition, compliance with import and export regulations, including commodity controls, rules of origin, and quotas, is important.
  • Pay attention to labor issues: Vietnam has strict labor regulations, including worker rights, working conditions, and labor safety. Ensuring compliance with these regulations not only helps avoid legal risks but also contributes to a positive work environment.
  • Protect Intellectual Property Rights: Ensure protection of intellectual property rights (IP) during business processes in Vietnam. This includes registering copyrights, trademarks, patents, and other IP rights according to Vietnamese and international regulations.

QUAN, Nguyen Vu | Partner, IP Attorney 

NIEM, Hoang Thi | Associate