Setting up a Chinese Logistics Company in Vietnam: Process and Key Conditions
Vietnam boasts a thriving maritime industry with over 3,000km of coastline and a strategic position in Southeast Asia. The dynamic industrial zones are import-export hubs, propelling the logistics sector forward
Foreign investors, including Chinese investors see the great potential. However, setting up a logistics company in Vietnam requires meeting specific legal conditions, outlined in local laws and international agreements.
This article serves as a crucial resource, compiling vital legal insights to help Chinese investors navigate the process of establishing a logistics business in Vietnam.
What Chinese investors need to do before landing in Vietnam?
When a Chinese company plans to invest abroad, it must comply with various regulatory procedures mandated by Chinese Law. The investor must obtain approval from both the NDRC and the MOFCOM or opt for the registration of the investment project. Once the prospective investor company successfully completes the required procedural steps, the investment project is registered with a foreign exchange bank approved by the state, following the guidelines set by the SAFE. State-owned enterprises and publicly traded companies are subject to additional requirements for compliance.
Find further information about requisite conditions and procedures that Chinese Investors must adhere to when engaging in outbound investments in Vietnam.
Guidelines for Chinese Investors Engaging in Outbound Direct Investments.
What constitutes logistics services in Vietnam?
Vietnam defines logistics services to include:
- Container handling services (except for services provided at airports)
- Warehousing services
- Delivery services
- Freight transport agency services
- Customs brokerage services (including customs clearance services).
- Additional services: bill of lading inspection, cargo brokerage, cargo inspection, sampling and weighing services; goods receipt and acceptance; and preparation of transport documents.
- Wholesaling auxiliary services and retailing auxiliary services including management of goods in storage, and collection, collation and classification of goods and their delivery.
- Transportation services
- Technical inspection and analysis services.
- Other auxiliary services for transport.
Thresholds of Chinese capital (foreign capital)
The level of permissible foreign investment varies by industry.
|
Industry |
Industry codes (CPC) |
Form of investment |
Maximum foreign capital |
|
Maritime transportation services (except domestic transport) |
721 |
Joint Venture Company
Note: The JVC must be operating fleets with Vietnamese flags or contributing capital, buying shares and contributed capital in Vietnamese capital enterprises |
49% |
|
Container handling services (sea freight support) |
7411 |
Joint Venture Company |
50% |
|
Services of inspection of bills of way invoices, goods transport brokerage services, an inspection of goods and services of sampling and weight determination; services of receiving and accepting goods; transportation documents preparation service |
N/A |
Joint Venture Company |
Can be up to 99% |
|
Internal waterways transport services |
722 |
Joint Venture Company |
49% |
|
Rail transport services |
711 |
Joint Venture Company |
49% |
|
Road transport services |
712 |
Joint Venture Company |
51%
One hundred % drivers shall be |
|
Warehousing services |
742 |
100% Foreign-Owned Enterprises OR Joint Venture Company |
100% |
|
Freight agent services |
748 |
100% Foreign-owned Enterprises OR Joint Venture Company |
100% |
|
Customs clearance services |
N/A |
Joint Venture Company |
Can be up to 99% |
Additional specific conditions
Depending on the logistic services, different conditions related to human resources, vehicles, and infrastructure apply.
Foreign company incorporation procedure
In order to set up a foreign-owned company (i.e. 100% foreign-owned company or joint-venture company) (“VN Co”), the investors need to conduct the following steps:
Ø Step 1: Apply for an Investment Registration Certificate (IRC)
Ø Step 2: Apply for an Enterprise Registration Certificate (ERC)
The company is legally established on the date written on the ERC.
Required documents
The investors need to prepare the following documents:
1. The Business License issued by the Chinese authority;
2. The financial reports of the last 2 years;
3. The bank balance confirmation letter confirming the investors have funds equal to or more than the capital registered;
4. The passport of the legal representative of the investor and the VN Co.
5. Office lease agreement and related documents;
6. Application set to be prepared by consulting firm.
Documents originating from abroad must undergo legalization by the Vietnamese embassy or consulate in the investors' home country.
Legal Representation Requirements of the VN Co
The VN Co shall have at least one and may have more Legal Representative(s). One of them must be a resident of Vietnam.
In case the VN Co has only one legal representative, during the time the only Legal Representative does not stay in Vietnam, they are required to grant an Authorization Letter to a person in Vietnam to take over their duties under their instruction and strictly comply with the law. In short: if the only legal representative is not a Vietnam resident, a legally authorized representative in Vietnam is required.
Capital Requirements
The Capital Structure of the VN Co which needs to be registered in the application and eventually mentioned in the IRC, includes the Charter Capital and the Long-term Loan Capital.
Charter Capital is the capital that the Investors shall pay fully to the Capital Account opened at a licensed bank in Vietnam within 90 days as of the date of issuance of the ERC.
The Long-term Loan are those having a duration of more than 1 year and optional. If the Investors have plans to grant a Long-term Loan to the VN Co, it is required to include the Long Term Loan in the company incorporation application. Otherwise, no Long-term Loan is included.
Sub-licenses for specific services
The need for various sublicenses varies based on the specific logistics services being registered.
For example, for customs clearance services, obtaining the IRC and ERC is necessary, along with a Customs Authority-issued Decision on recognition of customs brokerage agents.
Similarly, companies engaged in road transport services require a specific sublicense, known as the license for automobile transport business.
Start your journey in Vietnam
Setting up a foreign logistics company in Vietnam presents unique challenges and opportunities.
At Fidinam, our expertise lies in providing tailored solutions that adhere to local and international regulations, ensuring your business not only complies but also thrives in Vietnam’s vibrant market.
Our team is equipped with the knowledge and experience to address your specific needs. For expert assistance and to discover how we can support the growth of your logistics business in Vietnam, reach out to Fidinam today.
Author
Ms. Phuong Thao Bui
Managing Director, Lawyer
Fidinam (Vietnam) Company Limited
info@fidinam.com.vn or phuong.thao@fidinam.com.vn
Tel.: +84 974 992 062
Landline: +84 28 3827 1938
All information provided is of a general nature and is not intended to be a full analysis of the points discussed. This article is also not intended to constitute, and should not be taken as, legal, tax or financial advice by us. If you are interested in investing in Vietnam or have any further questions, please reach out to us.
