A different perspective on Vietnam’s economy and doing business in Vietnam. Make sure to  subscribe.

how to guides

cheat sheets


How to Open a Factory in Vietnam: Ultimate Guide 2024

This article is sponsored by: your business here (learn more)

Low-cost labour, tax incentives, and a broad drive among manufacturers to diversify their supply chains have seen factories proliferate all over Vietnam.

Opening a factory in Vietnam for foreign firms or individuals, however, is not always easy. Not only are there several technical requirements that need to be met, but there are also a broad number of considerations that need to be made–choosing the right location, the right business structure, and finding the right workers, for example.

Understanding the nuances of opening a factory in Vietnam and the complexities of business establishment procedures in advance of entering the market can therefore be crucial to the success of a new factory in Vietnam.

Manufacturing in Vietnam: Overview

Whereas a broad range of products are manufactured in Vietnam, several key products, in terms of dollar value, account for the lion’s share of goods made in Vietnam.


Electronics manufacturing in Vietnam is mostly concentrated in the north. Samsung, for example, has its biggest factory in Thai Nguyen a few clicks north of Hanoi with complimentary operations in neighbouring Bac Ninh, Bac Giang, and Vinh Phuc.

Samsung has invested billions in its northern Vietnam operations and its enormous size has seen a whole electronics ecosystem spring up around it–northern Vietnam is well positioned geographically to seamlessly integrate into supply chains from both China and Korea. It’s also relatively easy to get manufactured goods to the coast and subsequently shipped to the rest of the world.

Garments and Textiles

Vietnam’s garment manufacturers are mostly made in and around Ho Chi Minh City.

Southern Vietnam is generally considered somewhat more progressive and forward-thinking than the north and as a result, when the economy began to open up, firms dealing in low-cost manufactured goods–clothing and apparel–set up in the better-prepared south.

Furthermore, Ho Chi Minh City is also well positioned to take deliveries of cotton from key producers in Australia and the US and then to turn those imports into clothing and apparel and send them back.

See also: Vietnam Garment Manufacturing 2024: Quick Guide


Vietnam’s footwear manufacturing industry is among the biggest in the world. In fact, it generally comes in third place behind India and China which is a mean feat for a country with a population of just 100 million, a fraction of the billion-plus populations of the two industry leaders. 

In 2023, Vietnam exported US$19.94 billion worth of footwear for brands like Nike, Adidas, Crocs, Vans, and Timberland among a range of others.

See also: Vietnam Footwear Manufacturers: Quick Guide 2024

Establishment procedures for factories in Vietnam

Factories in Vietnam with foreign ownership are generally established as a limited liability company either as a wholly owned foreign enterprise or a joint venture with a Vietnamese partner. This article provides a broad overview of establishment procedures with a more thorough, detailed technical guide available here: How to Form a Company in Vietnam: Technical Guide 2024

Wholly foreign-owned factories in Vietnam

A wholly foreign-owned factory in Vietnam allows a foreign investor complete control over a company’s operations. It is, however, generally more costly and time-consuming.

Specifically, before they can apply to register a business, foreign entrepreneurs who want to set up a wholly foreign-owned company will need to first apply for an Investment Registration Certificate (IRC) which they do not have to do with a local partner.

An IRC is basically required to ensure that foreign firms are not engaging in business in restricted or forbidden business lines. The conditions for approving an IRC are outlined in the Law on Investment which also states that IRCs should be issued in between 5 to 15 days. In reality, however, it is usually around 30 to 45 days.

Joint venture factories in Vietnam

With a local partner foreign business persons do not need to file for an Investment Registration Certificate, but rather the Vietnamese partner establishes the company and the foreign investor buys a share. In this sense, working with a local business partner can considerably reduce setup costs and application processing times. 

Joint ventures, however, can be risky. A mismatch in work ethics and management styles can cause conflict in the workplace, particularly in cross-cultural settings. For example, whereas in Vietnam it is common to financially penalise staff for arriving late or for using their phone during work hours, in Western countries, this would be unacceptable. Understanding these little nuances of cross-cultural communication, in a joint venture environment, may be crucial to a business’s success.

Contract manufacturing

A third option worth considering is not setting up a factory at all. This involved engaging a factory that already exists on a contractual basis.

Most big apparel brands like Nike and Adidas use contract manufacturers whereby almost everything is taken care of by the Vietnam-based factory. Note, however, that the size of these big brands and their buying power gives them a lot of control over their contract manufacturers which they often exercise to ensure quality. Smaller outfits might, however, find that they have a lot less control using contract manufacturers than they would if they built their own local firm.

Visas for foreign factory owners in Vietnam

Foreign business persons who establish a factory in Vietnam are likely to qualify for investor visas. The length and cost of an investor visa will depend on the value of the investment. There are four categories of investor visas. They are:

Vietnam investor visas

Investor visas in Vietnam are known as DT visas (DT stands for đầu tư which translates to investor). There are four types of investor visas which vary in length depending on the value of the investment.

Investor visas in Vietnam 2023

DT1Investments over VND 100 billion (US$4.15 million), or for investment into ‘prioritised’ sectors, professions, or areas of Vietnam.5 years
DT2Investments between VND 50 billion (US$2.07 million) and VND 100 billion (US$4.15 million), or for investment into ‘prioritized’ sectors, professions, or areas of Vietnam.5 years
DT3Investor visa: issued for investors with total investment capital between VND 3 billion (US$125,000) and VND 59 billion (US$2.07 million).3 years
DT4Investor visa: issued for investors with total investment capital less than VND 3 billion (US$125,000).12 months

Source: Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam

Choosing a location for a factory in Vietnam

Choosing the right location for any business can be the difference between success and failure. Firms and individuals looking to establish a factory in Vietnam should consider the best market for their products and services. That said, future supermarket proprietors, wherever they choose to establish themselves, will very likely have to sign on to a commercial lease. 

Tax incentives

Foreign-invested manufacturing enterprises in Vietnam have historically been able to receive a number of corporate income tax incentives. The extent of these incentives largely varies depending on several criteria, however, most manufacturing firms generally qualify for a 10 percent CIT rate for the first 15 years. 

That said, many foreign firms also often qualify for a 50 percent CIT reduction for the first four years which can be extended up to 9 years in some circumstances.

Furthermore, it is not unusual for individual provinces to provide their own tax incentives as well and the national government often affords foreign firms additional tax discounts on an ad-hoc basis.

Top-up Tax

All of that said, in 2023, a top-up tax was approved by Vietnam’s National Assembly in response to the OECD’s Global Minimum Tax initiative. This will see multinationals paying less than 15 percent tax, required to make up the difference in Vietnam. This is only a relatively new development and will likely have a substantial impact on the tax incentives outlined below. That said, the government has said that it intends to use the additional tax revenue to provide foreign firms with other benefits. As of December 2023, it was unclear what those alternative benefits might be.

Industrial real estate prices

Industrial real estate prices in Vietnam vary depending on the region. Typically in and around Ho Chi Minh City is the most expensive and then in and around Hanoi. These two cities have substantially more manufacturing infrastructure than other parts of the country and are large population centres filled with relatively young populations well suited to manufacturing work.

Industrial land rents in Vietnam, per square metre

Q1 2023Q2 2023Q3 2023Q4 2023
Southern Industrial MarketUS$172.8US$187US$189
Northern Industrial MarketUS$122.9US$127US$131US$132

Source: CBRE Insights and Research

Commercial leases in Vietnam

The Law on Real Estate Business 2014 regulates leases broadly and this includes commercial leases. A typical lease agreement in Vietnam will have several key features:

  • The length of the lease: In Vietnam a commercial lease typically runs for about five years;
  • The payment terms: How often rent payments will be made and how. Typically, rent payments are made quarterly, however, they can also sometimes be monthly, every six months, or yearly; and
  • The division of responsibilities: who is responsible for what and when between the landlord and the tenant.

These are just the broad strokes but are also the most pivotal components of the agreement. Other aspects of the agreement can generally be negotiated between the landlord and the tenant without too much direction from the real estate law.

Hiring factory workers in Vietnam

Factory workers are generally paid much higher than the minimum wage in Vietnam on the back of much higher demand for workers in the sector.

Average salary factory workers in Vietnam

Monthly WageChange
Q4 20227,700,000302.61
Q1 20237,900,000310.47200,0007.86
Q2 20237,800,000306.54-100,000-3.93
Q3 20237,900,000310.47100,0003.93
Q4 20238,100,000318.33200,0007.86
Q1 20248,400,000330.12300,00011.79

See also: Average Salary in Vietnam 2024: Quick Guide

Factory manager wages in Vietnam

Factory manager wages in Vietnam can often be substantially higher than those of workers on the factory floor. According to labour recruitment firm Indeed, the average wage of a factory manager in Vietnam is around VND 22,584,113 (US$888.44). Note that Indeed’s data is taken from a relatively small pool, however, job listings for factory managers do tend to give a wage range from VND 16 to 28 million (US$629 to US$1,100).

See also: Average Salary in Vietnam 2024: Quick Guide

Electricity in Vietnam

Vietnam has said it intends to be net zero by 2050. To do this it is looking at wind, solar, and hydro as well as hydrogen and is putting an emphasis on renewable energy production in policy development. That said, its main power sources are currently hydropower and coal.

Notably electricity it relatively cheap in Vietnam. The average world electricity price is about 15.5 US cents per kilowatt-hour, however, electricity in Vietnam runs at about 7.2 US cents per kilowatt-hour. That said, Vietnam has experience some supply issues in recent years, with blackouts impacting a number of businesses in northern Vietnam in 2023.

See also: Electricity in Vietnam: Foreign Investor Cheat Sheet 2024

Intellectual property protection

Protecting intellectual property in Vietnam can be challenging. It is common for local businesses to use brand names and logos of other more well-established businesses. As of 2022, Vietnam remained on the Office of the US Trade Representative’s Special 301 Report which labelled IP enforcement as ‘a serious challenge’ for the burgeoning nation. That said, it is a signatory to most international intellectual property treaties and it has made several key reforms in recent years to strengthen IP protections.

Trademarking a factory’s intellectual property in Vietnam

With respect to establishing a factory, there are a number of items of intellectual property that factory owners may want to consider trademarking. A unique product name, a brand name, or a company logo could all be the subject of a trademark application.

Note that Vietnam is a signatory to the Madrid Agreement and therefore, firms with trademarks approved in other countries that are also party to the agreement will automatically have their trademarks recognised in Vietnam.

Likewise, businesses that register a trademark in Vietnam will automatically have protection in the other countries party to the agreement.

Filing a trademark application in Vietnam

In order to apply for a trademark a firm must first complete an application that includes:

  • A trademark registration declaration,
  • An image of the trademark between 3cm x 3cm and 8cm x 8cm,
  • A list of products and services that are to be registered;
  • A power of attorney, if necessary, and
  • Proof of payment of all necessary fees and charges.

Trademarks in Vietnam are then filed with the Intellectual Property Office of Vietnam (IPVN). It can take 12 to 18 months for a trademark application in Vietnam to be approved.

Fees and taxes for factories in Vietnam

New businesses will need to register with the General Department of Taxation in order to pay their taxes and ensure they are tax-compliant. There are also a number of recurring fees and taxes that new factory owners in Vietnam should be aware of.

Business licence fees

Limited liability companies in Vietnam are required to pay a business licence fee annually. This must be paid by January 30. These fees depend on the registered capital of the firm.

Business licence fees, 2023

Registered CapitalFee (VND)
Less than 10 billion VND (US$415,671)2,000,000 (US$83)
Greater than 10 billion VND (US$415,671)3,000,000 (US$124)

Source: Decree No. 20/VBHN-BTC

Value-Added tax (VAT)

The specifics of the VAT are outlined in Law No. 13/2008/QH12. Broadly, this is a consumption-based tax on goods and services in Vietnam. It is generally charged at the point of sale for retail businesses. There are some exceptional circumstances in which VAT declarations and payments can be made quarterly, however, payments are usually made to the General Department of Taxation each month. VAT is generally charged at 10 percent of the sale price, though for select specialty items, it is only 5 percent, and some items are also exempt.

Personal Income Tax (PIT)

PIT is levied on a worker’s wages in Vietnam. The amount to be collected is on a sliding scale, the more a worker earns the more PIT they pay. Employers are required to collect PIT on an employee’s wages and pay said tax to the General Department of Taxation each month. If approved by the authorities an enterprise may be able to make tax payments quarterly instead. The PIT is governed by Law No. 04/2007/QH12.

Corporate Income Tax (CIT)

CIT is the tax a company pays. The standard CIT payment is 20 percent of assessable income, however, on large investments foreign firms have been known to receive tax breaks. This tax is paid yearly though firms can make payments quarterly. The CIT is governed by Law No. 14/2008/QH12

Getting help opening a factory in Vietnam

There is a broad range of tax agents, lawyers, market research firms, human resource professionals, and all-in-one consultancies in Vietnam that can assist entrepreneurs in opening a factory in Vietnam→Let us connect you with a market entry expert.

For up-to-date information on what is happening in Vietnam’s manufacturing industry at any given time, factory owners should make sure to subscribe to the-shiv.

Latest updates

  • May 16 2024: added section on electricity prices

get connected with an expert
contribute a guest post
send a letter to the editor
submit a press release

latest news

Hanoi university signs agreement with Australian mining firms

With reserves estimated to be the second biggest in the world after China, and rare earth minerals becoming increasingly necessary in a slew of electronics, miners from all over have been actively courting partnerships with Vietnamese mining firms. Needless to say, partnerships with local universities is one way for these firms to open doors…

Read More »

State Bank of Vietnam denies change of exchange rate policy

With Forex reserves being spent hand over fist trying to keep the dong from devaluing, there has been speculation that greater intervention may be needed, specifically an interest rate hike. On Thursday Bloomberg reported that Malayan Banking Berhad was expecting an interest rate hike possibly as early as this week…

Read More »

Korean credit card firms struggle to crack Vietnam market

Indeed, demand for credit has plummeted over the last year or two as thrifty Vietnamese have tightened their belts. By the end of March credit growth was at just 1.34 percent. That said, credit cards have not proven to be very popular in Vietnam in general, with consumers tending to spend only…

Read More »

UK Pork approved for export to Vietnam

Of note, back in March it was reported that the a submission had been made by Vietnamese meat producers to the Government of Vietnam requesting additional technical barriers on imported meats. This was necessary, they argued, to level the playing field with other meat producing countries.

Read More »

Vietnam News Roundup: May 17 to May 23

This week’s Vietnam news roundup covers the latest news on Vietnam’s foreign reserves, updates on VinFast’s mounting troubles in the US, conflicting claims over electricity conservation, the USDA trade mission to Vientam, bad debts, open market operations, and more.

Read More »

Unpaid taxes blamed on late payment from Electricity Vietnam

EVN was selling electricity at a loss for most of last year and 2022 and the start of this year too. This saw the state-owned enterprise accumulate losses of over US$1.5 billion. It has never been made clear how these losses have been covered but, in light of these claims, it could very well be that power producers may be footing the bill.

Read More »

advertising enquiry

submit a press release

Note that it will be marked as a press release/sponsored post.

guest post

We publish guest posts of 800 to 1000 words from experts who have something unique to say on topics relevant to our audience. 

get connected with an expert

letters to the editor

We review letters for quality and authority and generally only publish views that add to the discussion from experts in their field.