In the context of Vietnam's increasingly deeply integrated economy, the retail and distribution sector is becoming an attractive destination for foreign investment (FDI) enterprises. However, to operate effectively and legally in this field, foreign investors need to pay special attention to changes in the current legal framework. The new regulations not only impact business establishment but also directly affect operations, distribution chain expansion, business licensing and market share control. Understanding these regulations is the first step for FDI enterprises to ensure legal compliance and sustainable development in Vietnam.
The current Vietnamese retail market is no longer out of the sights of international "giants". But unlike domestic enterprises, foreign-invested enterprises when participating in this field need to meet many more specialized legal requirements.
One of the first points to note is that operating in the retail and distribution of goods is on the list of conditional business lines for foreign investors. Therefore, in addition to the Investment Registration Certificate and Business Registration Certificate, FDI enterprises must also apply for a Business License if they carry out retail distribution activities, especially for goods that are not on the Exemption List according to WTO commitments.
In addition, opening a second or subsequent retail location must comply with the regulations on "economic needs test" (ENT - Economic Needs Test), one of the prominent regulations that makes many investors have difficulty when expanding retail chains. ENT requires businesses to demonstrate the necessity of new retail locations through an assessment of retail density, geographical distance, impact on the business environment and management capacity.
Although Vietnamese law does not stipulate a minimum capital level for retail and distribution activities, in reality, when working with licensing agencies, investors need to demonstrate financial capacity appropriate to the registered business scale. Besides, the most popular form of investment is still establishing a limited liability company with one member or two or more members with foreign investment capital.
Some foreign businesses choose to contribute capital or buy back capital contributions in domestic retail companies to shorten procedure time and take advantage of the existing network, however, this method also comes with legal risks in terms of tax obligations, transfer and license changes.
When participating in the distribution chain in Vietnam, FDI enterprises need to pay special attention to compliance with product standards, labels, origin, and specialized regulations (eg food, cosmetics, electronic equipment...). Minor violations of labeling or not having a certificate of conformity can lead to administrative sanctions, suspension of circulation or product recall.
In addition, FDI enterprises are obliged to fully register tax codes, declare VAT, corporate income tax, and other taxes/fees related to commercial activities.
FDI enterprises need to pay special attention to compliance with product standards, labels, origin, and specialized regulations [/caption]Deploying investment in the retail sector is not only a matter of capital or business model, but also requires a correct legal strategy and long-term companionship.
The first advice that experts at DEDICA often give to FDI enterprises is to build a clear investment structure, prepare complete and reasonable documents to minimize being asked to supplement or amend many times by state agencies. Choosing the right industry, drafting a charter and clearly dividing benefits among members are key factors for a business to operate stably.
Vietnam's legal system is constantly being updated, especially in sensitive areas such as goods distribution. Therefore, regularly monitoring new circulars, decrees or internal instructions from ministries and branches is extremely necessary. This is the reason why many FDI enterprises choose to outsource legal services to receive in-depth, timely support and reduce compliance pressure.
In the fiercely competitive environment of the retail industry, commercial disputes such as late payment, breach of contract, or unfair competition can occur at any time. DEDICA regularly supports customers who are FDI enterprises in handling these conflicts through negotiation, mediation or litigation at Court/Arbitration, always aiming to maximize the benefits and brand reputation of customers.
Retail is no longer simply selling products, but involves logistics, data security, e-commerce, intellectual property... Each element is a link that can lead to legal consequences if the business does not control it well. Having a legal partner like DEDICA with you for a long time will help businesses build a solid legal foundation and avoid "stumbles" on their development journey in Vietnam.
With extensive experience in supporting foreign investors, DEDICA understands every "nook and cranny" of Vietnamese law on the retail and distribution industry. We not only support investors in applying for licenses but also accompany businesses in all legal issues, from strategic consulting to dispute resolution. If you are an FDI enterprise that is or will be operating in the retail sector, let DEDICA become your reliable legal companion.
Retail is no longer simply selling products but also involves many other factors [/caption]Hotline:(+84) 39 969 0012 (Support via WhatsApp, WeChat and Zalo)
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