FOREIGN DIRECT INVESTMENT COMPANY (FDI COMPANY) ESTABLISHMENT SERVICES IN VIETNAM (2026): WHAT IS A JOINT VENTURE COMPANY? WHEN SHOULD FOREIGN INVESTORS FORM A JOINT VENTURE WITH A VIETNAMESE PARTNER?
For foreign investors looking to enter the Vietnamese market, establishing a joint venture company with a Vietnamese partner can be an attractive option, particularly in sectors where local market knowledge, business networks, or specific investment conditions are important.
A joint venture allows foreign and Vietnamese investors to contribute capital and work together to conduct business in Vietnam. Depending on the business sector and applicable regulations, the parties may agree on the ownership ratio, management structure, capital contribution, business strategy, and distribution of profits.
However, forming a joint venture is not always the best option for every foreign investor. Investors should carefully assess foreign ownership restrictions, market access conditions, required business licenses, capital requirements, the capabilities of the Vietnamese partner, and the rights and obligations of each party before deciding on the appropriate investment structure.
So, what exactly is a joint venture company? What are its advantages and potential risks? And when should a foreign investor choose to establish a joint venture with a Vietnamese partner instead of a 100% foreign-owned company?
In this article, Dai Quang Minh Company will provide an overview of joint venture companies in Vietnam, the key legal and practical considerations, and the circumstances in which a joint venture structure may be suitable for foreign investors.
Clients seeking assistance with the establishment of an FDI company in an industrial park in Vietnam (2026) may contact Dai Quang Minh Company via Hotline: 0932 191 299; Zalo: 0932 191 299; Email: info@quangminhlawfirm.com; Viber: (+84) 337 926 405; WhatsApp: (+84) 337 926 405; WeChat: (+84) 337 926 405 (ID: pouniverse) for complimentary consultation and comprehensive, efficient, and accurate legal services.
In addition, Dai Quang Minh Company provides a wide range of services, including sub-licenses, business registration, investment, foreign labor, and ongoing legal advisory services for both domestic and foreign enterprises.
Contact:
- Zalo: 0932.191.299
- Gmail: info@quangminhlawfirm.com
- Viber: (+84) 337926405/ (+84) 869672216
- WhatsApp: (+84) 337926405/ (+84) 869672216
- Wechat:(+84) 337926405 (ID: _pouniverse)/(+84) 869672216 (ID:DQM_Verna)
- Telegram: (+84) 337926405/ (+84)869672216
I. What Is a Joint Venture Company?
A joint venture company is a form of economic organization established by two or more parties based on an agreement or contract. The parties contribute capital, participate in management, share profits, and bear risks corresponding to their respective capital contribution ratios. This model commonly involves both domestic and foreign investors.
A joint venture company is an enterprise in which both foreign and Vietnamese investors contribute capital to conduct business together, participate in management, share profits, and bear risks according to their respective capital contribution ratios or another lawful arrangement agreed upon by the parties.
In the context of foreign investment, a joint venture company is generally understood as a type of foreign-invested economic organization or FDI company, in which the entire capital is not owned by foreign investors but includes the participation of one or more Vietnamese investors.
For example:
- A Korean individual contributes 60% of the capital, while a Vietnamese individual contributes 40% to establish a restaurant company.
- A Japanese company contributes 70% of the capital, while a Vietnamese company contributes 30% to establish a manufacturing factory.
- A Singaporean company acquires a 49% equity interest in a Vietnamese company operating in the logistics sector.
- A Chinese investor and a Vietnamese enterprise jointly establish a trading company in Vietnam.
- A foreign company forms a joint venture with a Vietnamese partner to implement a project in education, distribution, technical services, or manufacturing.
The key characteristic of a joint venture company is that both Vietnamese and foreign capital are involved. Therefore, a joint venture company differs from a 100% foreign-owned company in terms of control rights, ownership ratio, management structure, profit distribution, capital contribution obligations, and the level of dependence on the Vietnamese partner.
From an investment law perspective, it is more accurate to refer to a joint venture company as a foreign-invested economic organization where a foreign investor is a member or shareholder. Under the 2025 Law on Investment, a foreign investor is defined as an individual holding foreign nationality or an organization established under foreign law that conducts investment and business activities in Vietnam. A foreign-invested economic organization is an economic organization in which a foreign investor is a member or shareholder.
II. Is “Joint Venture Company” an Official Legal Term?
“Joint venture company” is a commonly used term in investment, commercial, and FDI consulting practice. However, when preparing legal documents in Vietnam, it is generally not sufficient to use the broad term “joint venture company” alone. The investment structure must be determined based on several specific factors, including:
- Type of enterprise: a multi-member limited liability company, joint stock company, or another appropriate form;
- Investor status: foreign investor, Vietnamese investor, or foreign-invested economic organization;
- Form of investment: establishment of an economic organization, capital contribution, purchase of shares or contributed capital, implementation of an investment project, or a Business Cooperation Contract (BCC);
- Ownership ratio;
- Business lines;
- Market access conditions;
- Investment and enterprise registration requirements, as well as any applicable sub-licenses.
Under the 2025 Law on Investment, forms of investment include the establishment of economic organizations, capital contribution or purchase of shares/contributed capital, implementation of investment projects, investment under BCCs, and other forms of investment and types of economic organizations as prescribed by the Government.
Therefore, “joint venture company” should primarily be understood as a practical business term rather than a specific legal form of enterprise. When structuring an investment project, Dai Quang Minh Company generally needs to address more specific legal questions, such as:
1. Is the investor establishing a new company or contributing capital to an existing Vietnamese company?
2. Is the foreign investor an individual or an organization?
3. Is the Vietnamese investor an individual or an enterprise?
4. What is the capital contribution ratio of each party?
5. Does the proposed business sector allow the foreign investor to hold the intended ownership ratio?
6. Is it necessary to obtain an Investment Registration Certificate (IRC) before applying for the Enterprise Registration Certificate (ERC)?
7. Is registration of the capital contribution, share purchase, or purchase of contributed capital required?
8. After establishment, is the company required to open a Direct Investment Capital Account (DICA)?
III. Why choose Dai Quang Minh Company
With years of practical experience in legal consulting, Dai Quang Minh Company is a pioneer in corporate support services, specializing in fast and affordable company formation. Below are the reasons to choose business registration services at Dai Quang Minh Company:
Human Resources: Gather a team of corporate legal experts and project legal experts with a long working history at domestic private economic groups; large foreign-invested enterprises operating in Vietnam.
Consulting Policy: Clients are gifted a completely free legal consulting package when using services at Dai Quang Minh Company.
Professionalism and Experience: Dai Quang Minh Company has a workforce with in-depth knowledge of business formation, ensuring a swift and accurate consulting process.
Time-Saving: Using Dai Quang Minh Company 's services helps you save precious time as we handle the entire process and related procedures.
Legal Insight: Dai Quang Minh Company ensures that all relevant legal regulations are strictly followed in accordance with the law.
Customization: Our consulting services are highly adaptable to your specific needs, allowing you to choose options suitable for your business.
Trusted Partner: Dai Quang Minh Company has built a reputation for providing affordable business setup consulting to many enterprises and individuals nationwide.
Confidentiality Assurance: Dai Quang Minh Company is committed to the absolute protection of your personal and business information.
Detailed Support: Dai Quang Minh Company provides detailed advice and support regarding the process and requirements to help you better understand business formation.
Process Optimization: Our consulting helps optimize the business setup process, minimizing potential risks and difficulties.
Excellent Customer Experience: Dai Quang Minh Company is dedicated to providing the best customer experience through professional advice and enthusiastic support.
Focus on Business Plans: By utilizing our registration services, you can focus on developing your business plans and core activities instead of worrying about legal procedures.
IV. How Is a Joint Venture Company Different from a 100% Foreign-Owned Company?
The key difference lies in ownership and the level of control. A 100% foreign-owned company is wholly owned by a foreign individual or organization, allowing the foreign investor to exercise full control over the company. A joint venture company involves capital contributions from both foreign investors and Vietnamese partners, with the parties sharing management rights, profits, and risks.
This is one of the most important questions for foreign investors before entering the Vietnamese market. Choosing the wrong structure may result in the investor losing a certain level of control, facing disputes with the Vietnamese partner, or, conversely, establishing a 100% foreign-owned company when a Vietnamese partner would have been more appropriate or necessary to satisfy market access requirements.
|
Criteria |
Joint Venture Company |
100% Foreign-Owned Company |
|
Capital structure |
Includes both Vietnamese and foreign capital |
Entirely owned by foreign investors |
|
Control rights |
Depend on the ownership ratio, company charter, and joint venture agreement |
Foreign investor generally has full control |
|
Suitable when |
A Vietnamese partner is needed; the business sector has foreign ownership restrictions; or the investor needs access to local licenses, customers, locations, or business networks |
The business sector permits 100% foreign ownership and the investor wants to operate independently |
|
Risks |
Internal disputes, voting deadlocks, capital transfers, and profit-sharing issues |
The foreign investor bears the costs, operational responsibilities, licensing requirements, and market risks independently |
|
Implementation speed |
May be faster if the Vietnamese partner already has assets, licenses, customers, or local business networks |
May take longer if the investor needs to build everything from the beginning |
|
Documentation |
Requires due diligence and documentation for both the foreign investor and Vietnamese partner |
Primarily focuses on the foreign investor and its supporting documents |
|
Charter / joint venture agreement |
Particularly important for defining management, voting, profit distribution, transfer, and dispute resolution mechanisms |
Important, but there are generally fewer issues arising from conflicts between co-investors |
|
Expansion capability |
May depend on the decision-making mechanism agreed upon by the parties |
Generally provides greater flexibility and autonomy |
|
DICA / capital contribution |
The foreign investor's capital flows must be properly managed and documented |
The foreign investor's capital flows must be properly managed and documented |
|
Sub-licenses |
Depend on the specific business sector |
Depend on the specific business sector |
In practice, the choice between a joint venture company and a 100% foreign-owned company should not be based solely on the desired ownership ratio. Foreign investors should first determine whether the proposed business sector is subject to market access conditions or foreign ownership restrictions, and then assess whether a Vietnamese partner can provide meaningful commercial or operational advantages.
A suitable joint venture structure can allow foreign investors to combine their capital, technology, and management expertise with the Vietnamese partner's local market knowledge, business relationships, facilities, workforce, and understanding of the regulatory environment. Conversely, where 100% foreign ownership is permitted and the investor has sufficient resources and local knowledge, a wholly foreign-owned company may provide greater autonomy and reduce potential conflicts between shareholders or members.
V. When Should Foreign Investors Consider Forming a Joint Venture with a Vietnamese Partner?
Foreign investors should consider a joint venture structure when at least one of the following circumstances applies:
1. The Business Sector Has Foreign Ownership Restrictions
Certain business sectors are subject to market access conditions for foreign investors. These conditions may relate to foreign ownership ratios, forms of investment, scope of business activities, investor capacity, participating Vietnamese partners, or other requirements prescribed by Vietnamese law and applicable international treaties.
Under the 2025 Law on Investment, foreign investors are generally subject to the same market access conditions as domestic investors, except where the relevant business sector is included in the list of sectors subject to restricted market access for foreign investors. Market access conditions may include foreign ownership ratios, forms of investment, scope of activities, investor capacity, participating partners, and other applicable conditions.
Therefore, if a business sector does not permit 100% foreign ownership or requires the participation of a Vietnamese partner, a joint venture may be a necessary investment structure.
Business sectors that should be carefully reviewed include:
- Distribution and retail;
- Logistics;
- Transportation;
- Education;
- Advertising;
-Tourism;
- E-commerce;
- Employment services;
- Healthcare;
- Real estate;
- Land-related services;
- Inspection and certification services;
- Certain specialized services subject to international commitments and Vietnamese regulations.
2. The Vietnamese Partner Already Has Licenses, Customers, or a Local Business Network
A joint venture may be an attractive option if the Vietnamese partner already has:
- Valid and legally operating sub-licenses;
- An established customer base;
- An experienced local workforce;
- Factories, warehouses, or suitable business premises;
- Established supplier relationships;
- Experience operating in the Vietnamese market;
- A recognized local brand;
- Existing contracts;
- Knowledge of local business practices, tax, labor, and administrative procedures.
For example, a foreign investor entering the restaurant, distribution, education, logistics, or manufacturing sector may save considerable time by forming a joint venture with a Vietnamese partner that already has suitable premises, licenses, or an operating system.
However, “already available” does not necessarily mean “legally safe.” The foreign investor should conduct due diligence on the validity of the partner's licenses, assets, outstanding debts, tax obligations, employment matters, contracts, and other existing liabilities.
3. The Investor Wants to Reduce the Risks of Entering the Vietnamese Market
A joint venture allows foreign investors to share certain market risks with a Vietnamese partner. Instead of independently investing all the capital, recruiting employees, finding customers, handling licensing procedures, and managing operations, the investor can combine resources with a local partner.
This structure may be suitable when the investor:
- Is entering Vietnam for the first time;
- Has limited knowledge of the Vietnamese market;
- Does not yet have a local management team;
- Does not have the necessary specialized licenses;
- Wants to test the market before making a larger investment;
- Wants to leverage the Vietnamese partner's operational experience.
However, reducing market risk may increase internal management risk. Therefore, the company charter, joint venture agreement, and internal control mechanisms should be carefully structured from the beginning.
4. The Investor Needs Premises, a Factory, or Other Assets from the Vietnamese Partner
For many manufacturing, warehousing, restaurant, education, healthcare, or retail projects, the availability of a suitable location can be a decisive factor.
If the Vietnamese partner already has lawful rights to use or operate a suitable location, a joint venture may allow the investment project to be implemented more quickly.
However, the parties should carefully verify:
- Lawful land use rights or lease rights;
- Land use purposes;
- Rights to sublease the premises;
- Permitted use of the factory or office;
- Fire prevention and fighting (PCCC) requirements;
- Environmental requirements;
- Construction requirements;
- Planning and zoning;
- Lease term;
- Whether the premises can be used to register the investment project;
- Whether the premises can be used to obtain relevant sub-licenses.
If the location itself is legally unsuitable, forming a joint venture with a Vietnamese partner will not resolve the underlying legal issue. On the contrary, it may make the investment structure and licensing process more complicated.
5. The Investor Needs a Vietnamese Partner to Satisfy Sub-License Requirements
Certain business activities require more than just an IRC and ERC and may also be subject to specialized licenses or sub-licenses.
Where a sub-license requires specific conditions relating to personnel, facilities, experience, professional certificates, capital, programs, warehouses, vehicles, or a qualified person in charge, a Vietnamese partner may play an important role in helping the joint venture satisfy these requirements.
For example:
- Education: facilities, educational programs, teachers, and other operating conditions may be required;
- Logistics: certain services may be subject to requirements concerning vehicles, warehouses, or the scope of services;
- Restaurants: food safety, premises, and PCCC requirements may apply;
- Healthcare: professional certificates, facilities, and operating licenses may be required;
- Travel services: requirements may include a deposit, a qualified person in charge, and a travel business license;
- Distribution and retail: a business license or license for establishing a retail outlet may be required in certain cases.
6. The Investor Wants to Gradually Increase Its Ownership Ratio
Some foreign investors choose to establish a joint venture at the initial stage and subsequently increase their ownership ratio after gaining a better understanding of the market, completing licensing procedures, stabilizing operations, or when applicable laws and commercial conditions permit.
In such cases, the joint venture agreement should clearly regulate:
- The right to purchase additional capital;
- Conditions for capital transfer;
- The transfer price or valuation formula;
- The timing for exercising the purchase right;
- Pre-emptive rights;
- Tag-along and drag-along rights, where appropriate;
- Restrictions on transfers to third parties;
- Required approvals from competent authorities, where applicable.
If these matters are not addressed from the outset, a foreign investor may become dependent on the Vietnamese partner's willingness to cooperate when the investor later wishes to increase its ownership or acquire the partner's interest.
Therefore, choosing a joint venture structure should not be based solely on the desire to have a Vietnamese partner. Foreign investors should first assess market access conditions, the actual contribution of the Vietnamese partner, the project's licensing requirements, and the long-term ownership and exit strategy. A well-structured joint venture can be an effective way to enter and expand in the Vietnamese market, but an inadequately structured joint venture may create significant legal and commercial risks..
Prospective clients seeking assistance with procedures for establishing a foreign-invested company in Vietnam (2026) are kindly invited to contact Dai Quang Minh Company via Hotline: 0932 191 299; Zalo: 0932 191 299; Email: info@quangminhlawfirm.com; Viber: (+84) 337 926 405; WhatsApp: (+84) 337 926 405; WeChat: (+84) 337 926 405 (ID: pouniverse) for complimentary consultation and comprehensive, efficient, and accurate legal services.
In addition, Dai Quang Minh Company provides a wide range of services, including sub-licenses, business registration, investment, foreign labor, and ongoing legal advisory services for both domestic and foreign enterprises.
Contact:
- Zalo: 0932.191.299
- Gmail: info@quangminhlawfirm.com
- Viber: (+84) 337926405/ (+84) 869672216
- WhatsApp: (+84) 337926405/ (+84) 869672216
- Wechat: (+84) 337926405 (ID: _pouniverse)/ (+84) 869672216 (ID: DQM_Verna)
- Telegram: (+84) 337926405/ (+84) 869672216
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