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Question: We are a foreign company and wish to establish a distribution company in Vietnam. Can we set up a 100% foreign owned company and what are business activities of a distribution company in Vietnam?

Answer:

According to Decree No.23/2007/ND-CP dated 12 February 2007 of the Government providing regulations for implementation of Commercial Law regarding purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam and commitments of Vietnam when joining WTO, as from 1 January 2009, an investor, who is a legal entity/individual of a country or territory participating in an international treaty of which Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods, may apply for setting up a 100% foreign owned company engaging in distribution activities.

A foreign owned company which has been licensed to conduct distribution activities shall be permitted to exercise distribution activities as follows:

-          To conduct wholesaling, retailing, franchising and agency for trading goods manufactured in Vietnam and goods imported into Vietnam, except for goods in the list of goods not permitted to be distributed;

-          With respect to goods in the list of goods permitted to be distributed pursuant to a schedule, the foreign owned company shall be permitted to conduct wholesaling, retailing, franchising and agency for trading of goods in accordance with the schedule as stipulated.

The foreign owned company which has been licensed for wholesaling only shall not be permitted to directly sell goods to end-users.

The foreign owned company which has been licensed to establish a retail sale outlet shall not be permitted to conduct retailing outside the retail sale outlet which has been licensed. The establishment of retail sale outlets in addition to the first retail sale outlet shall be considered on a case by case basis and shall depend on the number of retail sale outlets, market stability, population density in the province/city where the retail sale outlet is to be set up, and consistency of the investment project with the master plan of such province/city.
 

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