Moving Supply Chains to Vietnam: Practical Legal and Compliance Considerations for Multinationals

Vietnam has become an increasingly important manufacturing and supply-chain location for multinational companies, including Chinese companies expanding their overseas production footprint. Its extensive trade-agreement network, established manufacturing clusters, proximity to major Asian supply chains, and growing industrial base can make Vietnam an attractive option for supply-chain diversification.

But moving production to Vietnam is not simply a question of relocating equipment or adding a Vietnamese contract manufacturer. Companies need to consider how the new operation will function as a real supply chain—from investment approvals and local sourcing to customs, origin, tax, labor, environmental compliance and downstream-market requirements.

The most successful projects tend to address these issues at the design stage, rather than after production has already begun.

Key Takeaways

• Moving final assembly is not necessarily the same as moving origin. Companies should design Vietnamese operations around genuine manufacturing substance and the applicable origin rules of each destination market.

• The operating model matters as much as the location. Investment structure, customs status, tax incentives, environmental approvals, labor arrangements and local sourcing should be assessed together before a site is selected.

• Vietnam should be treated as a new compliance environment, not simply an extension of an existing Asian supply chain. Local suppliers, data, workforce, customs and upstream inputs require their own diligence and controls.

1. Start With the Business Model, Not the Factory

One of the first questions should be deceptively simple: what exactly will the Vietnam operation do?

There is a significant difference between:

• relocating an entire manufacturing process;

• moving only certain production stages;

• establishing final assembly in Vietnam;

• using an independent Vietnamese contract manufacturer;

• creating an export-processing operation;

• establishing a regional distribution or procurement hub; and

• sourcing more components from Vietnamese suppliers while retaining substantial upstream production elsewhere.

These models can produce very different outcomes for investment licensing, customs treatment, tax, origin and trade remedies.

Vietnam's new Investment Law, effective March 1, 2026, continues to provide the basic framework for domestic and foreign investment.[1] Foreign investors should determine at an early stage whether the proposed business falls within a restricted or conditional sector and what investment and enterprise registrations, sector-specific licenses or other approvals will be required.

For manufacturing projects, site selection should therefore involve more than comparing rent and labor costs. Companies should confirm whether the proposed industrial park or site is suitable for the specific production process, including environmental approvals, power and utility requirements, hazardous-material handling, construction and fire-safety requirements, wastewater treatment, logistics access and the availability of qualified workers.

A location that works well for electronics assembly, for example, may not be suitable for chemical processing, plating, battery materials or another environmentally intensive operation.

2. Do Not Treat “Made in Vietnam” as a Project Objective by Itself

Country of origin is often one of the principal reasons companies reconsider their manufacturing footprint. It is also one of the areas most likely to create problems if addressed too late.

There is no single universal test under which a company can determine that a product has become “Vietnamese.”

Different destination markets apply different origin rules, and preferential origin under a free trade agreement is a separate question from non-preferential origin, marking requirements, trade-remedy rules and anti-circumvention analysis.

Vietnam participates in numerous trade agreements, including RCEP, CPTPP and the EU-Vietnam Free Trade Agreement (“EVFTA”). Each agreement contains its own product-specific origin rules, which may involve regional value content, tariff-shift requirements, specified manufacturing processes, wholly obtained criteria or some combination of those tests.[2]

Companies therefore should conduct origin modeling before finalizing the bill of materials and production flow.

For example, importing most components into Vietnam, performing limited assembly and exporting the finished product does not automatically mean that the product will qualify for Vietnamese preferential origin. Whether it does will depend on the applicable agreement and the product-specific rule.

The same caution applies outside the FTA context.

U.S. trade-remedy enforcement provides a useful illustration. In prior antidumping and countervailing duty circumvention proceedings concerning solar products, the U.S. Department of Commerce examined whether production activities conducted in Vietnam and other Southeast Asian countries constituted sufficiently meaningful processing or instead involved circumvention through relatively limited third-country processing.[3]

The lesson is not that manufacturing in Vietnam is inherently problematic. Rather, the legal consequence depends on what production actually occurs there.

Companies should be able to document manufacturing steps, machinery, labor, production costs, material transformation, value added and the role played by upstream suppliers. Production engineering and customs planning should therefore be coordinated rather than handled as separate workstreams.

3. Customs Structure Can Determine Whether the Economics Work

Manufacturing projects frequently model Vietnam based on headline labor and tax assumptions but give insufficient attention to the customs structure through which raw materials, machinery and finished goods will move.

Vietnam offers customs arrangements that can be attractive for export-oriented manufacturers. But preferential treatment normally comes with operational requirements.

Companies should determine, among other things:

• who will act as importer and exporter of record;

• whether the operation will use an export-processing structure;

• how imported raw materials and equipment will be accounted for;

• whether goods will be sold into the Vietnamese domestic market;

• how scrap, defective goods and production losses will be handled;

• how transfers between related facilities will be documented; and

• what customs consequences arise if materials originally imported for export production are diverted to domestic use.

Depending on the product, imports may also be subject to specialized inspection, product standards, technical regulations or licensing requirements in addition to ordinary customs clearance.[4]

These details can materially affect working capital and operating efficiency. A business model that assumes duty-free importation of inputs, for example, can become considerably less attractive if actual operations do not satisfy the relevant customs conditions.

Companies should therefore test the customs model using actual product flows rather than relying only on the corporate structure shown on an organization chart.

4. A “Vietnamese Supplier” Is Not Necessarily a Vietnamese Supply Chain

A second common assumption is that increasing procurement from suppliers located in Vietnam automatically reduces upstream supply-chain exposure.

That is not always the case.

Many Vietnamese manufacturers themselves rely on imported raw materials, components, machinery or subassemblies. A supplier incorporated in Vietnam may therefore sit within a substantially broader regional supply chain.

Supplier diligence should go beyond confirming the supplier's Vietnamese business registration and factory address. Depending on the risk profile, companies should understand:

• where key raw materials and components originate;

• which processes the supplier actually performs;

• which processes are outsourced;

• who owns or controls significant sub-suppliers;

• whether production capacity is consistent with the supplier's stated output;

• whether the supplier maintains appropriate customs and origin records; and

• whether relevant sanctions, export-control, forced-labor or other downstream-market requirements apply.

This becomes particularly important for products entering the United States.

CBP has repeatedly emphasized that importers are expected to exercise reasonable care over their supply chains and understand where and how merchandise is produced. Forced-labor and UFLPA analysis may require tracing well beyond the immediate supplier.[5]

Moving final manufacturing to Vietnam therefore does not, by itself, eliminate upstream compliance questions associated with materials produced elsewhere.

The practical objective should be traceable diversification, not merely geographic diversification.

5. Tax Incentives Should Be Modeled—Not Simply Advertised

Vietnam continues to provide corporate income tax incentives for qualifying investments based on factors such as sector, activity and location. Under the 2025 Corporate Income Tax Law, the general corporate income tax rate is 20%, while qualifying projects may benefit from preferential rates or periods of exemption and reduction.[6]

For a large multinational group, however, the headline incentive should not be the end of the analysis.

Vietnam has implemented the OECD-based global minimum tax framework for in-scope multinational groups. The regime generally applies where consolidated group revenue reaches the EUR 750 million threshold in at least two of the preceding four fiscal years, subject to the applicable statutory rules and exclusions.[7]

As a result, some groups need to analyze how much economic value a traditional income-tax holiday actually provides after global minimum tax consequences are taken into account.

Transfer pricing is another important consideration. A Vietnamese subsidiary operating as a contract manufacturer, full-fledged manufacturer, procurement company or regional service center may require different pricing and functional analyses.

Companies should therefore determine the intended economic role of the Vietnam entity at the beginning of the project. Customs valuation, transfer pricing, intellectual-property arrangements and intercompany service charges should ideally tell a consistent story.

6. People, Technology and Data Need Their Own Workstreams

Supply-chain relocation inevitably involves people.

Foreign managers, engineers and technical personnel deployed to Vietnam may require work permits or qualify for exemptions under Vietnam's current foreign-worker regime, including Decree No. 219/2025/ND-CP.[8] Project timelines should account for these requirements rather than assuming that key technical personnel can simply begin working immediately after arrival.

Technology transfers deserve similar planning. Companies may need to transfer manufacturing know-how, drawings, software, process technology, machinery or technical assistance into Vietnam. Before doing so, they should consider both Vietnamese requirements and any applicable export-control or technology-transfer restrictions in the jurisdiction from which the technology originates.

Chinese companies in particular should treat the Vietnam project as both an inbound Vietnamese investment and, where applicable, an outbound investment and technology-transfer project under Chinese law. The Vietnamese incorporation process does not replace any home-country approvals or compliance obligations that may separately apply.

Data is another increasingly important element.

Vietnam's Personal Data Protection Law took effect on January 1, 2026.[9] Multinationals building new operations should therefore consider privacy and data-governance requirements when establishing HR systems, supplier-management platforms, employee monitoring, access-control systems and cross-border data flows.

It is generally much easier to design a compliant information architecture when a factory is being established than to retrofit one several years later.

7. Environmental Compliance Can Affect the Project Schedule

Manufacturing companies should also assess environmental requirements early.

Vietnam's environmental framework may require environmental impact assessment or environmental licensing depending on the nature, scale and environmental impact of a project. Recent administrative reforms have also adjusted the allocation of environmental licensing authority, including greater provincial-level responsibility for many projects.[10]

This is particularly relevant for manufacturing processes involving emissions, industrial wastewater, chemicals, hazardous waste, metal treatment, batteries or other environmentally sensitive activities.

An environmental permit should not be treated as a document to obtain shortly before production begins. Environmental requirements may affect the site itself, equipment layout, wastewater infrastructure and construction design.

Environmental diligence on an acquired or leased facility is equally important. A company should understand not only whether the industrial park holds the necessary infrastructure approvals but also which environmental obligations remain the responsibility of the individual tenant.

8. Build the Compliance Architecture Before the First Shipment

A well-designed Vietnam project usually has several workstreams running in parallel.

The legal and investment team determines the appropriate entity and licensing structure. The customs team models imports, exports and origin. Tax specialists review incentives and transfer pricing. Operations map the bill of materials and local supplier base. HR handles workforce and expatriate arrangements. Environmental specialists assess the site and production process. Trade-compliance teams consider the rules applicable to the ultimate destination markets.

These issues are interconnected.

Changing a supplier can affect origin. Changing a production step can affect both origin and environmental permits. Selling goods domestically may change customs treatment. Moving intellectual property or technical functions may affect transfer pricing. Changing the role of the Vietnam entity may affect both tax and customs valuation.

For that reason, companies should avoid treating Vietnam merely as a destination to which an existing factory model can be copied.

The better approach is to ask a broader question:

What would a legally sustainable, commercially viable and traceable Vietnamese supply chain look like for this particular product and these particular destination markets?

That question tends to produce a much more durable supply-chain strategy.

Final Observation

Vietnam can offer significant opportunities for manufacturers seeking a more diversified regional production footprint. But diversification works best where the Vietnamese operation has real operational substance, a credible local compliance structure and sufficient visibility into its upstream supply chain.

For multinational companies—including Chinese companies expanding internationally—the most important distinction may therefore be between relocating production and building a new supply chain.

The former can sometimes be done relatively quickly.

The latter requires more planning—but is usually what produces the long-term value.

Notes

[1] Vietnam National Assembly, Law on Investment No. 143/2025/QH15, adopted December 11, 2025 and effective March 1, 2026. 

[2] Vietnam Ministry of Industry and Trade, Vietnam National Trade Repository, rules-of-origin materials for RCEP, CPTPP, EVFTA and other Vietnamese free trade agreements. The EVFTA, for example, uses product-specific rules that may include limits on non-originating materials, changes in tariff classification and specified processing requirements. 

[3] U.S. Department of Commerce, Final Determination of Circumvention Inquiries of Solar Cells and Modules from China, August 18, 2023. The determinations included company-specific findings concerning production in Vietnam and other Southeast Asian countries. 

[4] U.S. Department of Commerce, International Trade Administration, Vietnam Country Commercial Guide—Customs Regulations, updated April 23, 2026. The guide notes that various imported products remain subject to specialized inspection in addition to customs procedures. 

[5] U.S. Customs and Border Protection, Forced Labor Frequently Asked Questions and related UFLPA guidance. CBP states that importers should exercise reasonable care over their supply chains and understand where and how their products are manufactured or produced. 

[6] Vietnam National Assembly, Law on Corporate Income Tax No. 67/2025/QH15, effective October 1, 2025. The general corporate income tax rate is 20%, subject to statutory preferential rates and incentives for qualifying taxpayers and projects. 

[7] Vietnam National Assembly, Resolution No. 107/2023/QH15; Government Decree No. 236/2025/ND-CP implementing Vietnam's global minimum tax rules. The regime generally applies to constituent entities of multinational groups meeting the EUR 750 million consolidated-revenue threshold in at least two of the four preceding fiscal years, subject to statutory exclusions. 

[8] Government of Vietnam, Decree No. 219/2025/ND-CP on foreign workers working in Vietnam, effective August 7, 2025. 

[9] Vietnam National Assembly, Law on Personal Data Protection No. 91/2025/QH15, effective January 1, 2026. 

[10] Vietnam National Assembly, Law on Environmental Protection No. 72/2020/QH14, as amended; Government Resolution No. 66.19/2026/NQ-CP concerning allocation of environmental licensing authority. 

This article reflects the legal and regulatory landscape as of September 15, 2026 and is intended for general informational purposes only.