Distribution services

Legal basis

• WTO, FTAs, VKFTA
• Decree 23/2007of the Government dated 12 February 2007 detailing the commercial law regarding goods purchase and sale activities or goods purchase and sale related activities of foreign invested enterprises in Vietnam
• Decree 35/2006 of the Government dated 31 March 2006 detailing implementation of commercial law 2005 regarding franchising(“Decree 35/2006”)

Investment conditions

1. WTO, AFAS, FTAs, VKFTA:

Foreign-invested business organizations’ scope of application

• Commission agents’ services (CPC 621, 61111, 6113, 6121);
• Wholesale trade services (CPC 622, 61111, 6113, 6121);
• Retailing services (CPC 631 + 632, 61112, 6113, 6121) (including multilevel sale) ;
• Franchising services (CPC 8929).

Foreign-invested business organizations are not allowed to distribute: Cigarettes and cigars, books, newspapers and magazines, video records on whatever medium, precious metals and stones, pharmaceutical products and drugs, explosives, processed oil and crude oil, rice, cane and beet sugar.

Conditions to establish retail outlets: The establishment of retail outlets of foreign-invested business organizations (beyond the first one) shall be allowed on the basis of an Economic Needs Test (ENT)

2. The Law of Vietnam:

Retail outlet establishment

• A foreign- invested business organization is allowed to establish first retail outlet only if it is licensed distribution right. The establishment of the first retail outlet is carried out without having to obtain License on retail outlet establishment.
• Retail outlet establishment, including first retail outlet establishment, has to comply with administrative regulations and related plans of provinces, central cities in which the retail outlet is planned to locate.
• The establishment of a retail outlet (beyond the first one) shall be considered on the basis of an Economic Needs Test (ENT) of each area where the retail outlet is located under the standards as follows: quantity of retail outlet, stability of market, residential density and scale of district-level areas where the retail outlet is expected to locate This regulation does not apply in cases an investor sets up a retail outlet with the area of less than 500m2  and located in areas planned for goods trading activities by central- affiliated cities and provinces and already finishes construction of infrastructure, except the case of planning change in which this conditions not included.

Franchising:

• The business system intended for franchise has been in operation for at least one year.
• Where a Vietnamese trader is the primary franchisee of a foreign franchisor, such Vietnamese trader must conduct business by mode of franchising for at least one year in Vietnam before sub-franchising.