Suitable business models in Vietnam: 100% Foreign-Owned or joint venture?

Vietnam has become an attractive destination for foreign investors thanks to its stable economic growth, young population, and active policies to attract foreign direct investment (FDI). However, when entering the Vietnamese market, one of the first and most important decisions investors must make is choosing the appropriate business model: a 100% foreign-owned company or a joint venture with a Vietnamese partner?

1. 100% Foreign-Owned company – Autonomy and flexibility

Definition:

This is a business model where foreign investors hold 100% of the charter capital. The investor has full control over all business operations, from strategic development and daily operations to profit distribution.

Advantages:

• Complete autonomy: No dependency on local partners for management, operations, or business direction.
• Financial independence: The investor has full authority over the use of capital and profit allocation.
• Easier to transfer international technology and business models into Vietnam.

Limitations:

• Not applicable for certain restricted or conditional sectors for foreign investors (e.g., retail distribution, logistics, education, etc.).
• Investors may face difficulties adapting to Vietnam’s legal environment and business culture.

See also: 59 Conditional Business Sectors for Foreign-Invested Companies in Vietnam

2. Joint venture – Combining local and international strengths

Definition:

This model is a partnership between foreign investors and Vietnamese businesses/organizations/individuals. The ownership ratio depends on the sector and mutual agreements, typically ranging from 49% – 51%, or as regulated by law.

Advantages:

• Leverage local networks and market insights from the Vietnamese partner.
• Access to sectors with foreign ownership restrictions.
• Greater credibility and administrative ease when operating in Vietnam.

Limitations:

• Potential conflicts in management, profit sharing, or development strategy if no clear cooperation agreement is established.
• The foreign investor’s control may be limited if holding a minority stake.

3. Which model should you choose?

Choosing between a 100% foreign-owned company and a joint venture depends on several factors such as:

• Your intended investment sector: Is it subject to foreign ownership limitations?
• Experience and knowledge of the local market: If limited, a joint venture might be advisable.
• Long-term goals: Are you looking to scale quickly or build a strong, stable foundation?

There is no universally “best” model – only the most suitable one for your specific industry and business strategy. Careful assessment before making a decision will help save time, reduce costs, and minimize risks when entering the Vietnamese market.
If you're seeking in-depth advice on the right business model in Vietnam, let Zora Consulting be your trusted partner. With experience supporting hundreds of foreign businesses, we are committed to providing legal, effective, and tailored solutions – helping you start strong in this promising market.