Posted 19.01. 2021 by Cekindo
Vietnam provides companies with numerous opportunities in the manufacturing sector because of the mix of a large workforce and low workforce costs. However, organisations that are new to Vietnam’s booming market often overlook the necessity of having an appropriate agreement when doing business in Vietnam.
For an emerging market like Vietnam, the laws are often complex and evolving, and that’s why having a fair contract in place from the get-go can save the company a lot of trouble and hardship in the future. If you are a business owner in need of manufacturing opportunities in Vietnam, don’t leave the contract drafting to the manufacturer who may not have sufficient knowledge of the local law. Get assistance from a specialist instead.
In addition to getting help from a professional, it is crucial that you understand what a processing contract is and how it is different from a goods sales contract. Under the Law of Vietnam, a processing contract is defined as an agreement between the manufacturer/processor who produces the goods. The supplier/investor who requests the production and receives the final products pays a fee for the manufacturing process.
Foreigners or foreign companies utilise a processing contract in Vietnam to import raw materials to Vietnam for goods manufacturing and then export the final products to another country. In this case, the foreign companies shall also seek a suitable local entity to process their goods instead of setting up a Vietnam factory.
Therefore, a processing contract in Vietnam must detail information about the supplies, equipment and machinery, raw materials, and finance required before the production starts. The supplier/investor who requests the manufacturing of goods shall also supply all material following the agreed equipment used, quantity, documents, and methods.
As for a goods sale contract, or property sale contract, it is utilised when investors or buyers want to purchase products from local companies during their regular business activities.
Goods Sale Contract
A processing contract in Vietnam has to be in written form and include the following details:
Cekindo adopts a pro-active and dynamic approach to assist our clients. We encourage our clients to prepare and review their processing contracts in Vietnam before signing anything.
Our experienced legal consultants at Cekindo have a perfect combination of expertise and knowledge to draft and review your processing contracts in Vietnam properly. We also help you with contract modification and enforcement so that you can get the most out of a deal.
We work with our individuals and companies across diverse industries and company sizes, both nationally and internationally.
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