Introduction
Vietnam has firmly established itself as one of the world’s most attractive manufacturing destinations. Political stability, a highly competitive workforce, an expanding industrial base, and an impressive network of free trade agreements have transformed the country into a strategic production hub for multinational companies.
However, establishing manufacturing operations in Vietnam involves considerably more than identifying a factory, signing a manufacturing agreement and shipping products overseas.
After more than twenty-five years advising international investors and manufacturers in Vietnam, I have observed that the most expensive mistakes are rarely engineering failures. More often, they are legal, regulatory, customs and structural issues that were overlooked during the planning stage.
Most of these mistakes are entirely avoidable.
This article highlights twenty of the most common issues encountered by international manufacturers and offers practical guidance on how to avoid them.
Mistake No. 1 – Treating Vietnam as Simply Another Low-Cost Manufacturing Location
Vietnam is not merely a lower-cost alternative to other manufacturing jurisdictions.
It has its own legal system, customs framework, regulatory authorities and business practices. Strategies that succeed elsewhere cannot automatically be transferred to Vietnam without careful legal analysis.
Best Practice: Design a Vietnam-specific strategy rather than copying an existing manufacturing model from another jurisdiction.
Mistake No. 2 – Selecting the Manufacturing Structure Before Obtaining Legal Advice
Many companies finalise commercial arrangements before consulting legal advisers.
Once contracts have been signed and production has commenced, changing the legal structure often becomes difficult and expensive.
Best Practice: Integrate legal planning into the earliest stage of project development.
Mistake No. 3 – Relying Solely on the Supplier’s HS Classification
Incorrect customs classification can affect customs duties, import procedures, licensing requirements, VAT, statistical reporting and rules of origin.
Supplier classifications should always be independently verified.
Best Practice: Conduct an independent HS classification review before importation.
Mistake No. 4 – Assuming Assembly Automatically Creates Vietnamese Origin
One of the most common misconceptions concerns rules of origin.
Simply assembling imported components in Vietnam does not automatically qualify products as Vietnamese origin.
Origin depends upon detailed legal requirements under applicable trade agreements and customs legislation.
Best Practice: Carry out a comprehensive origin analysis before production begins.
Mistake No. 5 – Underestimating the EVFTA
The EU–Vietnam Free Trade Agreement offers substantial commercial advantages.
However, preferential tariff treatment is available only where the applicable legal requirements are fully satisfied.
Best Practice: Design the manufacturing process with EVFTA compliance in mind from the outset.
Mistake No. 6 – Choosing the Wrong Customs Procedure
Different customs procedures produce different legal consequences.
Selecting an unsuitable procedure may increase administrative burdens, create unnecessary costs or complicate future exports.
Best Practice: Evaluate all legally available customs procedures before selecting the most appropriate structure.
Mistake No. 7 – Separating Customs Planning from Corporate Planning
Corporate structure directly influences customs compliance.
Ownership, contractual arrangements, importation, exportation and taxation should all be considered together.
Best Practice: Develop customs and corporate structures simultaneously.
Mistake No. 8 – Failing to Understand the Entire Supply Chain
Legal advice cannot focus solely on one shipment.
The entire supply chain—from supplier to final customer—should be analysed.
Best Practice: Prepare a complete process map before implementation.
Mistake No. 9 – Neglecting Product-Specific Regulatory Requirements
Certain products require approvals beyond customs compliance.
Examples include radio equipment, telecommunications products, medical devices, batteries and products incorporating encryption technology.
Best Practice: Conduct a comprehensive regulatory review alongside customs planning.
Mistake No. 10 – Inadequate Documentation
Documentation frequently determines whether customs authorities accept origin claims and customs declarations.
Poor documentation creates unnecessary audit risks.
Best Practice: Develop documentation systems before production starts.
Mistake No. 11 – Assuming Customs Compliance Ends After Importation
Compliance continues throughout manufacturing, exportation and post-clearance audit periods.
Best Practice: Treat compliance as an ongoing management function.
Mistake No. 12 – Ignoring Contract Manufacturing Risks
Manufacturing agreements frequently allocate legal responsibility differently from commercial expectations.
Best Practice: Ensure manufacturing contracts accurately reflect operational reality.
Mistake No. 13 – Failing to Clarify Ownership Throughout Production
Questions concerning ownership influence customs declarations, taxation, accounting and liability.
Best Practice: Clearly define ownership at every production stage.
Mistake No. 14 – Overlooking Customs Audit Preparation
Many companies prepare for customs inspections only after receiving an audit notice.
By then, reconstructing documentation may be difficult.
Best Practice: Operate as though every shipment may eventually be audited.
Mistake No. 15 – Ignoring Long-Term Scalability
A structure suitable for one pilot shipment may become inefficient for regular production.
Best Practice: Design systems capable of supporting future growth.
Mistake No. 16 – Focusing Only on Vietnam
International manufacturing projects involve multiple legal systems.
European customs authorities, overseas regulators and international trade agreements all influence compliance.
Best Practice: Consider the entire cross-border legal framework.
Mistake No. 17 – Underestimating Internal Compliance
Legal compliance depends upon people as much as documentation.
Employees should understand their responsibilities.
Best Practice: Establish internal compliance procedures and regular training.
Mistake No. 18 – Waiting Until Problems Arise
Correcting legal issues after production has begun is almost always more expensive than preventing them.
Best Practice: Identify legal risks before implementation.
Mistake No. 19 – Treating Customs as an Administrative Function
Customs decisions frequently determine commercial profitability.
They therefore deserve management attention.
Best Practice: Include customs and international trade specialists in strategic planning.
Mistake No. 20 – Viewing Legal Advice as a Cost Rather Than an Investment
The objective of legal advice is not merely to solve disputes.
Its greatest value lies in preventing disputes from arising.
Well-designed legal structures improve operational certainty, facilitate customs compliance and reduce long-term commercial risk.
Best Practice: Consider legal planning as part of the overall investment in manufacturing success.
Final Thoughts
Vietnam offers exceptional opportunities for international manufacturers.
Companies that combine sound commercial planning with robust legal structuring are well positioned to benefit from Vietnam’s growing role in global manufacturing and international trade.
Experience consistently demonstrates that successful manufacturing projects share one common characteristic.
They are designed—not only engineered.
Careful planning of customs procedures, rules of origin, corporate structures, regulatory approvals and documentation before the first shipment leaves the factory is significantly easier than correcting structural weaknesses after production has begun.
The most successful manufacturers recognise that legal certainty and operational excellence are not competing objectives. They are complementary pillars of a resilient, efficient and internationally competitive supply chain.
About the Author
Dr. Oliver Massmann is Partner and General Director of Duane Morris Vietnam LLC. For more than twenty-five years, he has advised multinational corporations, manufacturers, investors and financial institutions on foreign direct investment, international trade, customs, free trade agreements, WTO matters, manufacturing, energy, infrastructure and complex cross-border transactions in Vietnam.
His practice combines legal analysis with practical commercial implementation, assisting clients in developing legally compliant, customs-efficient and commercially sustainable business models for long-term success in Vietnam.