Summary: Foreign manufacturers entering Vietnam face a genuine choice between building a new facility from scratch and acquiring an existing manufacturing business. Acquisition is often framed as the faster route — but speed and liability exposure move in opposite directions, and the two paths carry very different risk profiles depending on whether the transaction is structured as a share deal or an asset deal. This article sets out the trade-offs a CEO or board should weigh before choosing.
By ECOVIS Vietnam Law | Last reviewed: 17 July 2026
“Boards often ask which route is faster. The better question is which route matches the risk the company is actually prepared to inherit — a share acquisition can close in months but brings the target’s full history with it; a greenfield project starts clean but on its own timeline. Neither is inherently safer; they are different trades.” — Attorney Vu Manh Quynh, Founder & Managing Partner, ECOVIS Vietnam Law
Why This Matters for Foreign Investors / Foreign Companies
A greenfield project gives the investor a clean legal and operational slate — the company controls its own licensing, site selection, environmental compliance and labor structure from day one, at the cost of a longer runway to production. An acquisition can shorten that runway by taking over an already-operating facility with existing licences, workforce and customer relationships — but it also takes over that facility’s existing legal position, including liabilities the investor may not fully see until after signing.
The choice is not simply “faster vs. slower.” It is a decision about which risks the investor is prepared to underwrite: construction and licensing execution risk on the greenfield side, versus inherited compliance, environmental, labor and contractual risk on the acquisition side. Getting this trade-off wrong at the outset — choosing acquisition purely for speed without pricing in the diligence and remediation cost, or choosing greenfield without accounting for site and licensing timeline risk — is a strategic decision, not a detail to leave to deal counsel alone.
Key Legal and Compliance Issues
- Share deal vs. asset deal changes what is inherited. In a share acquisition, the target company itself does not change — as a practical rule, it keeps its own legal history, so tax, labor, environmental, contractual and litigation exposure stays with that entity. The buyer inherits this as economic exposure through ownership, not because liabilities are novated to the buyer personally; a sale-purchase agreement’s indemnities allocate risk between buyer and seller but do not by themselves erase statutory liabilities owed to the State, employees, or third parties. In an asset acquisition, the buyer’s inherited-liability footprint is usually narrower — but not liability-free: statutory obligations attached to specific assets, land, employees, or customs/tax treatment of imported equipment can still follow the transaction even where the buyer only selected certain assets. Which structure suits a given deal depends on the target’s risk profile and the investor’s risk tolerance — this is a structuring decision, not a formality.
- Licence and permit transferability varies by licence type. There is no single rule that applies to every licence. Enterprise registration changes (legal representative, ownership, members/shareholders) generally require registration or notification, commonly within a defined short window after the change. Investment registration certificates are typically only amended where the project content or the investor named on the certificate changes, or where the deal itself requires a foreign-investor approval procedure. Environmental licences, fire-safety approvals and sector-specific permits each have their own trigger, tied to what the specific permit records (named entity, site, capacity, activity) — this should be mapped licence-by-licence, not assumed to follow one common rule.
- Land use rights and site legal status. In a share deal, if land use rights are held in the target company’s own name, those rights generally do not need to be separately transferred merely because ownership of the company changes — though change-of-control conditions in the underlying land lease or industrial park contract, and any foreign-investor approval requirement, should still be checked. In an asset deal, transferring land use rights (or an industrial park sub-lease) is a distinct transaction with its own conditions and registration requirements.
- Environmental and construction compliance history. A target facility’s environmental approvals, construction completion acceptance, and fire-safety certification should be reviewed for gaps in the same way as for a ready-built factory lease. In a share deal, the target entity generally remains the party responsible for historical non-conformities. In an asset deal, the buyer does not automatically inherit the seller’s historical administrative liability, but continuing to use a non-compliant facility can still create forward-looking enforcement risk (orders to stop use, remediate, or cease operating that portion) regardless of who caused the original gap.
- Workforce and labor liabilities. In a share deal, employment relationships generally continue with the company, since the employer entity does not change. In an asset deal, transferring the workforce is not automatic — where a transfer of ownership or use rights over assets affects a significant number of employees, Vietnamese labor law requires the employer to prepare a labor-use plan, and the current and successor employers are responsible for carrying it out; this typically means a documented transfer/employment arrangement for affected employees, not an automatic novation of existing contracts, and severance obligations can arise for employees who do not continue.
- Tax and customs exposure. Historical tax filings, transfer pricing positions, and customs declarations should be reviewed for latent liabilities — this exposure sits with the target entity and continues to run after closing regardless of the change of ownership; a change of shareholder does not reset or pause the tax authority’s ability to assess the target for pre-closing periods within the applicable statutory window.
- Timeline realism. A greenfield project’s timeline risk sits mainly in licensing sequencing and construction execution (see our companion articles on industrial park due diligence and site selection); an acquisition’s timeline risk sits mainly in diligence depth and negotiation of price adjustments for issues found — both can slip, for different reasons.
Practical Risks for Management
- CEOs risk choosing acquisition for speed without pricing in diligence time and remediation cost, eroding the expected timeline advantage.
- Boards risk approving a structure (share vs. asset deal) without a clear picture of which liabilities transfer, creating governance exposure if a legacy issue surfaces post-closing.
- M&A/Corporate Development leads risk under-scoping diligence on environmental, labor and licensing history if the target is treated as a standard corporate acquisition rather than a manufacturing-specific one.
- CFOs risk mispricing the deal if remediation costs for inherited compliance gaps are not quantified before signing.
Practical Action — Greenfield vs. Acquisition Decision Checklist
- Decide early whether a share deal or asset deal better fits the risk profile of the specific target — this should drive diligence scope, not follow from it.
- Commission licence and permit transferability review before signing, not as a post-closing surprise.
- Verify the target’s land use rights basis, term and any change-of-control consent requirements.
- Review environmental, construction and fire-safety compliance history using the same rigor as a ready-built factory review.
- Map workforce transfer mechanics (share deal vs. asset deal) and any unresolved labor liabilities.
- Quantify historical tax and customs exposure, including any open audit risk.
- Compare the realistic timeline for remediating acquisition-side gaps against the realistic timeline for a greenfield project at a verified site.
How Ecovis Vietnam Law Can Support
Ecovis Vietnam Law advises boards and management teams on the greenfield-versus-acquisition decision for Vietnam manufacturing investment — structuring the transaction to match the investor’s risk tolerance, and coordinating legal, tax and accounting due diligence so the decision is made with a full picture of inherited risk.
FAQ
Is acquiring an existing factory always faster than building one?
Not necessarily. An acquisition can shorten the path to production, but the time saved can be offset by diligence, negotiation and remediation of inherited issues — the realistic comparison should include those steps, not just the headline closing timeline.
Does a share acquisition or an asset acquisition carry more risk?
It depends on the target. A share deal keeps the target’s legal history intact within the same entity, so the buyer’s economic exposure is generally broader but licence continuity is often simpler; an asset deal usually narrows inherited-liability exposure but is not liability-free, and requires separate transfer of licences, land rights and employee arrangements. The right structure depends on the specific target’s risk profile.
Do environmental violations at the target facility automatically become the buyer’s responsibility?
In a share deal, the target entity remains the party historically responsible. In an asset deal, the buyer does not automatically inherit the seller’s historical liability, but continued use of a non-compliant facility can still create forward-looking enforcement risk — this should be reviewed against the specific transaction documents and compliance history, not assumed either way.
Can licences be transferred automatically when a company changes ownership?
Not uniformly, and there is no single rule for all licence types — enterprise registration, investment registration, environmental, fire-safety and sector-specific approvals each have their own trigger and process, and should be mapped licence-by-licence before signing.
What happens to existing employees in an acquisition?
In a share deal, employment relationships generally continue since the employer entity does not change. In an asset deal, Vietnamese labor law requires a labor-use plan where the transfer affects a significant number of employees, with a documented arrangement for affected staff rather than automatic transfer of contracts; employees who do not continue may be entitled to severance.
Should the investor’s own management team lead the greenfield-vs-acquisition decision, or should it be delegated to deal counsel?
Both should be involved from the outset — the strategic risk tolerance judgment sits with management and the board, while legal and diligence findings should directly inform that judgment rather than following a structure already decided.
Call to Action
Request a Market-Entry Structure Review. Ecovis Vietnam Law helps foreign investors weigh greenfield and acquisition options for Vietnam manufacturing investment, and structures the chosen route to match the company’s risk tolerance. Contact us before committing to either path at [email protected], or request a complimentary 30-minute consultation.
This article is for general information only and should not be treated as legal, tax or accounting advice. Specific transaction structuring should be reviewed for each deal.