Vietnam’s rules on labelling domestically produced goods as “Made in Vietnam” have long been one of the most uncertain areas of the country’s trade and consumer-protection framework. For manufacturers, brand owners, retailers, and anyone buying or selling a Vietnamese business, the practical consequence is immediate: origin claims need a documented methodology, retained evidence, and a place in every M&A diligence file. This article sets out the generally accepted legal tests for Vietnamese origin of domestically circulated goods, how to calculate and document them, and how deal teams should treat origin as a live regulatory and valuation risk.
Note on current status: Vietnam’s rules on preferential and non-preferential origin for exported and imported goods are well established (for example, the framework implementing the Foreign Trade Management Law and related Ministry of Industry and Trade circulars on non-preferential origin). By contrast, the rules governing when goods made and sold within Vietnam may lawfully bear a “Made in Vietnam” claim have been the subject of a draft circular from the Ministry of Industry and Trade for several years and remain subject to change.
Businesses should confirm the exact instrument, number, effective date, and thresholds in force at the time of any transaction with the Ministry of Industry and Trade or qualified local counsel, rather than relying on any single figure quoted here.
Unlike origin rules tied to free trade agreements, which govern goods crossing borders to claim preferential tariffs, the domestic “Made in Vietnam” question concerns when a product made and sold within Vietnam can lawfully bear a Vietnamese-origin claim. That distinction matters because the audience affected is far broader than exporters. Any trader placing goods on the domestic market, and any business whose brand value rests on a Vietnamese-origin message, operates under a regime that increasingly expects a defensible, documented basis for the claim.
The approach under discussion in Vietnam mirrors the long-standing structure of non-preferential rules of origin: goods are treated as of Vietnamese origin if they are either wholly obtained in Vietnam, or substantially transformed there. Substantial transformation is typically demonstrated through a change in tariff classification at the four-digit Harmonised System level (an “HS4 change”) or by meeting a prescribed local value content threshold. Businesses should confirm the precise value-content percentage currently applicable, as it may differ across product categories and may be revised.
The domestic-origin framework applies to goods produced and circulated within Vietnam, and it reaches traders, state agencies, organisations, and individuals involved in determining or declaring origin. In practice this captures domestic manufacturers, assemblers, importers who finish or process goods in Vietnam, distributors, and retailers who label or market products as Vietnamese. It also reaches the professionals advising them, in-house counsel, compliance officers, and deal teams who must now treat origin as a live regulatory risk rather than a marketing convention.
Several terms carry technical weight. “Wholly obtained” refers to goods entirely produced or obtained in Vietnam without inputs from any other country. A “trader” is any organisation or individual placing goods into domestic circulation. “Local value content” is the percentage of value attributable to Vietnam, measured by one of two prescribed formulas (direct or indirect). An “HS4 change” means a shift in the four-digit Harmonised System tariff classification between the non-originating inputs and the finished good, a recognised proxy for substantial transformation.
The framework offers two paths to Vietnamese origin. The first covers goods that are wholly obtained in Vietnam. The second applies to goods made using inputs from more than one country: these qualify if they either undergo a change in tariff classification at the four-digit HS level or achieve the prescribed local value content. These two tests are generally structured as alternatives, satisfying either one confers origin. This disjunctive structure gives producers flexibility, but it also means a defensible origin claim depends on correctly identifying which test applies and documenting it. Confirm the applicable value-content threshold for your product category before relying on it.
Goods are treated as wholly obtained where they originate entirely in Vietnam. Typical examples include plants grown and harvested in Vietnam, live animals born and raised there, minerals and natural resources extracted from Vietnamese soil, fish and marine products caught by Vietnamese-flagged vessels, and qualifying scrap or waste collected in Vietnam and fit only for raw-material recovery. For these categories, documentation is comparatively straightforward: cultivation or harvest records, extraction permits, vessel registration and catch logs, and collection records. The evidentiary burden is lighter, but it is not absent, a claim of “wholly obtained” must still be substantiated on request.
Where a good is not wholly obtained, the HS4 change test asks whether processing in Vietnam moved the product into a different four-digit tariff heading from its non-originating inputs. To apply it, a producer first classifies each material input under the Harmonised System, then classifies the finished product, and checks whether the first four digits differ. A shift at that level generally signals substantial transformation. Classification should follow the methodology used by the General Department of Vietnam Customs, since consistency with customs tariff practice reduces the risk of a disputed classification.
Where ministries issue product-specific origin rules, those rules generally take precedence over the general test, so producers should confirm whether their goods are subject to a specialised rule before relying on the default HS4 approach.
The value-content test is the route most businesses will scrutinise, because it is where judgement, cost allocation, and documentation converge. The framework typically permits two calculation methods, direct and indirect, in both cases measured against a prescribed threshold. Confirm the current threshold applicable to your product, as it may vary and may be revised. The direct method builds local value up from Vietnamese-originating costs; the indirect method derives it by subtracting non-originating value from the product’s value. Each produces a percentage that is compared against the threshold. For IT and digital goods, allowable Vietnamese-incurred costs can extend to research and development, design, programming, digitisation, automation, and software and technical testing.
Costs attributable to non-originating operations, simple packaging and simple assembly among them, do not contribute toward local value content.
Under the direct method, local value content is the sum of Vietnamese-originating values, including qualifying local materials, direct labour, direct overhead, and allowable local costs such as R&D and design, divided by the value of the finished product, expressed as a percentage. Consider a consumer appliance with a finished value of 100. If local materials contribute 12, Vietnamese direct labour 9, local overhead 6, and qualifying local design and testing 5, the Vietnamese-originating value totals 32, giving a local value content of 32%. Whether that clears the applicable threshold depends on the percentage currently in force for that product category, which should be verified.
The product would qualify as Vietnamese origin via the value-content route only if it meets the applicable threshold and each cost component is evidenced and properly allocated.
The indirect method approaches the same question from the opposite direction: it takes the value of the finished product, subtracts the value of non-originating (imported) materials and inputs, and divides the remainder by the finished value. Using the same appliance with a finished value of 100, suppose imported components and non-originating inputs total 66. Subtracting 66 from 100 leaves 34, giving a local value content of 34%. Note that the direct and indirect methods may yield slightly different percentages for the same product because they capture and exclude different cost categories, which is precisely why the choice of method, once made, should be applied consistently.
Value in IT and digital goods is often intangible. For these products, the following Vietnamese-incurred cost categories may typically be included when computing local value content:
For technology businesses whose physical inputs are largely imported, these categories can be the difference between failing and clearing the applicable threshold, which makes contemporaneous cost records for development teams essential.
A trader should choose between the direct and indirect value-content methods and apply that choice consistently, typically for a whole financial year. Consistent application has real operational consequences: it prevents method-shopping within a period and demands that the decision be made deliberately, ideally before the fiscal year begins. The recommended internal practice is to document the election in a short memo signed off by management, recording which method applies, the rationale, and the fiscal year to which it relates. That memo becomes the first document an auditor or an M&A buyer’s diligence team will ask to see.
To substantiate a value-content calculation, traders should retain a coherent evidence pack. At minimum this includes:
Traders are responsible for the accuracy of origin claims and must be able to produce substantiating records on request. Records should therefore be kept in an organised, retrievable form and retained in line with applicable recordkeeping requirements for commercial and tax documents. On audit, authorities will expect to trace a declared origin claim back through the calculation to the underlying invoices, BOMs, and payroll, so the evidence pack must be internally consistent and reconcilable to the financial accounts. A claim that cannot be reconstructed from records is, in practice, an unsupported claim.
Certain operations do not, by themselves, confer Vietnamese origin. Simple packaging, labelling, and simple assembly are the clearest examples: taking imported finished components and merely boxing, tagging, or loosely joining them does not transform them into Vietnamese goods. The underlying principle is substantial transformation, origin follows meaningful processing that changes the nature, character, or use of the inputs, not cosmetic or minor operations. The practical difficulty lies in borderline cases, where it is genuinely arguable whether an operation is “simple” or amounts to substantial transformation.
In textiles, cutting and sewing fabric into garments typically involves substantial transformation, whereas simply pressing and folding imported garments does not. In electronics, assembling a device from imported sub-assemblies with minimal integration may be treated as simple assembly, while manufacturing and integrating components with testing is more likely to qualify. In consumer goods, repackaging imported bulk product into retail units is a non-originating operation, but formulating, processing, or manufacturing the product in Vietnam can confer origin. Where the position is unclear, the HS4 change and value-content tests provide the objective benchmarks against which to assess the claim.
Origin rules do not operate in isolation from Vietnam’s labelling and consumer-protection framework, which includes the decree on labelling of goods and the Law on Protection of Consumer Rights. Traders bear responsibility for the accuracy of origin information and must substantiate it on request, which ties origin claims directly to consumer-facing representations. A “Made in Vietnam” label that cannot be supported by a wholly-obtained, substantial-transformation, or value-content analysis exposes the trader to both regulatory and consumer-protection consequences. New or revised instruments in this area commonly include transitional provisions allowing goods lawfully labelled before an effective date to retain those labels for a defined period; businesses should confirm the exact transitional terms of whatever instrument applies.
Retailers and brand owners should treat any transition period as a managed project rather than a single cut-off. Recommended steps include:
False or unsubstantiated origin claims carry exposure across several fronts. Administrative penalties may apply to non-compliant labelling and misrepresentation, and inaccurate origin statements can also generate civil liability to consumers who relied on them. For M&A, the risk is acute because origin exposure is often embedded in inventory, marketing, and brand value, assets that a buyer pays for directly. A target that has been marketing goods as Vietnamese without a documented methodology may be carrying latent liability that surfaces only after closing, or non-conforming inventory that must be relabelled or written down.
Deal teams should fold origin compliance into standard diligence. A practical checklist includes:
After closing, the buyer should prioritise integration of origin compliance into the acquired operations: rerun value-content calculations under the chosen method, remediate any unsupported labels, and update the evidence pack to a defensible standard. Where risk was identified at diligence, remedial timelines should be tracked against the indemnity and escrow arrangements. Warranty and indemnity insurance may also be considered as a mechanism to allocate residual origin risk, particularly on larger transactions where the quantum of potential liability is material.
The two substantial-transformation tests are alternatives, and businesses will often find one more practical than the other depending on their product and cost structure. The table below compares them.
| Feature | HS4 change test | Local value content |
|---|---|---|
| Mechanics | Compare four-digit HS classification of inputs and finished good; origin if heading changes | Calculate Vietnamese value as a percentage of finished value; origin if the applicable threshold is met |
| Evidence required | Correct tariff classification of inputs and output; classification rationale | Invoices, BOMs, payroll, R&D contracts, allocation workpapers, election memo |
| Pros | Binary and often quicker to assess; less cost accounting | Works where no tariff shift occurs; captures intangible value for IT/digital goods |
| Cons | Fails where processing does not shift the heading; classification disputes possible | Documentation-intensive; sensitive to cost allocation and method choice |
| Best suited to | Manufacturing that clearly transforms inputs into a different product category | IT and digital goods, and assembly operations with significant local value-add |
Preparation should begin before any new instrument takes effect. A practical pre-implementation programme includes:
Consider a three-component electronic product with a finished value of 100. Component A (imported) costs 40; Component B (imported) costs 20; Component C (locally manufactured) costs 10. Vietnamese direct labour adds 8, local overhead adds 5, and qualifying local design and software testing add 7. Under the direct method, Vietnamese-originating value is 10 + 8 + 5 + 7 = 30, giving a local value content of 30%. Under the indirect method, non-originating value is 40 + 20 = 60, so the remainder is 40, giving a local value content of 40%. Whether either figure qualifies depends on the applicable threshold in force, which should be confirmed.
The worked logic is reproducible in a spreadsheet: originating costs and non-originating costs sit in separate columns, each formula referencing the finished value cell, with the result tested against the current threshold. A compliance checklist and calculation template help operationalise this across a product range.
Vietnam’s origin framework contemplates that ministries may issue product-specific origin rules, which would govern particular categories ahead of the general tests. This means the regime is not static, and businesses should monitor regulatory output rather than rely solely on a single instrument. The ministries most likely to act are the Ministry of Industry and Trade for general manufacturing and trade, the Ministry of Finance in connection with customs valuation and tariff classification interfaces, and the Ministry of Agriculture and Environment for agricultural and seafood products. Subscribing to official publications from these bodies, and maintaining a legal-update watch, helps ensure that any product-specific rule is caught before it affects a live origin claim or a pending transaction.
Vietnam’s approach to the “Made in Vietnam” claim for domestically produced goods centres on three recognised routes: wholly obtained status, an HS4 tariff change, or meeting the applicable local value content. Because the specific domestic-labelling instrument and its thresholds remain subject to revision, businesses should verify the rules currently in force before relying on any figure. In all cases, traders should choose and document a value-content method consistently, retain a defensible evidence pack, and manage existing labels under whatever transitional provisions apply. For M&A, origin compliance now belongs in diligence, warranties, indemnities, and pricing. For tailored compliance and transactional advice, connect with our Vietnam M&A lawyers (directory).
This article was produced by Global Law Experts. For specialist advice on this topic, contact Ngan Nguyen at VILAF, a member of the Global Law Experts network.
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