Question: We are foreign investor and would like to set up company in publishing and distribution of books in Vietnam, please advise the option for our choice.
Answer: As your question, we would like to advise as follows:
1. Background:
The Vietnamese Government does not commit to open its market for foreign investors to invest into the business sector of books publishing and printing. It does mean that the government can grant the investment license in its own direction only. According to our practical experience in similar previous cases, the possibility for a foreigner to run investment in the field of books publishing and printing in Vietnam is very low. Therefore, we are of the opinion that you do not have a chance to set up a joint venture company or wholly foreign invested company in Vietnam for publishing or printing text book. Therefore, you can consider following options:
2. Options
2.1. Option 1: Your Publishers holds the copyright of textbooks to be published in Vietnam. Publishers shall grant the exclusive copyright license to Vietnam company and Vietnam company shall obtain necessary license and approval from the competent authority for publishing and distribution of those textbooks in Vietnam. After that, Vietnam company shall have to pay the royalty fee to Publishers.
We understood that Publishers could consider paying expenses for marketing and market research etc through direct contracts/agreements with services suppliers in Vietnam. However, this does not help Vietnam company much as VN company could not claim those expenses so that it can optimize the tax burden and profit generated from the project. Then, we do not not consider this.
2.2. Option 2: Publishers holds the copyright of textbooks to be published in Vietnam. Publishers shall grant the exclusive copyright license to Vietnam company and Vietnam company shall obtain necessary license and approval from the competent authority for publishing and distribution of those textbooks in Vietnam. Vietnam company shall have to pay the royalty fee to Publishers. Meanwhile, Publishers shall establish a subsidiary company in Vietnam, named New Vision. New Vision shall provide business management consultation services to Vietnam company. Through the business management consultation services between New Vision and Vietnam company , New Vision shall pay in advance expenses for marketing, designing and market research for publishing textbooks in Vietnam. Then, at the end of each year, Vietnam company shall reimburse New Visions those expenses as paid by New Visions and share income before tax generated from publishing and distributing textbooks in Vietnam.
2.3. Option 3 Publishers holds the copyright of textbooks to be published in Vietnam. Publishers shall grant the exclusive copyright license to Vietnam company and Vietnam company shall obtain necessary license and approval from the competent authority for publishing and distribution of those textbooks in Vietnam. Vietnam company shall have to pay the royalty fee to Publishers. Meanwhile, Publishers shall establish a subsidiary company in Vietnam, named New Vision. New Vision shall provide education services in Vietnam. Then, New Visions shall purchase textbooks from Vietnam company and resell those to students of NewVision. We are concerned that this option does not work well as New Visions shall have to setup schools in Vietnam for running the education services.
We do hope that the above information is helpful for you. If you have any other questions, please feel free to contact us. We look forward to hearing from you soon.
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