[2025 update] Establishing a foreign-invested hair salon or hair beauty business in Vietnam

I. Legal Basis:

- Specific Commitments on Trade in Services WTO (GATS);

- Law on Investment No. 61/2020/QH14 dated June 17, 2020;

- Law on Enterprises No. 59/2020/QH14 dated June 17, 2020;

- Decision No. 27/2018/QĐ-TTg dated July 6, 2018, on the promulgation of the Vietnam Standard Industrial Classification System;

II. Scope of Hairdressing Services Business in Vietnam:

According to the provisions of Decision No. 27/2018/QD-TTg dated July 06, 2018 promulgating the system of Vietnam's economic sectors, hairdressing, hair styling, and hair washing services are classified under industry code 9631-96310 as follows: "9631 - 96310: Hairdressing, hair styling, hair washing.

This group includes:

• Hair cutting, washing, perming, blow-drying, dyeing, straightening, pressing, and other hairdressing services for both men and women;
• Cutting, trimming, and shaving beards;
• Facial massage, pedicures, manicures, make-up, etc.

Excludes: Production of wigs is classified under group 32900 (Other manufacturing not elsewhere classified)."

According to the Explanation of the Services Listed in the United Nations' Central Product Classification ("CPC"), hairdressing and hair cutting services are classified under CPC code 97201, and nail polishing and manicures/pedicures are classified under CPC service 97022, specifically:

"9720. Hairdressing and other beauty services

97021. Hairdressing and hair cutting services Hair cutting and hairdressing services for men, women, and children, including shaving and beard care.

97022. Cosmetic treatment, manicure and pedicure services Facial and beauty care, cosmetic treatments, manicure and pedicure services.”

III. Content of Market Access Restrictions for Hair Salon or Hair Beauty Services in Vietnam:

Hairdressing and other beauty services are not specified in Vietnam's Schedule of Commitments on Services within the WTO; however, there are no regulations prohibiting or restricting foreign investors according to Article 6 of the Investment Law 2014. Accordingly, in cases where foreign investors invest in providing hairdressing and other beauty services in Vietnam, after submitting the application, the licensing authority will seek opinions from relevant specialized agencies for appraisal before deciding whether or not to approve the foreign investor's project.

However, one of the fundamental principles of GATS when Vietnam joined the WTO is "Most-Favoured-Nation" (MFN), meaning that each member country must provide non-discriminatory treatment to goods and services originating from different WTO member countries.

"Specifically, there is a very blurred line between the concepts of 'full autonomy' and 'adherence to the basic principles of GATS' that regulators must pay special attention to. Take publishing services as an example. As they are not listed in the Schedule of Services Commitments, Vietnam has 'full autonomy' in closing this market to foreign publishers. However, if Vietnam agrees to license a certain foreign publisher, the 'adherence to the basic principles of GATS' will immediately apply. Since one of the basic principles of GATS is MFN (non-discrimination among members), Vietnam will have to license other foreign publishers as well if requested. (page 8, book 'Commitments on Services upon Accession to the WTO - Insider Commentary - Ministry of Industry and Trade')."

Thus, in the case where hairdressing and hair cutting services (CPC 97201 Hairdressing and hair cutting services) have been licensed to operate for a foreign investor who is a WTO member, Vietnam must also open this sector to investors from other countries according to the Most-Favoured-Nation principle.

More importantly, depending on the nationality of the investor, one can review other bilateral or multilateral trade agreements/treaties signed between Vietnam and that country to get more in-depth advice on market access restrictions regarding the establishment of a commercial presence in Vietnam. Unlike the "pick and choose" rule of Vietnam's Schedule of Commitments on Trade in Services within the WTO, some new trade agreements such as the CPTPP are built according to the "pick and omit" method, meaning the committing party will list all services subject to restrictions for members. Apart from these restricted services, members are allowed to invest in and conduct business in sectors outside the listed restricted list.

IV. Investment Procedures for Foreign Investors in Vietnam:

According to the provisions from Article 21 to Article 28 of the Law on Investment 2020 regarding forms of investment in Vietnam, the following are included:

Foreign investors can choose the following forms of investment to conduct business activities in Vietnam:

1. Investment in establishing economic organizations: 

a) Foreign investors establishing economic organizations must meet the market access conditions for foreign investors stipulated in Article 9 of this Law;

b) Before establishing an economic organization, foreign investors must have an investment project and carry out the procedures for applying for and adjusting the Investment Registration Certificate, except for the case of establishing small and medium-sized innovative startups and innovative startup investment funds according to the law on supporting small and medium-sized enterprises.

From the date of being granted the Enterprise Registration Certificate or other legally equivalent documents, the economic organization established by the foreign investor is the investor implementing the investment project according to the Investment Registration Certificate.  

2. Investment in capital contribution, purchase of shares, purchase of capital contributions: 

The capital contribution, purchase of shares, or purchase of capital contributions by foreign investors in economic organizations must meet the following regulations and conditions:

a) Market access conditions for foreign investors stipulated in Article 9 of the Law on Investment.

b) Ensuring national defense and security according to the provisions of this Law;

c) Provisions of the land law on conditions for receiving land use rights and conditions for land use in islands, border communes, wards, and towns, and coastal communes, wards, and towns.

3. Implementation of investment projects: 

Foreign investors conduct business activities through the implementation of investment projects in Vietnam.

4. Investment in the form of a BCC contract:

- BBC contracts signed between domestic investors shall comply with the provisions of civil law.

- BBC contracts signed between domestic investors and foreign investors or between foreign investors shall follow the procedures for applying for an Investment Registration Certificate as stipulated in Article 38 of the Law on Investment.

- The parties participating in the BCC contract shall establish a coordination board to implement the BCC contract. The functions, tasks, and powers of the coordination board shall be agreed upon by the parties.  

5. New forms of investment and types of economic organizations as prescribed by the Government: 

Foreign investors shall make investments in new types of economic organizations as prescribed by the Government.

V. Conclusion:

Given the specific legal characteristics of foreign investment in the hair salon sector in Vietnam under WTO (GATS) commitments, choosing a reputable legal partner is extremely important. DB Legal hopes to have provided a basic overview of investing in hair salon services in Vietnam for foreign investors through this article. Furthermore, DB Legal also provides comprehensive consulting services, supporting clients from the initial stage until the business operates stably, helping you overcome all legal barriers and achieve success in the Vietnamese market.

 

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The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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