Every week I get the same idea pitched to me: "Let's find an agency in Vietnam, they'll handle everything, and we'll set up a legal entity later — once things take off." The logic is clear. I'm not arguing: the savings on registration are real, timelines are shorter, and on paper there are fewer risks. But there's a catch that flips this whole scheme on its head — and it's not about money.
What Brands Say in Meetings
"We're not ready for full registration. Give us a contractor who can handle hiring, warehousing, and shipping." I hear this from Russian e-commerce teams all the time. And I get it: setting up a Vietnamese legal entity means capital, time, reporting, and a tax history starting from scratch. For market testing, it's heavy.
The scheme through a local subcontractor looks like a clean solution. The agency takes on employment contracts, payroll, social insurance, and office space, while you pay invoices and get results. Legal entity in Russia, team in Vietnam, simple reporting.
Seems logical. In reality — it's not. And here's why.
What Changed in the Rules Since January 1, 2026
On January 1, 2026, Vietnam's Employment Law came into force (passed on June 16, 2025). It replaced previous regulations and clarified hiring rules — including those directly affecting subcontracting and labor contracts. The ILO tracks legislative updates in the eplex database.
A separate issue is labor leasing. Historically, this activity required a license and was regulated separately. In 2026, public sources contradict each other: Nhan Dan writes about measures to manage labor leasing, while legal reviews note both ongoing licensing and reforms to certain procedures.
What this means for you in practice: If your Vietnamese partner "provides people" for your project, they are either licensed for labor leasing or doing it illegally. There's no third option.
What Market Data Shows
Demand for such schemes is growing, not just in words. Adecco Vietnam's Vietnam Talent Market Update Q2 2025 recorded a roughly 30% increase in job demand in Q2 2025, with demand specifically for payroll/staffing services up 15% over the same period. Adecco specifically notes: foreign companies without a legal entity in Vietnam are increasingly turning to payroll partners.
The number is dry, but behind it is a shift in model. Previously, payroll outsourcing was a tool for large corporations. Now it's a way for mid-sized brands to test the market without registration.
The flip side is responsibility. The ILO in its report on subcontracting chains explicitly states: outsourcing does not exempt the main brand from liability for labor violations by the contractor. This is not an abstract norm. It's a risk that moves to you along with the contract.
Where the Economics of the Scheme Break Down
Let's do the math honestly. The agency takes a margin for assuming labor obligations on your behalf. Its margin is your savings on a legal entity. As long as volumes are small, the math works.
Then comes what I see in operations. Once turnover crosses a certain threshold, the agency's margin becomes more expensive than maintaining your own legal entity. And you're paying for someone else's infrastructure instead of your own.
The second point is control. Through a subcontractor, you don't manage the team directly. You manage the agency. These are different games: the agency optimizes its margin, you optimize your brand on the shelf. Interests don't always align.
What I See from Operations
At VietSmart, we launch partners onto Vietnamese marketplaces and regularly hit this choice. The observation is simple: teams that stay on subcontracting longer than needed lose speed. Not money — speed.
The reason is the decision cascade. Any change — a new SKU, a price adjustment, a local promotion — goes through the agency. One extra layer of approval. During testing, it's unnoticeable. During growth, it's critical.
Second observation. Partners who build direct relationships with the team from the start — even if they pay through an agency — adapt noticeably faster. Formally, the scheme is the same. In practice, it's a different level of control.
How to Vet a Counterparty Before Signing
This isn't about trust. It's about basic hygiene that I recommend going through before the first payment.
- Request the labor leasing license if people are being transferred. Verify the number in the registry.
- Clarify who exactly will be your counterparty: the agency or its subsidiary.
- Check how employment contracts are structured for the employees assigned to you.
- Specify in the contract who bears responsibility for labor disputes and fines.
- Request tax registration and company history — not just an extract.
Separately about fines. Legal reviews from 2026 note sanctions for failure to provide information on labor leasing, for paying temporary workers less than permanent staff with the same functions, and for engaging subcontractors in work not included in the permitted list. This isn't theory — it's current practice.
What a Brand Should Do
My practical advice for Russian teams testing Vietnam.
- Define the testing horizon. If it's 3–6 months and one channel, subcontracting is justified.
- Calculate the transition point in advance: at what turnover does your own legal entity become cheaper.
- Build direct relationships with the team, even if you pay through an agency.
- Check licenses and tax history of the counterparty before signing, not after.
- Specify in the contract responsibility for labor violations — yours and the contractor's.
And most importantly. Subcontracting is not a "way to avoid opening a legal entity." It's a way to buy time until you open one. As soon as you stop understanding where the test ends and the business begins, the scheme will start working against you.
At VietSmart, we handle this transition: we package the partner for the Vietnamese market, select counterparties with verifiable history, and guide them through marketplace listing in 3–4 weeks. If you're at the stage of choosing between subcontracting and registration, start with calculating the transition point, not with finding the cheapest agency.