Case Study No. 2 | Legal Analysis of Foreign Market Entry into the Day-Service (Elderly Day Care) Business in Vietnam
A clear, example-based explanation of the legal considerations for operating a day-service business for the elderly in Vietnam — foreign-ownership restrictions, obtaining licenses, establishing a local entity, staffing, and the boundary with medical practice. The article maps out the possibilities and risks of foreign entry into this area of rising social need. NEXORA LAWFIRM has extensive experience supporting Japanese companies in planning, conducting local due diligence for, obtaining licenses for, and executing M&A in the elder-care and healthcare sectors in Vietnam. Attorneys with deep knowledge of both the Japanese and Vietnamese systems provide consistent support from the planning stage through to actual business launch.
01 - Overview of the Case
Japanese company XXX is considering launching a day-service (adult day care) business for the elderly in Hanoi, Vietnam ("this Business").
In recent years, Vietnam has seen rapid growth in demand for elder-care services alongside its aging population, with growing need for elderly-care facilities and in-home support, particularly in urban areas.
Against this backdrop, Company XXX sought legal advice on whether a Japanese company could operate a day-service business in Vietnam on a wholly-owned basis, along with the applicable foreign-ownership restrictions, permissible business classifications, required procedures, and risks.
02 - Legal Advice from Vietnamese Counsel
▶ Legal Issue 1: Whether a foreign investor may register a day-service business
The business classification for this Business is identified as follows:
Service Content
Applicable Business Line
Treatment under WTO/FTA
Health assistance (bathing, meals, mobility assistance, etc.)
CPC 93191
(care/nursing services)
"Health assistance services for the elderly" (VSIC 8730)
✅ 100% foreign ownership permitted for CPTPP member states
Transportation assistance for the elderly (pick-up/drop-off)
Passenger transport business
❌ Foreign entry not permitted (partnership with a domestic company required)
Vietnam is a CPTPP member state, and Japanese companies are permitted to register care services falling under CPC 93191 with 100% foreign ownership (see the CPTPP annexes).
✅Note, however:
In practice, while the authorities are familiar with the WTO classification, they are often less familiar with registrations based on the CPTPP or AFAS (the ASEAN framework), which may require additional explanation and negotiation.
Accordingly, an approach involving advance explanation with reference to the specific CPTPP provisions is advisable.
▶ Legal Issue 2: Registration requirements for licensing (VSIC 8730)
To register a business as "health assistance services for the elderly" (VSIC 8730), the following conditions must be satisfied.
Category
Key Requirements
Corporate form
May be established as a general enterprise or a social enterprise
Legal representative requirements
Full civil legal capacity, and no criminal or prosecution record
Facility standards
Urban areas: at least 10 sqm per user, barrier-free design, complete electrical and water/drainage systems, etc.
Staffing requirements
Caregiving competence, moral fitness, health, and a minimum required staffing level
✅Establishment requires meeting certain capital and personnel requirements, but registration is, in principle, available once these are met.
▶ Legal Issue 3: Comparing entry structures (sole establishment, BCC, M&A)
Company XXX has three principal options for entering this Business.
Structure
Overview
Key Advantages
Considerations
① Sole establishment
Operating the business through a 100%-owned entity of Company XXX
High degree of decision-making freedom
Tends to face stricter foreign-ownership restrictions and registration review
② BCC (Business Cooperation Contract)
Business cooperation contract with a local Vietnamese company (no entity established)
Simplified legal procedures, faster rollout
Risk of disputes and difficulty reaching agreement with the partner
③ M&A
Acquiring a local company and leveraging its existing license
Can make immediate use of an already-registered license
Requires post-acquisition management effort and due diligence
✅Recommended structure (for the initial rollout phase): ② the BCC structure
→ Because it allows for a fast and flexible business launch while making use of the local partner's existing license.
◆Conclusion and Recommended Course of Action◆
While 100%-foreign-owned entry into this Business in Vietnam is theoretically possible on CPTPP grounds, in practice a response that accounts for administrative custom is required.
We therefore recommend proceeding as follows.
Clearly define the business purpose and service content as falling under "CPC 93191" in preparation for license negotiations.
Use the BCC structure to partner with a licensed local company and roll out the business promptly.
Formulate a strategic plan to transition to sole establishment or M&A over time.
Begin early work on securing facilities that meet local facility standards and on staffing strategy.