Comparing state-owned enterprises – private enterprises – examples

What is a state-owned enterprise (SOE)? What is a private enterprise? What is the difference between a state-owned enterprise and a private enterprise? Find out with fdiinvietnam.com!

What is a state-owned enterprise (SOE)?

In Chapter IV of the 2020 Enterprise Law, it is defined that state-owned enterprises include:

• Enterprises with 100% state-owned charter capital;
• Enterprises with more than 50% state-owned charter capital or total voting shares.

Also according to the Enterprise Law 2020, state-owned enterprises are managed in the form of limited liability companies and joint stock companies, including:

• Enterprises with 100% state capital are in the form of single-member LLCs;
• Enterprises in which the State holds more than 50% of the charter capital or total voting shares are in the form of limited liability companies with 2 or more members and joint stock companies.

The above state-owned enterprises may be:

• Independent company;
• Parent company of economic group;
• Parent company of state-owned corporation;
• Parent company of parent company and subsidiary group.

What is a private enterprise (PE)?

Article 4 of the Enterprise Law 2020 defines an enterprise as an organization:

• Have own name, assets and transaction office;
• Registered business in accordance with the law.

Private enterprises are enterprises that are not owned and managed by the state, operate independently, and comply with legal regulations.

Note: The concept of “private enterprise” here is not the type of private enterprise specified in Chapter VII of the Law on Enterprises.

If state-owned enterprises only include LLCs and joint stock companies, then in this concept of private enterprises, you have 4 common types of enterprises as follows:

• Joint Stock Company;
• Limited Liability Company (including 1 member and 2 or more members);
• Partnership;
• Private enterprise.

You may be interested in:

>> Business establishment services;

>> Advantages and disadvantages of business types;

>> Conditions for establishing a company or enterprise.

Distinguish between state-owned enterprises and private enterprises

The difference between private enterprises and state-owned enterprises is shown through 4 criteria:

• Business owner;
• Form of existence;
• Scale of operations;
• Business line.

1. Business owner

2. Form of existence

State-owned enterprise	Private enterprise
Joint Stock Company; One member LLC; Limited liability company with 2 or more members.	Joint Stock Company; Partnership; One member LLC; Limited liability company with 2 or more members; Private enterprise (*).

(*) The type of private enterprise is regulated in Chapter VII of the Law on Enterprises.

3. Scale of operation

State-owned enterprise	Private enterprise
Large scale of operation; Usually organized in the form of parent company – subsidiary company, economic group.	The scale of operations varies, but the majority are small and medium sized.

For example:

➧ For state-owned enterprises:

• Vietnam Electricity Group;
• Military Telecommunications Group;
• Vietnam National Petroleum Corporation;
• Vietnam Airlines

➧ For private enterprises:

• Hong Duc Company Limited;
• fdiinvietnam.com Consulting Services Company Limited;
• Vingroup Corporation;
• Hoa Phat Group Joint Stock Company.

4. Business lines

State-owned enterprise	Private enterprise
Mainly operating in key economic sectors and exclusive business lines: Lottery; National power transmission system; Printing, minting and producing gold bars; Large-scale multi-purpose hydroelectric plants, nuclear power plants…	Operating within the scope of industries specified in Decision 27/2018/QD-TTg – Promulgating the system of economic sectors in Vietnam.  Note: Do not engage in business lines that are monopolized by state-owned enterprises.

>> See more: Regulations on business codes when establishing a business .

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So, fdiinvietnam.com has just shared the differences between state-owned enterprises and private enterprises. In case you are looking for information on how to register a business as well as suitable types of enterprises, you can refer to the following articles:

>> Procedures for establishing companies and enterprises;

>> Popular types of businesses in Vietnam.

Or in case you need detailed advice on business types and quickly complete business establishment procedures, consider using Online Accounting.

➧ Business establishment service – business registration – full package from 1,000,000 VND.

➧ Online Accounting undertakes establishment procedures for all types of businesses including: joint stock companies, limited liability companies, private enterprises and partnerships.

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Questions about state-owned enterprises and private enterprises

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