China vs. Vietnam vs. India: Assessing Costs, Tax, and Market Access for Australian Companies

Part II of our Australia Asia market entry series compares labor costs, tax regimes, and foreign investment access across China, Vietnam, and India to help Australian companies identify the right location for overseas expansion.

China, India, and Vietnam remain three of the most attractive destinations for Australian investors in Asia, offering diverse opportunities across manufacturing, technology, and consumer markets at varying cost and risk profiles.

In Part I of this two-part series, we compared the economy, industrial landscape, and trade relations between Australia and these three countries to assess which location is the most attractive depending on a company’s sector, scale, and strategic objectives.

In Part II, we look at some of the practicalities of investing in these countries, comparing the labor costs, tax environment, and market access to help Australian businesses make a more informed decision about where to deploy capital in Asia.

Labor costs

While wages can be difficult to compare across jurisdictions due to discrepancies in sampling methods and the percentage of the population that is in formal employment, the data clearly show that China today commands the highest labor costs among the three countries, both in terms of statutory minimum wages and average incomes.

China’s minimum wage, which varies across regions and is adjusted every few years, ranges from AUD 356.9 to AUD 558.8 per month, the highest of the three countries.

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The average annual income for an urban worker in a private company in China is around AUD 14,161.5 in 2024. However, this figure does not accurately reflect the country’s actual average annual wage, but similar data on the wages of rural workers is not published. The average disposable income from wages across the entire population in 2025 was around AUD 5,005, according to China’s National Bureau of Statistics (NBS).

Vietnam’s average annual income was around AUD 3,436 in 2024, according to the National Statistics Office (NSO).

Minimum wages in India vary more than in Vietnam and China because, unlike other countries that put in place broad statutory minimums, the country also varies wages based on skills. This makes India highly competitive from a labor cost perspective, but the greater discrepancies could lead to more compliance headaches for businesses operating in multiple locations.

India’s annual average income for people in salaried jobs was around AUD 4,247.4 for men and AUD 3218.95 for women in 2025, based on data from the Ministry of Statistics & Programme Implementation (MSPI). The average earnings of casual workers in 2025 were around AUD 6.7 per day for men and AUD 4.6 per day for women. 

For more information on minimum wages, see our sister articles here:

• China: China Minimum Wage Standards 2026
• Vietnam: Vietnam’s Regional Minimum Wage Effective from January 1, 2026
• India: A Guide to Minimum Wage in India in 2026

Tax environment

Between the three countries, Vietnam offers the lowest corporate income tax (CIT) rate, with foreign companies required to pay a base rate of 20 percent on their taxable income, the same as domestic companies. Vietnam also offers lower tax rates of 15 percent and 17 percent to companies with low annual revenues.

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Vietnam imposes a value-added tax (VAT) on goods and services ranging from 0 to 10 percent, while import VAT ranges from 5 to 10 percent. A consumption tax ranging from 0 to 150 percent is levied on certain luxury goods.

China’s standard CIT rate is 25 percent, while the standard VAT rate ranges from 3 to 9 percent. Small-scale taxpayers pay a VAT rate of 3 percent. Import VAT is calculated based on the price or value of the imported goods.

India has by far the highest corporate tax rate among the three countries, with foreign companies required to pay income tax at 35 percent of the average taxable income, plus additional charges. For domestic companies, the tax rate ranges from 22 percent to 40 percent. India also charges a goods and services tax (GST) at a rate ranging from 5 to 28 percent for goods and 0 to 40 percent for services. Cess also applied to some services linked to luxury goods.

All three countries are members of the OECD/G20 Inclusive Framework on BEPS and have committed to the Pillar Two global minimum tax rules, meaning multinationals with a combined annual revenue of over EUR 750 million either already are or will be required to pay top-up taxes if their effective tax rates in any of the jurisdictions fall below 15 percent.

All three countries also provide preferential tax treatment for companies operating in incentivized industries that can help to reduce the effective tax rates for businesses. For more information on these incentives, see our sister publications:

• China: Tax Incentives for Foreign-Invested Enterprises
• Vietnam: Tax Incentives for Foreign Enterprises in Vietnam
• India: Tax Incentives for Businesses in India

Market access

China, Vietnam, and India all impose some restrictions on FI. While it can be difficult to directly compare the number of prohibited and restricted sectors due to differences in classification, China generally remains the most restrictive of the three economies, although it has continued to open up more sectors over the years.

Vietnam implements the simplest market access of the three countries, having just two negative lists of prohibited and restricted sectors, allowing 100 percent foreign ownership in all economic activities outside these lists.

India implements a combination of a prohibited list and a positive list, with certain sectors not included in the positive list also prohibited from FI, or subject to certain market entry conditions or foreign equity caps.

China

China governs FI access through a negative list system. The two main negative lists are the Negative List for FI Access (2024 Edition), which applies specifically to foreign investors, and the Negative List for Market Access (2025 Edition), which applies to all private enterprises in China, foreign and domestic.

These lists outline both sectors that are completely off-limits to foreign or private investment, and those that are subject to certain restrictions, including licensing requirements and foreign equity caps.

The FI negative list currently covers 20 prohibited sectors and nine restricted sectors, whereas the market access negative list covers six prohibited sectors and 106 restricted sectors.

In addition to these two national lists, China also has the Negative List for FI in Free Trade Zones (2021 Edition), which applies to FI access in China’s 23 free trade zones (FTZs) and has historically offered considerably more market liberalization. However, since China has gradually reduced the number of restricted and prohibited sectors in the national FI negative list in recent years, the difference between the two lists is not as great as it previously was. Nonetheless, the FTZ list still has two fewer sectors than the national list, and some sectors that are prohibited nationally are permitted in the FTZs with certain restrictions in place.

Vietnam

Vietnam’s market access restrictions for foreign investors are governed by Decree 31/2021/ND-CP (Decree 31), which guides the implementation of the 2020 Law on Investment.

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Decree 31 implements two market access lists: the Prohibited List and the Market Entry List. The Prohibited List, as the name implies, lists the sectors in which FI is prohibited. The list currently includes 25 sectors, including press activities, security services, public postal services, and goods transshipment. 

The Market Access List covers the sectors in which FI is permitted, but only under certain conditions. The list currently covers 58 industries, including radio and television services, telecom services, legal services, and the manufacture of aircraft.

The conditions for investing in these industries include charter capital holding rate of foreign investors in economic organizations, forms of investment, scope of investment activities, and capacity of investors and partners participating in investment activities, as well as other conditions.

For all sectors and activities not included in these two lists, foreign investors are treated the same as domestic investors and are there for permitted to invest without any foreign equity caps.

India

India provides two different permissible FDI routes: the Automatic Route and the Government Route. Under the Automatic Route, foreign investors can invest in India without prior approval from the Reserve Bank of India or the Central Government. Investments made under the Automatic Route may still be subject to foreign equity caps depending on the sector or activity.

The Government Route applies to certain restricted sectors and requires foreign investors to obtain prior Government approval before investments can be made.

FI market access in India is governed by the Consolidated FDI Policy of 2020, the most recent version of the document. This document lists nine sectors that are completely off-limits to foreign investors, namely:

1. Lottery business, including government/private lottery, online lotteries, etc.;
2. Gambling and betting, including casinos, etc.;
3. Chit funds;
4. Nidhi companies’
5. Trading in Transferable Development Rights (TDRs);
6. Real estate business or construction of farm houses (“real estate business” does not include development of townships, construction of residential/commercial premises, roads or bridges, and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014).
7. Manufacturing of cigars, cheroots, cigarillos, and cigarettes, of tobacco or of tobacco substitutes;
8. Atomic energy; and
9. Railway operations (except those explicitly permitted under the “Permitted Sectors” list).

Unlike Vietnam and China, the Consolidated FDI Policy implements a positive list of “Permitted Sectors”, which also outlines specific foreign equity caps and possible investment entry conditions. In some cases, sectors not explicitly permitted under this list are also prohibited from FDI. For instance, in agriculture, 100 percent foreign equity is permitted under the Automatic Route in the following sectors:

1. Floriculture, horticulture, and cultivation of vegetables & mushrooms under controlled conditions;
2. Development and production of seeds and planting material;
3. Animal husbandry (including breeding of dogs), pisciculture, aquaculture, apiculture; and
4. Services related to agriculture and allied sectors.

However, FI is not permitted in any agricultural sectors or activities not listed above.

Some sectors also require entry conditions, including norms for minimum capitalization, lock-in periods, or other sector-specific conditions.

Choosing the right location

Choosing the right location for overseas production or market expansion requires careful assessment of a broad range of factors, from labor costs and tax obligations to infrastructure quality, regulatory environment, and bilateral trade frameworks, among many others.

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China remains the default choice for companies seeking unmatched industrial scale, deeply integrated supply chains, and access to a massive consumer market. However, rising costs, a shrinking population, and a slowing economy mean that the most competitive industries in the future will be high-cost, high-value production and services, in particular advanced manufacturing, high-end technology, innovation and R&D, and high-end consumer goods.

India, meanwhile, offers a compelling combination of low labor costs, a vast and fast-growing consumer market, and an improving business environment, making it particularly attractive for companies looking to diversify away from China or tap into South Asian demand. Its strengths in IT, pharmaceuticals, and manufacturing make it a strong candidate for companies with a longer investment horizon.

Vietnam is ideal for cost-sensitive export-oriented manufacturing, particularly in electronics, textiles, and light industry, and its extensive network of trade agreements provides strong tariff advantages for companies producing for export to third markets. At the same time, the emerging nature of its economy means companies in certain industries may still be able to benefit from first- or early-mover advantage.

There are a myriad of other considerations that will shape the right decision for any given company, including local regulations and possible market access restrictions, as well as site-specific incentives, workforce availability, and geopolitical risk. Given this complexity, investors are strongly encouraged to conduct thorough due diligence and seek professional advice before committing to a particular market.

Whether launching, restructuring, or expanding, we ensure our clients benefit from coordinated input across legal, HR, tax, and financial teams. From startup to exit, our advisory scales with your business—designed to meet both immediate needs and long-term goals.

Allan Xu 

Partner

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