There are two ways to bring goods from 1688 into Vietnam: the informal channel and the formal channel. Most shop owners never really make a choice. They use whatever their first freight agent offered, and stay on that track. This article breaks down the real differences between the two paths: cost, speed, invoices, and legal exposure, so the decision is an actual decision rather than a habit.
What the informal channel is and why it dominates
The informal channel, called "tieu ngach" locally, means goods travel through unofficial border crossings or through freight services that do not file a complete customs declaration. There is no formal export declaration from the Chinese side, no proper commercial invoice on record, and no paperwork trail to present in an inspection.
The reason it dominates for small sellers is simple: it is faster, cheaper on the surface, and requires no paperwork on your end. You place an order through the agent's app, goods consolidate at a warehouse in Guangzhou or Yiwu, then land at a warehouse in Hanoi or Ho Chi Minh City. No HS code, no customs declaration, no registered business required. Transit time typically runs around 7 to 15 days from order to receipt.
For sellers at low volumes, a few million VND per batch, this path is effectively the default because nobody introduces an alternative.
What the formal channel is
The formal channel means goods clear customs properly on both sides: an export declaration in China, an import declaration in Vietnam, a commercial invoice, a packing list, and payment of the applicable import duty and VAT according to declared value and the HS code.
This requires a registered business with a tax ID, working through a licensed customs broker. The goods must be declared under the correct commodity name and HS code at their actual transaction value. After clearance, you have a full paper trail: the customs declaration, an input tax invoice, and transport documents.
Speed is slower than the informal route. Sea freight from a Chinese port to a Vietnamese port typically takes 18 to 30 days depending on the route, with actual customs clearance adding a few more days to roughly a week during peak seasons.
What the cost difference actually looks like
This is where the two paths get compared unfairly, because the informal channel is quoted at a lower rate but the quote does not include the full risk picture.
Informal channel costs:
- Freight is billed by actual weight or volumetric weight, and rates vary by agent. For smaller shipments, the quoted rate is often 20 to 40 percent lower than sea freight under the formal channel.
- No import duty and no input VAT, because the goods were never officially declared.
- No customs brokerage fee.
On the surface this looks clearly cheaper. But two costs need to be added back in:
- Risk of seizure or destruction at the border. Informal-channel goods have no legal standing if they are inspected and found without proper documentation. The batch can be held or destroyed with no compensation pathway. The probability per shipment is not high, but when it happens, the entire batch value is gone. You have to estimate that probability yourself based on your actual freight agent's track record.
- No input invoice. If you are a registered business or household business with a tax obligation, the absence of a valid input invoice means you cannot deduct procurement costs. Your effective tax-side cost of goods is higher than it is for a competitor who imports formally.
Formal channel costs:
- Sea freight for less-than-container-load (LCL) shipments is higher per unit than informal freight, because you share container space and pay accordingly.
- Import duty at the HS code rate, which ranges from 0% for some categories to 5 to 20% for others.
- Import VAT of 10% calculated on (goods value + import duty + freight and insurance).
- Customs brokerage and logistics handling fees.
Total formal-channel costs typically run 15 to 35 percent higher than informal costs as a share of shipment value, depending on the goods and the HS code. What you get in return is a clean paper trail and a valid input invoice.
Invoices and tax: why this matters more than most sellers realize
This is the part that many small-volume sellers overlook because it has no immediate visible effect.
When you sell on a marketplace platform, the platform now reports seller revenue to the tax authority. Current regulations require major platforms to submit this data. Once your revenue crosses the taxable threshold, you have an obligation to declare and pay tax. At that point, procurement costs are deductible, but only when backed by a valid input document.
With informal-channel goods and no invoice, you have nothing to present. In an audit, the input cost is not recognized, and you pay tax on gross revenue with no deduction. The gap, combined with late-payment penalties if applicable, can exceed the total profit from months of informal importing.
Formal-channel importing gives you the customs declaration and the supplier's commercial invoice as valid input documents. You pay more upfront, but you have a legal position.
Legal risk: scales with volume
The legal exposure from informal importing is not constant. For a new seller moving very small volumes, a few shipments a month, the direct legal risk is low because the volume is too small to attract attention. But as the business grows, risk compounds in two directions.
Border risk. Goods moving through unofficial crossings or informal freight services can be detained at any point when authorities increase enforcement. There is no contract, no declaration, no legal basis to claim compensation. The level of risk shifts with enforcement cycles and cannot be fully predicted.
Tax and audit risk. Once revenue is large enough to draw a tax review, missing input documentation is a serious problem. A business or household business hit with retroactive tax assessment and penalties can face a bill that dwarfs the cost savings from informal importing. Small volumes attract little scrutiny, but once you are in scope, there is no document trail to fall back on.
Platform risk. Some platforms request source documentation when handling buyer disputes or running their own shop audits. Sellers who cannot produce it risk account restrictions or suspension.
Formal importing removes all of these exposures, but it requires a registered business with a tax ID to be feasible. Individual sellers without a registered entity generally cannot use the formal channel because they lack the legal standing to file an import declaration.
When to use each channel
There is no universal answer. But a few conditions make the decision cleaner.
Informal channel fits better when:
- You are in a market-testing phase, small batches under a few dozen million VND, and you are not yet sure the product will work.
- You have not registered a business and your revenue is still below the threshold that triggers an obligation.
- Speed is the deciding factor, for example, short-season goods that need to land before a peak window.
- The freight agent you use has a stable track record and you have priced in the associated risk.
Consider moving to the formal channel when:
- Monthly revenue reaches a level you cannot explain without valid input documents.
- You have registered a household business or company and need input invoices to file taxes accurately.
- The batch is large enough that LCL sea freight is no longer significantly more expensive than informal freight once risk is factored in.
- The product category requires source documentation: certified goods, food items, electronics with safety requirements, and so on.
Many shop owners run both in parallel. Test orders and small one-off batches go through the informal channel, while stable high-volume SKUs gradually move to formal importing. That split is more practical than forcing everything onto one path before the business is ready.
Bottom line
The informal channel is cheaper and faster on the surface, but the missing invoices and legal exposure compound as your volume grows. The formal channel costs more upfront and requires a registered entity, but gives you a defensible paper trail for tax filings and inspections. The decision point is not which channel is cheaper in absolute terms. It is where your current scale and legal status sit, and which risk you can actually absorb if it materializes.