The incident took place on Saturday when seven men were captured by a gang in a forest in Vietnam's Quang Tri province and taken across the border, said Le Cong Dung, director of the provincial police department.
He said a struggle over agarwood was the likely cause of the killings. Agarwood is a rare type of fragrant wood used to make incense, soap and luxury items.
"The gang demanded a ransom of $720 for each man in exchange for his release," Dung said.
One of the captives was told to go home to get the money and one escaped, then returned later to find his five colleagues dead with shots to the head, the Tuoi Tre newspaper said.
The perpetrators were believed to be Vietnamese and Laotians, Dung said.
Agarwood is the common name for dark, aromatic deposits of resin in certain species of evergreen native to parts of Asia.