Vietnam can draw more attention of German groups

In the context of ongoing global economic uncertainties, German businesses still consider Vietnam as one of the most potential developing markets in Asia. What is more, with Germany’s investment diversification strategy, Vietnam is being evaluated as a promising and reliable investment destination for German enterprises.

In the tapestry of global investment, Vietnam has emerged as a shimmering thread, drawing the attention of German manufacturing giants seeking to weave their success story in its vibrant landscape. For years, Vietnam has been a magnet for German investors, offering a blend of opportunity, innovation, and growth potential that captivates the entrepreneurial spirit.

At the heart of this symbiotic relationship lies Vietnam’s textile and shoe industry, a traditional stronghold that has long enticed German investors. Names like Wendler, Groz-Beckert, and Amann have woven their presence into the fabric of Vietnamese manufacturing, supplying quality components to fuel the nation’s booming textile sector.

Yet, beyond mere suppliers, Germany’s influence extends to original equipment manufacturers like Seidensticker and Paddock’s, utilising Vietnam’s dynamic landscape as a pivotal node in their global manufacturing network.

However, the winds of change blow strong, ushering in a new era of industrial manufacturing. Chemical producers like Messer Gases stand as vanguards, supplying crucial components to local producers, especially in steel processing. Meanwhile, automotive and electronics titans pivot towards Vietnam, strategically positioning themselves within its borders to harness the power of its skilled workforce and burgeoning infrastructure.

At the forefront of this industrial evolution stands Bosch, with a monumental investment surpassing $350 million, emblematic of Germany’s unwavering commitment to Vietnam’s economic ascent. Not far behind, pharmaceutical giant STADA and chemical powerhouse Messer join the ranks, with investments totalling $250 million and $228 million respectively, underscoring the depth of German confidence in Vietnam’s potential.

However, contrary to popular belief, the cornerstone of German business in Vietnam isn’t colossal investments but rather a mosaic of smaller ventures, each contributing its brushstroke to the canvas of progress. With modest footprints ranging from 5,000 to 10,000 square metres, these investors favour the agility and efficiency of ready-built factories, propelling them swiftly into the fray of market competition.

Yet, amid the hustle and bustle of commerce, German companies remain steadfast in their commitment to embed themselves deeply within the Vietnamese market. Through strategic partnerships and alliances, they seek to leverage local expertise, fostering symbiotic relationships that benefit both parties. This dedication to integration fortifies their position in the market and fosters a spirit of collaboration and mutual growth.

Gone are the days when German business in Vietnam was confined to the bustling streets of Ho Chi Minh City. Today, the landscape is a tapestry of diversity, with investments spreading across the length and breadth of the nation. While Ho Chi Minh City remains a formidable hub, accounting for over half of German manufacturing, the allure of greener pastures beckons.

Central Vietnam, with its abundance of affordable land, emerges as an attractive destination, offering a blend of cost-effectiveness and accessibility. Meanwhile, Northern Vietnam stands as a strategic intermediary, bridging the gap between Ho Chi Minh City and central regions, balancing costs with gains in labour, land, and infrastructure.

Amid the symphony of success, German companies in Vietnam face a chorus of challenges. Low global demand casts a shadow of uncertainty, while skills shortages threaten to stifle growth and innovation. Potential disruptions in the supply chain loom large, casting doubt on the stability of operations.

Moreover, economic policies, with their ever-shifting landscape, pose a significant hurdle, with one-quarter of German investors citing them as a primary concern. Rising energy prices and financing challenges further compound the complexities of doing business in Vietnam, testing the resilience and adaptability of German enterprises.

To improve investment in Vietnam and enhance its attractiveness to foreign investors, the government should continue its efforts to streamline administrative procedures, to invest in infrastructure development, particularly in transportation and logistics.

Moreover, enhancing the competitiveness of local businesses, developing robust industry clusters, imparting specialised workforce training, adhering to international standards, and ensuring a stable electricity supply for sustainability are pivotal steps to enhance Vietnam’s investment appeal.

As Germany and Vietnam march towards a future brimming with promise, our partnership blossoms into a symphony of collaboration, each note resonating with the harmony of progress. Together, we forge new pathways, break down barriers, and embrace the winds of change, as we write the next chapter in the saga of the industrial renaissance.

In this grand tapestry of globalisation, Vietnam shines as a beacon of opportunity, drawing forth the ingenuity and vision of German investors. With more than 500 German companies, including over 100 manufacturers, offering 50,000 jobs for local Vietnamese, their commitment to Vietnam’s prosperity is unwavering, transcending challenges and heralding a future of shared success.

These German projects include large corporations but mainly small- and medium-sized enterprises, which have chosen Vietnam as an investment destination, thereby continuing to make a positive contribution to bilateral economic relations.

Vietnam Investment Review