Chinese Investors Show Increasing Interest in Vietnam

Chinese Investors Show Increasing Interest in Vietnam

As of August 2004, China invested over US$50 million in 43 projects in Vietnam. If Hong Kong is counted, the total projects reached 625 with a combined registered capital of US$3.65 billion. The Vietnam-China two-way trade revenues increased to US$4.6 billion in 2003 from US$2.5 billion in 2001 and are estimated to exceed US$5 billion in 2004.

Equality, mutual interest bases and favourable locations have boosted co-operative ties between Vietnamese and Chinese enterprises. Bilateral trade between the two countries has been developing year on year. The two-way trade turnover hit US$4.6 billion in 2003 and is estimated to surpass US$5 billion in 2004. Chinese firms buy agro-forestry produces from Vietnam and sell knitwear, metal ware and machinery to Vietnam. Apart from traditional commodities trading, firms of the two countries have set up long-term contracts.

Many Chinese companies arrived in Vietnam to seek investment and business opportunities, open representative offices and invest in the fields that are still underdeveloped in Vietnam, such as electricity, farm produce processing and consumer goods.

At a press conference for the China Guangxi Trade Fair in Ho Chi Minh City on September 20, 2004, Mr. Li Chiwei, head of Guangxi International Trade Promotion Subdivision, said that Chinese enterprises are interested in investment in Vietnam in a lot of fields. Guangxi province alone had opened three trade fairs in Ho Chi Minh City. More and more enterprises had registered to display their products at these trade fairs. Guangxi province accounts for a third of the total Chinese export volume and it sees a lot of investment potential in Vietnam in many fields.

According to Mr. Li, since the two trade fairs in Ho Chi Minh City in 2002 and 2003, many Chinese firms have opened representative offices, built factories and raised investment of hundreds of millions of dollars. Several trade contracts worth over US$100 million each were signed at these trade fairs. The growing influence of the annual trade fair has been realised by the number of Chinese firms in the Vietnamese market. Both the Vietnamese and Chinese governments have pledged their support in boosting their economic ties by way of programs and projects, which create more investment co-operation and opportunities for both sides.

China has opened the door for foreign firms and encouraged its enterprises to invest abroad. Nguyen Anh Tuan, deputy head of the Foreign Investment Department under the Ministry of Planning & Investment said: "Chinese firms currently are very much interested in stock markets, post & telecommunications, legal documents related to purchase of stocks in State-run companies and preferential tax policies for foreign investors in Vietnam. Mr. Sun Yan, deputy director of Vietnam-China Overseas Study Investment and Consultancy Co. said, "Chinese firms want to have sufficient information about the stock market and procedures to buy stocks in Vietnamese State-run enterprises."

Mr. Nguyen Anh Tuan said Chinese firms investing in Vietnam will have numerous advantages such as favourably geographic conditions and an ethnic-Chinese population. Ho Chi Minh City alone has about half a million ethnic-Chinese, who are living in large commercial areas. A lot of Chinese communities have lived in Vietnam for many generations. This is a potential force for Chinese firms to develop their businesses." The Vietnamese Government has allowed the establishment of the Vietnam-China Business Forum" in Hanoi on September 23, 2004 and the launching of the Vietnam-China trade and investment promotion website to provide information about Vietnamese and Chinese markets. These facilities are expected to meet and exchange forums to resettle bilateral trade disputes.

However, according to Mr. Tuan, different languages have hindered economic ties between the two countries. Chinese are weak at English while Vietnamese are weak at Chinese. Interpreters fail to fulfil all business requirements. Vietnam has a very small number of interpreters specialising in Chinese business. Other difficulties comprise of local government management and trading habits. State management bodies from the two sides need to monitor two-way trade in small volumes. The habit of pay-on-delivery trade should be replaced by payment via banking systems to keep in line with modern trade practices.

Cross-border smuggling is also a hard-nut-to-crack because Vietnam and China share a common international border. Mr. Tuan also stressed that in the minds of many Vietnamese people, the quality Chinese-made products are poor. The fact is however, that since its accession to the WTO, China has abided by the trade practices and regulations of the world’s largest trade organisation. China has applied advanced production technologies and has been producing better and more durable products.

• Thuy Tien