Vietnam Positioned as Attractive Investment Hub for German Enterprises

The Delegation of German Industry and Commerce in Vietnam (AHK Vietnam) recently unveiled the findings of the AHK World Business Outlook Fall 2023, underscoring Vietnam's growing appeal as a prospective investment destination for German corporations.

The survey indicated a robust commitment from Germany in bolstering its presence in Vietnam during the first 10 months of 2023. Notably, 26 foreign direct investment (FDI) projects were initiated, collectively amounting to nearly US$221.5 million. This not only attests to the confidence German companies place in the Vietnamese market but also positions Vietnam as an enticing prospect for those seeking to diversify their portfolios within the Asian landscape.

Simultaneously, the survey pointed to an encouraging trend for German enterprises pursuing the "China plus one" strategy, particularly in the realm of sustainable investments. Vietnam, equipped to support and embrace such endeavors, emerges as a strategic platform for growth, diversification, and sustainable business practices.

However, the survey identified substantial challenges faced by German companies in Vietnam, with 49% pinpointing the issue of low global demand as a primary obstacle. Skills shortages present a structural challenge for 41% of respondents, closely followed by concerns about potential disruptions in the supply chain at 37%. Other notable risks include economic policy (24%), energy prices (24%), and financing challenges (22%).

In terms of investment plans, the survey highlighted that 42% of German companies in Vietnam prioritize diversifying production and manufacturing, signaling a strategic emphasis on versatile production capabilities. Sales and marketing (41%), services (35%), and logistics (31%) are also deemed significant, reflecting a comprehensive approach to business development.

The survey underscored the influence of factors shaping local investments, with 50% recognizing the growth potential of the Vietnamese market as a pivotal consideration. Customer proximity and localization closely follow at 43%, underscoring a keen interest in aligning strategies with local dynamics. The availability of skilled labor is also deemed crucial, with 37% emphasizing the essential role of a qualified workforce.

By Thu Ha, Vietnam Business Forum