German Businesses Optimistic on Vietnam Market

The global economy shows slow but stable growth, with ongoing challenges. Despite this, German businesses remain optimistic about Vietnam, with the AHK World Business Outlook Fall 2024 survey highlighting investor confidence in both business performance and Vietnam's strong macroeconomic growth.

Economic growth expectations

Among surveyed businesses, 81% are positive as well as satisfied with their current operations, 50% expect business growth, 35% plan to increase local investments, showing an increase compared to spring 2024 (24%), and 35% anticipate economic growth in Vietnam over the next 12 months, while 54% are confident about Vietnam’s steady pace. Besides, 54% of respondents intend to maintain their workforce levels in the next 12 months while 35% plan to hire new employees.

In 2024, German investment in Vietnam reached new heights, reflecting a strong and growing partnership between the two countries. With over 530 German companies actively operating in Vietnam, the country remains a key market for Germany's global expansion strategies.

German enterprises have invested an impressive US$3.6 billion, showcasing their confidence in Vietnam's economic potential. These investments span diverse sectors, including manufacturing, advanced technology, logistics, and the rapidly growing renewable energy industry, underscoring Vietnam's pivotal role in supporting sustainable and innovative growth.

Challenges and opportunities

In Europe, the economic outlook is underwhelming. Although German companies operating internationally remain optimistic about the future, they still remain cautious due to these global economic fluctuations.

Businesses face key challenges in this volatile environment, including weak global demand (60%), economic policy uncertainty (30%), and infrastructure constraints (27%). Other issues impacting German enterprises, including those in Vietnam, are trade barriers (24%), rising labor costs (22%), legal uncertainties (22%), and supply chain disruptions (22%).

Additionally, German companies are defining factors influencing their competitiveness in the Vietnamese market. The highest influences include the rising cost of preliminary products (47%), intense local competition (33%), and competition from third-market players (26%). These factors further underscore the complex landscape that businesses must navigate to sustain growth and remain competitive globally.

Despite challenges, German businesses see significant growth potential in Vietnam's promising market. Over half (53%) of surveyed firms have noted a positive competitive position over the past five years. Vietnam’s steady economic growth and strategic role as a manufacturing and export hub offer German companies a stable alternative amid global uncertainties, enabling supply chain diversification and risk mitigation.

The country’s focus on renewable energy and sustainability aligns with Germany’s strengths in green technologies, presenting vast opportunities for innovation and collaboration. A strong and growing German business community in Vietnam further underscores the potential for partnerships and joint ventures. By addressing challenges like infrastructure gaps and local competition, German firms can strengthen their presence in Vietnam and leverage their dynamic economic landscape to achieve sustainable growth.

By Thu Ha, Vietnam Business Forum