Ample Room for Chinese Investment in Vietnam

China's foreign direct investment (FDI) in Vietnam is accelerating, presenting an opportunity for Vietnam to enhance the quality and efficiency of FDI inflows. The growing presence of Chinese projects, particularly in high-tech sectors, not only strengthens economic cooperation between the two countries but also supports Vietnam's efforts to diversify investment sources and drive sustainable growth in an increasingly competitive global market.

Prime Minister Pham Minh Chinh and Chinese Premier Li Qiang attends the Vietnam-China business forum in Hanoi in October 2024, urging stronger economic ties and sustainable development

Leading in number of investment projects

China remains one of Vietnam’s largest trading partners while rapidly expanding its investment footprint. In recent years, Chinese investment has surged over sevenfold, making it the sixth-largest foreign investor among 148 countries. In 2023, Chinese investors committed US$4.47 billion, up 77.6% from 2022, highlighting Vietnam’s growing appeal as a strategic investment hub.

According to the Foreign Investment Agency (Ministry of Planning and Investment), as of the end of 2024, total newly registered capital, adjusted capital and capital contributions for share purchases by foreign investors reached nearly US$38.23 billion. Notably, China led in the number of new investment projects, accounting for 28.3%. As of the end of October 2024, China had nearly 5,000 active investment projects in Vietnam, with a total registered capital of nearly US$30 billion. In January 2025 alone, foreign investment reached over US$4.33 billion, up 48.6% from the same period in 2024. China remained the leading partner in new investment projects, accounting for 30.1%.

Alongside rapid growth in quantity and scale, Chinese investment in Vietnam is also advancing in quality. Previously concentrated in sectors like garments, leather, wood, food processing and household goods, Chinese enterprises are now shifting toward high-tech industries, manufacturing components for industrial production, electronics, automobiles, green energy, electric vehicles and e-commerce.

Vietnamese State President Luong Cuong meets with Chinese Party General Secretary and President Xi Jinping on the sidelines of the APEC 2024 Leaders’ Week in Peru, November 2024

Many international-scale Chinese corporations have established production facilities in Vietnam, including Goertek, BYD, Radian, Brotex, Quanta Computer and Foxconn. Additionally, Chinese supporting enterprises supplying major global electronics brands like Samsung and Apple have chosen Vietnam for their factories after evaluating other competing markets.

Unlike many FDI enterprises that concentrate in major urban centers like Ho Chi Minh City and Hanoi, Chinese investors are more evenly distributed across many provinces. Binh Duong, Quang Ninh and Long An, each host 7% of Chinese enterprises, while emerging industrial hubs in the north, such as Bac Giang, Hai Duong and Hai Phong, have around 6%. These locations attract Chinese investors due to their geographical proximity, competitive land prices and favorable industrial infrastructure.

Opportunities and challenges

Attracting investment projects, particularly high-tech initiatives from China, presents an opportunity for Vietnam to enhance the quality and efficiency of FDI inflows. This trend not only strengthens Vietnam’s position in the global supply chain but also promotes diversification of investment sources across many countries and territories. However, the shift of Chinese investment into Vietnam is also creating significant pressure on domestic enterprises, especially in sectors where they have many advantages such as textiles, footwear and wood products. Many Vietnamese enterprises also express concerns that domestic support industries are not yet big enough to participate in the global supply chain, being overtaken by foreign enterprises, particularly Chinese, for market share in the domestic market.

Moreover, Chinese enterprises, especially large corporations, are becoming increasingly selective in choosing investment locations. They prioritize sites that offer rapid handover of premises and factories, as well as industrial parks in prime locations with ample land or proximity to existing hubs to support supply chain expansion. Key factors influencing their decisions include multimodal transport connectivity, energy transition initiatives, skilled labor availability, and continuous improvements in policy frameworks and the overall investment environment.

The expanding presence of Chinese projects helps enhance bilateral economic cooperation

The Ministry of Planning and Investment acknowledges potential for further Chinese FDI, particularly in large-scale, high-tech projects. Vietnam actively encourages increased investment from Chinese enterprises, fostering deeper cooperation, technology transfer, and enhanced production capacity. This aims to integrate Vietnamese businesses more deeply into the global value chain.

To effectively attract high-tech FDI, particularly from China, and drive enterprise development, Vietnam must establish a strong ecosystem for technology investment. Enhancing the business environment through streamlined policies, transparent legal frameworks, and efficient administrative procedures will be key. Upgrading technical and social infrastructure will maximize convenience for investors. A continuously improving legal framework supporting foreign enterprises will play an important role in ensuring sustainable and long-term investment growth in Vietnam.

An important factor in attracting investment is the careful selection of projects. Vietnam must prioritize investments that meet technological standards, integrate into the global value chain, enhance economic production capacity, foster new industries and generate employment. Strengthening project appraisal, tightening screening and supervision, and strictly preventing outdated, labor-intensive and environmentally harmful projects are important. By maintaining high investment standards, Vietnam can maximize the benefits of growing Chinese investment while mitigating potential economic and geopolitical risks.

By Thu Ha, Vietnam Business Forum