Where Are Chinese Investors Placing Their Bets in Vietnam?

There has been a significant increase in Chinese investment in Vietnam in recent years. To gain further insights into this matter, the Vietnam Industry and Trade Newspaper’s reporter had an interview with Mr. Ha Gia Ke, Vice Chairman of the Guangxi Enterprises Association (under the China Enterprises Association in Vietnam).

Many observers argue that there is a strong wave of Chinese business investment in Vietnam. What are your thoughts on this matter?

Indeed, there has been a robust wave of Chinese business investment in Vietnam recently. In my opinion, there are numerous reasons why Vietnam has become attractive to foreign investors, including those from China. Firstly, it is essential to acknowledge that Vietnam is a rapidly growing market, with high and stable economic growth over an extended period. Additionally, the country boasts political stability, an improving labor force, and relatively open and transparent investment attraction policies.

The trade conflict between China and the United States, along with the high tariffs imposed by the European and American markets on Chinese exports, have further fueled Chinese businesses’ investment in Vietnam. Meanwhile, Vietnam’s participation in numerous free trade agreements means that Chinese companies investing in Vietnam will benefit from preferential treatment when exporting goods to Europe, the United States, and other countries worldwide.

In which sectors are Chinese businesses primarily focusing their investments in Vietnam, Mr. Ha?

Chinese investors are interested in various sectors in Vietnam, with a particular emphasis on the processing and manufacturing industry. Specifically, they are targeting the electronics component supply chain. Previously, major global electronics corporations invested in China, but some have since shifted their investments to Vietnam. As a result, companies within the supply chain have had to follow suit, making electronics a key investment sector for Chinese businesses in Vietnam.

In addition to the electronics component industry, new energy products such as solar energy and logistics are also attracting the attention of Chinese investors in Vietnam. These sectors align with Vietnam’s priorities and are areas where Chinese companies have a competitive advantage.

In the long run, what should Vietnam do to enhance its attractiveness to foreign investors in general and Chinese investors in particular, in your opinion?

Vietnam’s investment environment is already appealing to foreign investors, including those from China. However, there are still some bottlenecks that need to be addressed. While Vietnam’s investment attraction policies are considered open, there is a lack of consistency and unity among local governments during the implementation phase, creating obstacles for foreign investors when executing their projects in Vietnam.

Additionally, Vietnam’s logistics costs remain high, increasing the overall costs for investors when implementing projects here. To enhance its attractiveness, Vietnam should consider reducing logistics costs.

Furthermore, rental costs for factories and warehouses in Vietnam are also on the rise, especially in provinces like Bac Ninh and Bac Giang. Consequently, Chinese investors, including large corporations that have already established a presence in Vietnam, are now looking toward other northern provinces that are actively attracting investments and offering more competitive land, tax, and investment incentive policies at lower costs.

Thank you for your insights, Mr. Ha!