“German Businesses on Challenges and Opportunities in Vietnam Amid Global Flux”

Despite mounting challenges, both domestically and internationally, the GBA remains confident in Vietnam’s role as a highly resilient and potential investment destination.

In the first months of 2025, the GBA maintained strong connections with the international business community and authorities in Vietnam through significant events.

In the first quarter of 2025, the GBA actively participated in high-level events, including: The conference on building regional and international financial centers in Vietnam, chaired by Prime Minister Pham Minh Chinh; Dialogue between GBA Vice President Martin Körner and Vietnamese Ambassador to Germany, Vu Quang Minh, in Berlin; Meeting and working with the People’s Committee of Quang Nam Province and leaders of departments, branches, and sectors.

The GBA successfully organized the Franco-German Day 2025 “Feierabend Rendez-Vous” with the French Chamber of Commerce and Industry in Vietnam (CCIFV); the first networking event “Connect & Cocktail meets Deutschentreff” with the American Chamber of Commerce in Vietnam (AmCham Vietnam) in Ho Chi Minh City, attracting nearly 250 attendees, and upcoming networking and partner search events with Asian business associations.

The GBA also holds monthly Business Meetings, inviting leading experts to update members on economic and trade forecasts, especially regarding new US tax policies.

On the occasion of the 50th anniversary of diplomatic relations between Germany and Vietnam and the 30th anniversary of the GBA, the GBA will organize a series of cultural festivals such as Oktoberfest in Hanoi, Danang, and Ho Chi Minh City, along with sports events, the GBA Business Awards, and the special event GBA German Ball – marking the 30-year milestone and expressing gratitude for the contributions of the business community.

These activities continue to affirm the long-term strategic imprint of German businesses and the GBA’s commitment to sustainable development in Vietnam.

Current Business Situation of German Enterprises in Vietnam

According to the survey by the German Chamber of Commerce and Industry (AHK World Business Outlook Spring 2025), businesses perceive both opportunities and risks, facing domestic challenges while benefiting from Vietnam’s increasingly important role in the global supply chain.

80% of businesses rate their current business situation as “good” or “satisfactory,” indicating a relatively stable operating environment. This confidence is also reflected in future-oriented decisions: 38% of businesses plan to increase investment, while 43% intend to expand their workforce in 2025.

The economic relationship between Germany and Vietnam continues to flourish. In 2024, bilateral trade surpassed 18.8 billion euros (equivalent to approximately 20.4 billion USD), and German businesses continued to invest in potential sectors such as renewable energy, automation, and vocational training.

Some German companies have expanded their operations in Vietnam over the past year. Ziehl-Abegg inaugurated a $20 million factory in Dong Nai specializing in ventilation and drive technology. Kärcher operated a $19.4 million factory in Quang Nam producing cleaning equipment. Recently, Südwolle Group also officially inaugurated a $21 million dyeing factory in Ninh Thuan.

Although the survey was conducted when the US announced new tariffs, many participating businesses have not yet fully assessed the potential impact of this policy. However, the survey results still reflect Vietnam’s enduring appeal in an increasingly volatile global context.

Main Challenges Faced by German Businesses

Alongside positive prospects, German businesses are striving to overcome multiple barriers affecting their operational efficiency and competitiveness, including:

Lack of consistency in the legal framework: Overlapping regulations create legal uncertainty.

Limited administrative efficiency: Prolonged customs clearance time and inconsistent implementation remain notable issues.

Sudden changes in US tariff policies for goods originating from Vietnam (according to EuroCham’s survey on the impact of US tariffs).

Shortage of technical and skilled personnel: This affects productivity in the manufacturing and technology sectors.

Unclear requirements for localization and investment licensing: This creates challenges in strategic planning.

German & EU Economic Context: Spillover Effects on Vietnam

The current German and EU economies are influenced by high energy costs, geopolitical instability, and moderate GDP growth. As a result, German businesses are reassessing their supply chains and seeking to diversify away from risky regions.

Vietnam is increasingly viewed as a strategic and safe choice for production, sourcing, and operations in the region.

In parallel, new trade policies – such as US import tariff increases and policy adjustments from the EU – are driving German businesses to expand their presence in Southeast Asia, with Vietnam standing out due to its robust system of trade agreements and improving infrastructure.

Investment Prospects and Confidence in Vietnam

German businesses remain firmly confident in Vietnam’s long-term prospects due to: A growing middle class and expanding domestic market; Political stability and improving macroeconomic indicators; The Vietnamese government’s relentless efforts in developing digital infrastructure and green transformation.

The GBA acknowledges the Vietnamese government’s commitment to attracting foreign investment and highly appreciates recent reforms in investment licensing, customs, and vocational education.

To continue attracting high-quality FDI, including from German businesses, the GBA makes the following key recommendations: Ensure transparency and consistency in enforcing legal regulations related to investment; Simplify customs procedures and administrative processes through digitization; Develop skilled human resources through the dual vocational training model; Strengthen public-private dialogue in a regular and systematic manner to effectively address challenges.

According to the GBA, despite facing numerous challenges, German businesses in Vietnam remain optimistic and committed to this market for the long term. The GBA’s relentless efforts in maintaining operations, promoting cooperation, and participating in sustainable development initiatives affirm Vietnam’s position as a strategic investment destination. With political stability, a thriving economy, and improvements in investment policies, Vietnam continues to be a preferred choice for German enterprises expanding and solidifying their presence in Asia.