Vietnam - potential investment destination for German businesses

On November 21, the German Chamber of Industry and Commerce in Vietnam (AHK Vietnam) announced the results of the AHK World Business Outlook survey - Fall 2023.

The survey of more than 3,600 businesses showed that many German businesses and businesses with close connections to Germany are continuing to expand their business scale in many markets.

According to the assessments of these businesses, the current global economic situation still shows no clear signs of recovery, and the growth rate has decreased since the beginning of the year. Inflation rates and prices of some goods and energy remain high in some areas.

Meanwhile, rising interest rates, especially in the Euro area, and the USD area, and a decline in Chinese demand and geopolitical risks are having a negative impact on the businesses of globally active companies.

The expectations of German businesses in doing business in foreign markets are somewhat more conservative, with many businesses intending to cut their investment. However, German businesses intend to invest more in their foreign businesses than in the German market.

According to survey results, German companies operating in Vietnam are facing many significant challenges. Of these, 49% of businesses said that the decline in global demand is the main barrier, 41% of businesses are concerned about the shortage of skilled labor, and 37% of businesses emphasized the risk of supply chain disruption. In addition, there are other notable challenges, such as economic development policies (24%), energy costs (24%), and financial challenges (22%).

The survey also showed that 42% of German companies in Vietnam prioritize diversifying production and manufacturing, focusing on product diversification strategies. 50% of businesses believe that the growth potential of the Vietnamese market is a key factor.

In addition, 43% of German businesses adjusted their strategies to suit the development dynamics in the Vietnamese market, in order to narrow the gap with customers/speed of localization. In addition, skilled labor is also a very important factor, with 37% emphasizing the indispensable role of a qualified workforce.

Over the first 10 months of 2023, 26 investment projects have been implemented, with a total investment of nearly $ 221.5 million from Germany into Vietnam. This not only reflects the confidence of German businesses in the Vietnamese market but also shows that Vietnam is becoming a promising destination for businesses looking for opportunities to expand scale in Asia.​