German firms consider Vietnam potential destination: Survey

Electronic accessories production at YPE Vietnam company in Binh Xuyen 2 Industrial Park in Vinh Phuc province (Photo: VNA)

The German Chamber of Commerce Abroad (AHK) in Vietnam on November 21 released its AHK World Business Outlook – Fall 2023, which highlights Vietnam as a promising investment destination for German businesses.

In October, German companies made a big step in increasing their presence in the Vietnamese market with the implementation of 26 projects worth nearly 221.5 million USD. This reflected the firms’ strong confidence in the Vietnamese market, and at the same time showed the attractiveness of Vietnam to German businesses who wish to expand their operations in Asia, according to the survey.

It said that German enterprises are paying great attention to green investment projects. Meanwhile, the Vietnamese market is ready to welcome and support business projects, providing a foundation for growth and sustainable business persification.

Specifically, for investment plans, the survey revealed that 42% of German companies in Vietnam prioritise persifying production and manufacturing activities, as well as focusing on product persification strategies. The sector is followed by sales and marketing at 41%, services (35%), and logistics (31%).

Regarding factors affecting the investment decision, 50% of surveyed businesses held that the growth potential of the Vietnamese market is a key factor, along with skilled workforce.

Over risks and challenges, the survey pointed out that German businesses assess that the decline in global demand is a main barrier, and they are concerned about the risk of supply chain disruption. In addition, those operating in the Vietnamese market also encounter some difficulties such as energy costs and financial resources.

At the same time, it said that German businesses tend to invest more in their network of business establishments abroad than in the German market. In response to the development of the global economy, many German enterprises and businesses with close connections to Germany are continuing to expand their business scale in the global market, including Vietnam, it added.

The AHK World Business Outlook is based on a regular German Chamber of Commerce and Industry (DIHK) survey of member companies of the German Chambers of Commerce Abroad, Delegations, and Representative Offices (AHKs). In fall 2023, it collected feedback from more than 3,600 German companies, branches, and subsidiaries worldwide as well as companies with close ties to Germany. The survey was conducted from September 25 to October 20.