German firms see positive outlook in Vietnam

[8 December 2019] — In alignment with global investment changes, an increasing amount of German firms are turning their heads towards Vietnam, seeking to venture into partnerships with local conglomerates in order to tap into the country’s growth potential.

Wolfgang Schmitz-Heinen, CEO of Witte Holding GmbH, visited Vietnam for the first time last week to look for opportunities to start a business here. Witte is a family-run global company in the printing business that specialises in printing secure and self-adhesive labels for various applications including the automotive and electronic industry.

“We want to expand abroad more than before and are analysing different countries, and we got the opportunity to join this business delegation organised by the OAV-German Asia-Pacific Business Association to Vietnam. We are impressed from south to north there, and would like to follow this track to see what is possible for us. I have ideas, but we have to check now the circumstances to ensure that everything we have to do is carried out properly, but we will do it fast”..

“What I learned in these last few days is that almost every industry could use labels. I think we will make contact at first with German companies already in Vietnam which are clients of ours in places like Germany and Mexico to get more information before making any conclusions.”

Witte Holding was one of over 20 German firms that joined the cross-sectoral business mission to explore prospects in Vietnam organised by the OAV-German Asia-Pacific Business Association. Other notable names included BASF Vietnam Co., Ltd, DZ Bank AG, GerBanFibres Ltd., HDI Global SE, and SAP Vietnam.

Representatives of the companies visited Vietnamese giants in some developed industries in Hanoi, Ho Chi Minh City, Haiphong, and Danang, including VinaCapital Group, VinaCapital Ventures, Thaco Chu Lai, Hoa Phat Steelwork, Vingroup, FPT Software, and T&T Corporation. Connection with these domestic companies is seen as vital in order to learn how to penetrate into the burgeoning market in Vietnam – a country which boasts high economic growth and a growing middle class.

At VinFast Haiphong, the delegation visited the car manufacturer’s body shop and general assembly shop in Dinh Vu-Cat Hai Economic Zone, before enjoying a VinFast test drive. As Vietnam’s first high-volume automotive manufacturer, VinFast is developing and manufacturing its own range of innovative, world-class vehicles – thus, it is looking for both financers and suppliers.

The development of industry leaders like VinFast requires a strong supporting industry. However, Vietnam still lacks a comprehensive value chain to bolster development. In this segment, German businesses and their strong expertise can work hand in hand with the industry’s top performers in this country.

“German companies and lenders are looking closely at the possibilities of supplying and financing equipment for projects and companies in Vietnam,” Almut Roessner, executive member of the OAV board explained. “So one aspect that we have learned from our visit is that there are good business opportunities for German high-quality equipment and know-how in supplying local champions.”

German enterprises are now targeting Vietnam as an important market in Asia, according to Roessner. “The OAV is working with local governments and agencies in the entire Asia-Pacific region to organise such business missions for German companies to get information about the opportunities and challenges of the different markets. This year we went to Bangladesh and Vietnam – both countries leading with high growth rates. In future, we will organise further such business missions.”

Also last week, the OAV and its members discussed with Vietnam’s Ministry of Planning and Investment (MPI), and the Ministry of Industry and Trade on the possibilities of strengthening bilateral investment and trade ties in the upcoming time.

The business mission comes at a time as some changes are made in Vietnam to push more economic links between the two countries in anticipation of the upcoming enforcement of the EU-Vietnam Free Trade Agreement. German companies are set to benefit, and next year will be a particular focus as the two countries celebrate 45 years of diplomatic relations.

With new developments would help change the German investment picture in Vietnam soon. According to the MPI, as of November 20, Germany had 349 valid investment projects in Vietnam, registered at $2.04 billion, ranking 18th among 132 countries and territories with investment in the Southeast Asian nation - VIR..

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