In recent years, China has been one of the leading countries for foreign direct investment in Vietnam. However, in addition to the opportunities, the wave of FDI by Chinese companies has also brought a number of challenges.
China's foreign direct investment in Vietnam, 2019-2023.
In recent years, in the wave of the transfer of ** chain to overseas, Vietnam is often the first choice for Chinese enterprises. In 2023, Chinese companies will accelerate their investment in Vietnam, and many enterprises will establish ** chains in the local area.
Currently, among the 144 countries and regions that have invested in Vietnam,China is the sixth largest investment partnerAs of the end of 2023, the cumulative registered capital is nearly 274$7.9 billion. In 2023 alone, the total registered capital of Chinese enterprises in Vietnam will reach 44$700 millionRanked fourth in total foreign investment in Vietnam
Chinese companies cover many different industries and sectors in Vietnam. According to statistics from Vietnam's Ministry of Planning and Investment, in recent years, in addition to familiar fields such as catering, hotels, and consumer goods, Chinese investors have also expanded to other processing and manufacturing industries, such as electronics, tire manufacturing, textiles, footwear and leather, and electricity.
BYD Fushou PlantFor example, in 2023, the investment of Chinese companies in Vietnam:
China's JinkoSolar Holding Group has invested US$1.5 billion in Quang Ninh's photovoltaic cell technology complex project.
Runyang Group invests in 2US$9.3 billion to build a semiconductor materials factory in Nghe An.
BYD Group, China's largest electric vehicle company, has also invested 2$6.9 billion auto parts project.
Chinese companies such as Trina Solar, Haohua Tire, Yadea, BOE, and Luxshare Precision have announced investments in Vietnam, from Chinese companies that produce new energy photovoltaics and auto parts to TVs and headphones that are closer to consumers.
According to the South China Morning Post, the increase in production costs, as well as the "China+1" wave and geopolitical tensions, are factors that are driving Chinese companies to invest more and more in Vietnam.
However, Ruchir Desai, director of Asia Frontier Capital, said that long before the outbreak of Sino-US tensions and the outbreak of the pandemic,Vietnam has attracted many foreign direct investment enterprises due to its abundant labor resources, attractive salaries, and excellent geographical location
In addition, Vietnam continues to strengthen its reputation as a reliable manufacturing hub by signing free** agreements with the European Union (EU), South Korea and Japan, and by acceding to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
Rational policies and a stable political environment that have been in place over the years to attract global manufacturing have helped Vietnam attract more and more FDI inflows. In other words, Vietnam's efforts to attract FDI are now at a "sweet spot".
In 2024, China still accelerated its investment in Vietnam.
According to the Vietnam Foreign Investment Agency, as of January 20, the total amount of new registrations, adjustments and capital contributions (**MCP) of foreign investors exceeded 23$600 million, an increase of 402%。Especially from the number of projects,China is the partner with the largest number of new investment projects, accounting for nearly 19%.
Opportunities and challenges coexist
The opportunities presented by the wave of foreign direct investment in China are enormous. Vietnam can take advantage of the inflow of foreign direct investment from China to learn and improve the level of production, technology, especially in semiconductor technology, clean energy, etc0 technical fields.
At the same time, there will be more opportunities for local Vietnamese companies to provide goods and services; Construction, logistics, real estate, etc. still have more room for development.
However, there are some concerns, especially for companies in the supporting sector. Phan Dang Tuat, Chairman of the Vietnam Association of Supporting Industries, said that when Vietnamese supporting industry enterprises are not large enough to participate in the global manufacturing chain, they are surpassed by foreign companies, especially Chinese enterprises, to gain market share.
Chinese enterprises