• Björn Koslowski

Current Status of German Investments in Vietnam (Part 2/2)

Updated: Jul 30, 2020


Vietnam has recently developed into an attractive investment location for German companies. They are drawn in by the reasonable and high-quality labor, open investment environment and growing local market. Within this two-part post we will 1) introduce the overall investment status and 2) take a look into German manufacturing operations in Vietnam. In today´s second part of this blog entry, we will examine German industrial investments in Vietnam. If you´re looking for part 1 you´ll find it here: https://www.deinternationalvietnam.com/post/current-status-of-german-investments-in-vietnam-part-1-2


Currently, there are 65 manufacturing sites of German companies located in Vietnam.

  • As can be seen beneath, most of them are active in apparel. It might surprise some that this is an industrial field German companies concentrate on. After all, this is the country of car and machinery manufacturers. Albeit, Germany also has a rich tradition in textile manufacturing. For example, the greater Reutlingen region is well known for its many successful textile suppliers as well as OEMs such as Hugo Boss or Trigema. Both kinds of players, textile OEMs and suppliers, are active in Vietnam.

  • Furthermore, 15 chemical companies are invested in Vietnam. While many other industries mostly use Vietnam as an export manufacturing hub, these chemical enterprises typically supply local customers.

  • Because Vietnam until recently did not have local car OEMs, German companies did so far not develop a broad supplier base. However, with Schaeffler, Bosch and Mercedes-Benz the industry contributes some of the biggest German investments in Vietnam.

German manufacturing investments in Vietnam by industry


The largest German investments have been implemented by Bosch (automotive), Messer Gases (chemicals) and B.Braun (medical equipment). Bosch is employing a major manufacturing complex for pushbelts in Dong Nai while also operating an R&D center in HCMC. Messer is supplying gases to local customers such as Ho Phat from its main production hubs in Hai Duong (northern Vietnam) and Quang Ngai (central Vietnam). B.Braun manufactured medial equipment in its two factories in Hanoi. The products are sold in Vietnam as well as shipped to worldwide customers.


Biggest German investments in Vietnam by charter capital


Most German manufacturing operations are located in southern Vietnam concentrating on Binh Duong, Dong Nai and HCMC. The capital Hanoi and its "harbor city" Haiphong are the most important investment locations in the North.


German manufacturing investments by region/province


Investments in northern Vietnam concentrate on the economic corridor between Hanoi and Haiphong. B.Braun and Messer are some of the oldest and biggest investments here. Latest addition has been ZF which is supplying Vinfast through its facilities in Haiphong.


German manufacturing investments in northern Vietnam


Most existing German investments in central Vietnam may be found in the provinces of Binh Dinh and Phu Yen as well as the greater Da Nang region (including Da Nang, Quang Nam and Quang Ngai). Especially the Da Nang area combines relatively low land prices with favorable personnel costs. For these reasons four new investors within our projects decided to go there during the past twelve months (who are not yet included in the graphic below).


German manufacturing investments in central Vietnam

*The smaller map above shows the provinces Binh Dinh and Phu Yen


The overwhelming majority of German manufacturing investments is clustered around 30 to 40 km of the business district of HCMC. The region is the traditional epicenter of foreign investments in Vietnam. It boasts some of the oldest (bültel, tatonka/mountech) as well as many of the biggest plants (e.g. Bosch, Schaeffler, Friwo) of German companies in Vietnam. It is also quite diverse with HCMC as the administrative and economic center of the region, Binh Duong and Dong Nai as established manufacturing hubs and Long An as an upcoming investment destination.


German manufacturing investments in southern Vietnam


The main driver for recent manufacturing investments in Vietnam have been so called "China plus one" strategies. Generally, the idea is that companies with a foothold in China are experiencing several challenges with their existing investments in the middle-kingdom which lead them to diversify to locations abroad. In this context Vietnam offers low labor costs (ca. 1/3 of China), an open and welcoming investment environment (e.g. with most business sectors open for WFOEs) as well as an overall similar business environment to China (which is culturally similar to Vietnam). However, companies typically keep their existing manufacturing in China as they are still mostly content with their operations there and because Vietnam´s northern neighbor is an important market. But when it comes to building up new capacities German investors lately often choose to add locations abroad - e.g. in Vietnam - to diversify their Asian footprint and to reduce individual country risks.


Motivations for "China +1" investments of German companies in Vietnam


Since 2014, we have supported 13 German customers with finding and establishing suitable locations and information on their investments in Vietnam (and some more have not yet implemented their operations). They represent a majority of new manufacturing plants from Germany in Vietnam. Our organization has a great network to local industrial zones and service providers. If you are pondering an investment in Vietnam we might be able to help you out. More information: https://vietnam.ahk.de/en/services/investment-location-analysis


We have created a comprehensive overview of German investments in Vietnam. Please send a mail to info@vietnam.ahk.de if you would like to receive it!


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