Vietnam a promising market for supply chain diversification, risk mitigation: German association AHK
German businesses see significant growth potential in Vietnam's promising market, especially when the country’s focus on renewable energy and sustainability aligns with Germany’s strengths in green technologies.
The Delegation of the German Industry and Commerce in Vietnam (AHK Vietnam) highlighted the opportunities in the fall 2024 edition of its AHK World Business Outlook report.
“A strong and growing German business community in Vietnam further underscores the potential for partnerships and joint ventures,” AHK Vietnam added.
Production at Mercedes-Benz factory in Vietnam. Photo courtesy of To Quoc (Home Country) newspaper.
The report showed that German businesses see significant growth potential in Vietnam's promising market. Over half (53%) of surveyed firms have noted a positive competitive position over the past five years
Vietnam’s steady economic growth and strategic role as a manufacturing and export hub offer German companies a stable alternative amid global uncertainties, enabling supply chain diversification and risk mitigation, the AHK emphasized.
Besides, a survey within the report indicated that 81% of surveyed businesses are positive as well as satisfied with their current operations in Vietnam and 50% expect business growth.
About 35% plan to increase local investments, showing an increase compared to spring 2024 with 24%. While 54% are confident about Vietnam’s steady growth, 35% anticipate economic growth in Vietnam over the next 12 months.
However, the AHK noted some risks for all German enterprises. They are subdued global demand (60%), economic policy uncertainties, infrastructure constraints, trade barriers, increasing labor costs, legal uncertainties, and ongoing supply chain disruptions (22%).
In the Vietnamese market, among major risks are the rising cost of preliminary products, intense local competition, and competition from third-market players.
Currently, over 530 German businesses are operating in Vietnam with total investment of $3.6 billion.
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