German businesses commit to long-term partnerships in Vietnam

Consumer confidence, unfortunately, remains low, compelling our members in related sectors to adjust their business activities. Nevertheless, German investors’ dedication to talent development and sustainable business practices has enabled most of our members to navigate these challenges with minimal restructuring. By leveraging their strengths, they have successfully driven market share and profitability.

Alexander Ziehe, chairman, German Business Association

Some members have expanded their customer base to neighbouring countries, promoted high-margin solutions, and built trust within the market. Overall, our community has shown resilience, supported by the German Business Association’s (GBA) growth to over 400 members, solidifying our position as the largest European business association in Vietnam.

2024 was a landmark year, as we successfully executed our comprehensive action plan, achieving outstanding results. Several key accomplishments highlight this success. We increased our event offerings by over one-third compared to 2023, notably introducing the newly launched GBA Business Awards to share success stories with the public. Additionally, we hosted more member-for-member workshops, empowering companies to develop new business ideas and share best practices.

The launch of our Zalo Konnects Platform provided members with a new tool to promote their solutions and news to the community, enhancing sales and branding opportunities.

We extended our presence in Northern Vietnam with our inaugural business luncheon, excursions to FPT, Qatar Airways, and tesa, and increased participation with regular Hanoi events.

The GBA strengthened its footprint in bilateral relations through initiatives such as the Green City Forum in Ho Chi Minh City, investor delegations to the neighbouring provinces of Binh Duong and Dong Nai, and high-level exchanges with government officials. We also organised round tables with German Federal President Steinmeier and the new German Ambassador to Vietnam Helga Margarete Barth.

We also engaged with German delegations and intensified collaboration with partners from the European Chamber of Commerce and the Delegation of German Industry and Commerce in Vietnam.

This past year also marked a significant shift in German investments in Vietnam. We welcomed major investments from Ziehl-Abegg, Kärcher, and Pearl Polyurethane Systems, highlighting the continued interest in the Vietnamese market.

However, the second half of the year saw a notable decline, with no further German investment growth. Companies already invested in Vietnam focused on stabilising their operations rather than expanding.

On a positive note, current investments are increasingly emphasising quality and sustainable business practices. This includes expanding training opportunities for employees, investing in green technologies such as photovoltaic systems, and upgrading production methods.

The Vietnamese government has shown strong efforts to address investors’ needs and reform administrative structures to enhance the business climate. We have engaged at multiple levels with local and national authorities to transparently share our insights and recommendations.

Despite the positive environment and the government’s openness, we have identified several areas requiring further improvement and attention. In infrastructure, we observe significant congestion on several intra-provincial roads, at Tan Son Nhat airport, and in customs during peak times. Additionally, the complexity of licensing, work permit requirements, and regulations on international financial transactions is diminishing Vietnam’s attractiveness to investors.

We encourage the government to fully digitise processes and significantly simplify admin. Rather than focusing on specific laws, we recommend a holistic approach where all departments and ministries work to lower burdens and reduce bureaucracy for companies across all sectors.

With this target and mindset, we believe Vietnam will continue to thrive as one of the most attractive investment locations, both regionally and globally. We acknowledge the recent announcements by the central government and believe these reforms present opportunities for Vietnam to enhance efficiency.

We believe the future for our community is promising for 2025 as Vietnam offers a robust foundation for further growth. With the stabilisation of the global economy and recent political trends, we anticipate a resurgence in German investments, driven by diversification, regionalisation, and supply chain localisation strategies.

As a result, we expect increased investments in local sourcing, research and development, and manufacturing to align with these trends. In line with global requirements, German companies will also remain committed to decarbonising operations and implementing the best business practices.

While certain sectors, particularly consumer goods and services, may experience a slower recovery in 2025, we foresee a cautious approach to activating local demand. Conversely, in export and investment goods and industrial supply, we anticipate a faster recovery and increased activity within both the foreign and local business communities here.

German groups keen on Vietnam’s innovation push German companies continue their pivot towards investing in Vietnam and doing business with domestic partners, underscoring their long-term commitment to one of the most lucrative markets in the region.

German businesses explore investments in Dong Nai A delegation of over 45 German enterprises and investors have explored investment opportunities in Dong Nai province thanks to its favourable investment environment and improved connectivity.

German businesses remain upbeat about Vietnam The AHK World Business Outlook Fall 2024 from December 11 highlights German investors’ confidence in the performance of their Vietnamese-based businesses and the robust macroeconomic growth here, underscoring the country’s appeal as a key investment destination.