German groups keen on Vietnam’s innovation push

An Phuoc Industrial Park Infrastructure Dong Nai, Source: khucongnghiepvietnam.com.vn

Last week, Pearl Group, a company involved in polyurethane (PU) insulation solutions and other PU-based applications, announced that it had established a new production facility in An Phuoc Industrial Park in the southern province of Dong Nai. This strategic expansion marks a key milestone in Pearl Group’s global growth, reinforcing its commitment to serving Southeast Asia with innovative products and advanced technical services.

Motivated by the region’s robust growth prospects and the increasing demand for premium materials, Pearl Group has chosen Vietnam as the hub for its Southeast Asian operations.

Vietnam’s dynamic market environment, coupled with its strategic location and business-friendly policies, makes it an ideal base for reaching neighboring markets such as Thailand, Cambodia, Indonesia, Malaysia, the Philippines, and Australia, with the potential to supply South Korea and Japan in the future, the company said.

“We believe in the potential of Vietnam and the broader Southeast Asian region,” said Martin Kruczinna, CEO of Pearl Group. “While some global players are retreating, Pearl Group is investing in the future of this vibrant region. Our new facility will allow us to better serve our customers by producing high-quality products locally and offering tailored technical expertise. This will allow us to deliver customised solutions that meet our clients’ needs while optimising their results and profitability.”

Also last week, German IT consulting company Uniqbit AG entered a strategic partnership with FPT Software to foster innovation and business development across Germany and the wider European region.

The partnership focuses on advancing digital transformation by developing innovative platforms for companies in the energy and retail sectors. “This partnership with FPT represents an opportunity for both companies to accelerate growth and innovation. Together, we will leverage our complementary strengths to develop advanced digital platforms that deliver meaningful value to our clients and support long-term business objectives,” said Tom Weber, founder of Uniqbit AG.

In early August, DIGI-TEXX Vietnam also launched its new operations centre in the Mekong Delta province of Hau Giang, capable of accommodating 900 employees working 24/7. The expansion into Hau Giang’s Innovation Solution Centre in 2024 mirrors DIGI-TEXX’s early days in 2003 when the company was among the first to invest in Quang Trung Software City, Vietnam’s first IT park.

Frank Schellenberg, founder and chairman of DIGI-TEXX Vietnam, said that both instances highlight Vietnam’s commitment to infrastructure development and technological innovation, which have been critical to the company’s success as a global digital service provider.

“Vietnam has emerged as a compelling investment destination in Southeast Asia, offering a stable political climate, a fast-growing economy, and a strategic location, making it a prime destination for foreign investment,” Schellenberg said.

According to the latest report from the Ministry of Planning and Investment, German investments in Vietnam continue to grow, culminating in 475 projects with a total registered capital of $2.78 billion. In the first nine months of 2024, German companies’ total registered investment in Vietnam hit $91 million, up 41 per cent on-year.

German companies have found a formula for success in Vietnam, with investments ranging from renowned global brands like Bosch, Mercedes, and Schaeffler to lighthouse projects from market leaders such as B. Braun, Messer, Stada, and tesa. Emerging projects from industry champions like Fuchs, Kärcher, Viessmann, and Ziehl Abegg also highlight Germany’s growing influence. Local German-influenced companies – such as DIGI-TEXX, Fischer ASIA, Lecka, and Pearl – have similarly made significant impacts by building their businesses in Vietnam.

Vietnam has also become one of the largest set-ups for Bosch in Southeast Asia. Over the past three decades, Bosch has invested around 450 million Euro (nearly $500 million) and established a comprehensive presence in manufacturing, research and development, business centres, and service centres.

Andre De Jong, the new managing director of Bosch Vietnam, said the company’s presence in Vietnam and Southeast Asia is in line with Bosch’s larger strategy to maintain a well-balanced global portfolio.

“Vietnam is attractive to Bosch due to its role as a tech and innovation hub and its strong pool of young, tech-savvy talent. Local young talent is the key factor to fostering continuous innovation in the region and staying relevant to our customers,” De Jong said.

According to Alexander Ziehe, chairman of the German Business Association (GBA), the increasing role of German investments in Vietnam reflects the country’s significance for German multinationals and small- and medium-sized enterprises in their internationalisation strategies.

“Vietnam is not just a sourcing and export hub, with its rising middle class and accelerated industrialisation, it is becoming increasingly important as a market for foreign-led projects,” Ziehe said.

“We observe that most projects follow a staged plan strategy, often starting in a small to mid-sized rental facility before expanding into a larger site. A few exceptions stand out, where companies design their own manufacturing footprint from the outset of their Vietnam journey.”

Recent German-invested projects are not confined to manufacturing alone. German companies are also investing in research, distribution, branding, and supply chain activities, reflecting the changing landscape of sectors attracting German investments in Vietnam over recent years, Ziehe added.

"While German investors initially focused on textiles and automatics, they have diversified into sectors such as medical supplies, chemicals, building materials, and consumer goods, further showcasing the rising importance of the Vietnamese and ASEAN markets," he said.

Vietnam’s thriving market: a magnet for German investors Vietnam has recently emerged as an attractive investment location for German companies due to numerous factors. The country’s reasonable and high-quality labour force offers a competitive advantage, while its open investment environment fosters business growth and collaboration.

Germany's DIGI-TEXX launches new operations centre in Hau Giang DIGI-TEXX Vietnam has launched its new operations centre in Hau Giang province, contributing to the economic transformation of the Mekong Delta region.

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Opportunities widen to do business in Germany In the last few decades, Vietnam has risen like a phoenix from ashes. After the end of the war in 1975, the nation was in a desperate situation. Today, growth and optimism can be felt everywhere, from Quang Ninh at the Chinese border to Ca Mau in the deep south. Vietnam’s ambitions are enormous, and it wants to join the club of industrialised nations by 2045.

Innovation heads up German-Vietnam ties As we move through 2024, the relationship between Germany and Vietnam is especially meaningful as we commemorate Vietnam’s National Day on September 2: a day that symbolises the resilience, unity, and progress of the Vietnamese people. In my capacity as German Ambassador to Vietnam, I offer my best wishes to the people of Vietnam.