German investors find an Asian home

After years in Vietnam, ThyssenKrupp Group - one of the leading industry manufacturers in Germany - saw huge growth potential which led to a decision for investment expansion in this country.

ThyssenKrupp Materials Vietnam, formerly a joint venture between ThyssenKrupp Materials International GmbH and Vietnam’s Dong Do Metal Company, in June announced that it became a 100 per cent foreign-invested company after the German company acquired all stakes of Dong Do Metal Company.

“The conversion reflects ThyssenKrupp Group’s  strong and long-term commitment to the Vietnamese market, especially when Vietnam’s economy and global economy are experiencing a tough time,” said Doan Tuan Viet, general director of ThyssenKrupp Materials Vietnam.

Established in Vietnam in 2007 with initial investment capital of $8 million, ThyssenKrupp Materials decided to increase total investment capital up $20 million.

ThyssenKrupp Materials Vietnam has become one of the leading companies in supplying metal materials for Vietnam. The group has not only expanded in the materials market, but also in other sectors. So far, ThyseenKrupp Group has three companies in Vietnam, namely ThyseenKrupp Materials, ThyssenKrupp Elevator and ThyssenKrupp Polysius and two representative offices.

The rapid economic growth over the past two decades has made Vietnam be an attractive investment venue for investors in Europe, especially in Germany, the largest European economy.

Vietnam’s  Foreign Investment Agency reported that as of the end of August 2012, German companies committed to invest in 184 projects in this South East Asia country with total investment capital of around $900 million.

Many well-known German companies have been present in Vietnam for a long time, including Siemens, Schenker, Bayer, Mercedes-Benz, B-Braun, Metro Cash & Carry, Bosch and Messer Group.

Mercedes-Benz is now running a manufacturing facility in Ho Chi Minh City, pharmaceutical producer B-Braun is having two manufacturing facilities in Hanoi. Meanwhile, Metro Cash & Carry opened 17 wholesale centres in Vietnam.

Like ThyssenKrupp Group, many German companies have drawn investment plans in Vietnam.

Robert Bosch last year started investing in a high-tech facility for the production of push belts used for continuously variable transmission in automobiles, at a total cost of $42 million. The firm also announced to build a research and development (R&D) facility in Vietnam. Robert Bosch stated that it would double investment in its pushbelt plant to $132.6 million by 2015.

During the German Minister of Economics Philipp Roesler’s recent visit to Vietnam, Siemens Vietnam – a subsidiary of Siemens Group - signed a contract with Vietnam Motors Industry Corporation for manufacturing an ELFA hybrid bus prototype. Accordingly, Siemens would supply all necessary ELFA components and provide technical support while Vinamotor would prepare the platform and manufacture remaining parts of the bus for operational readiness.

Meanwhile, Germany-based Hellmann Worldwide Logistics, one of the world’s leading logistics providers, is looking for bigger investment opportunities in Vietnam. The firm early this year announced it wanted to establish a joint venture  or private-public partnership (PPP) on providing logistics services in the fields of healthcare, fashion and garments, food, electronics, spare parts and specialised logistics services in Vietnam. The joint venture or PPP is set to become the company’s headquarters in ASEAN+3+6+8 and in the region of Trans-Pacific Partnership.

“Hellmann is committed to invest in business joint venture or PPP in Vietnam, becoming a trusted partner of the government and people of Vietnam and contributing to the social economic development strategy in the country,” said Achim Georg Deja, president of Tima International GmBH - a Hellmann affiliate, in his meeting with the Vietnamese Ministry of Planning and Investment.

In the health care service sector, German-based MMS International, specialised in hospital operation and management, is looking for investment opportunities in Vietnam. “We will step into two hospital projects in Ho Chi Minh City and one in Hanoi if things go smoothly,” said Matthias Deters, general director of MMS International.

Another German company, TSB Technology Systems Business AG, is also in the mix. “Hanoi and Ho Chi Minh City are our top targets since most high-paid people are residing here. We are negotiating with some partners to get our investment plans for building quality hospitals in Vietnam up in the shortest time,” said Michael Sprotte, director of the company.

German Minister Roesler, at a business forum held in Hanoi, affirmed German enterprises wanted to increase investment in three sectors including renewable energy, high technology and healthcare.

Most of German companies said that Vietnam could attract more investment from Germany if this country further improved infrastructure systems and legal frameworks.

“Vietnam is moving up rapidly and has invested largely in infrastructure. However, this will remain a challenge in luring foreign direct investment to Vietnam. Vietnam has to further invest in this sector as well as resolve issues related to public investment and financial sector to lure more German investors,” said Christiane Laibach, member of board of management at Kfw Banking Group.