Nestlé’s success story crowns 45 years of Swiss investment

As Switzerland and Vietnam will celebrate 45 years of diplomatic relations this year, how would you evaluate their trading and investment relationship to date?

Switzerland and Vietnam established diplomatic relations on October 11, 1971. Over the last number of decades bilateral relations have continuously intensified, focusing on trade and investment, development co-operation, and tourism. Notably, trade flows in both directions have been increasing every year. In 2015, the trade volume between Switzerland and Vietnam amounted to CHF1.473 billion ($1.5 billion), with a trade deficit for Switzerland of CHF481 million ($498 million).

The three major categories of Swiss products exported to Vietnam are pharmaceuticals (around 40 per cent), machinery (around 30 per cent), and optical and medical instruments (7 per cent of the total export volume). Exports from Vietnam to Switzerland include electronic products and machines, textiles and footwear, seafood and organically produced agricultural products, coffee, rubber, pepper and ceramic amenities. These examples are proof of the diversified relations between the two countries, which the Swiss Embassy is determined to further develop and promote.

How many companies from Switzerland are operating in Vietnam currently?

Switzerland is one of the world’s most competitive and internationally integrated economies. It is the fourth-largest foreign investor from Europe in Vietnam with the accumulated investment capital of over $2 billion, and is providing employment for more than 15,000 people.

Swiss companies in Vietnam generate a wide range of products and services: industrial machinery; civil engineering, construction and architectural design, food and beverages, pharmaceuticals and chemicals; electronics and IT equipment, as well as shipping and trading services. Additionally, more and more highly specialised small- and medium-sized companies are now interested in choosing Vietnam as a production base, with the number of these investments doubling in recent years.

Many well-known Swiss companies have been investing in Vietnam for a long time – companies like Holcim, Nestlé, Schindler, ABB, and Syngenta have gained a renown here as dependable investors. There are approximately 100 Swiss companies operating in Vietnam under different entities: 100 per cent capital from Swiss firms, private joint ventures, and joint businesses between the state and private sector.

In addition, Vietnamese students have flocked to some of the well-known Swiss universities specialising in tourism and finance here.

Swiss investment in Vietnam has continued along a steady trajectory to hit an accumulated capital of $2 billion

How important is the Vietnamese market to Swiss enterprises?

Vietnam is an important market for Switzerland because the Vietnamese economy is growing at an impressive speed. Its shift from a centrally-planned to a market economy has transformed the country from one of the poorest in the world into a lower middle-income one.

This track record is reflected in the economic relations between Switzerland and Vietnam. Vietnam has rapidly become an important destination for Swiss products and investments.

It is therefore not surprising that even more companies are looking for opportunities in Vietnam. With its improving business environment and increasing purchasing power, as well as the burgeoning industry here, Vietnam has the potential to become an even more important market for the Swiss economy.

Which sectors hold the most potential for Swiss investors in Vietnam?

We are growing very strongly in terms of food manufacturing technology, pharmaceutical and medicines, as well as in machinery and equipment. Since Vietnam wants to move up in the value chain in order to produce better machines and goods, it has been importing hi-tech machinery from Switzerland. Others sectors with a lot of potential for growth include bio-tech, green energy, and leaner and cleaner production lines.

Vietnam is aiming to reach its industrialisation goals by 2020. However, in order to reach them, good quality investment is crucial.

After 45 years of building our relationship, do you think there is still room to ramp up our investment? How can we improve upon our investment in Vietnam?

Yes, I think certainly there is room for development. In general, we are seeing a hugely improved business climate as a result of initiatives spearheaded by the Vietnamese government, but we have to ensure that the business environment is strong enough for the private sector. We know that the administrative procedures for businesses have been reduced and streamlined a lot over recent times, but it needs to be as efficient as possible.

I also think certain transaction charges should be reduced to ensure a safe and efficient business environment for all sectors. Other things which must be improved include the copyright and legal system. These will make your business environment more competitive, thus encouraging foreign investors to establish a presence here or to expand their existing investment projects.

Among the Swiss companies investing in Vietnam, Nestlé stands out as a success story to be emulated. What is your assessment of Nestlé’s activities in Vietnam?

Nestlé is one of the first Swiss companies to enter Vietnam. It is now the biggest investor from Switzerland to Vietnam with the investment capital of more than $520 million. Nestlé is a good example of a company that offers products tailored to local tastes by taking into account the local environment.

The company has been here for many years, and its investment has been growing all the time through new factories, using more local labour, and more products intended for both the local and international markets.

I have recently had the opportunity to take part in the ground breaking ceremony for a new Milo factory in the north. For me, this activity demonstrated the company’s enlarged investment strategy in Vietnam.

This is a prime example of how a big company can invest successfully in Vietnam. We are very proud of it because Nestlé epitomises the Swiss business values of quality and trustworthiness, ability, high quality products, and appeal for a wide range of consumers.

Nestlé’s factories in Vietnam are the most modern in the world with advanced production lines, fully automated systems, sterilised production lines, and state-of-the-art facilities. Another impressive quality is that Nestlé combines all the factors that make a responsible and successful company: safety, quality, and diversified products. They also invest heavily in improving the skills of their workers, as they are keenly aware that the most important access point to advanced technology is through people.

Another thing I also appreciated is the enthusiasm shown from the people working in Nestlé’s factories. It is like a big family where all people understand each other and are devoted to the ideal of responsibility within the company.