Vietnamese-German partnerships further flourish

Last week, an event titled Rhineland-Palatinate Hanoi – Golden Connection Brings New Opportunities was held to present products, services, and technology from enterprises in the southwestern German state of Rheinland-Pfalz to Vietnam.

Vietnamese-German partnerships further flourish, Source: baochinhphu.vn

Rhineland-Palatinate is among Europe’s leading innovation hubs. It provides networking, consulting, and infrastructure for subsidiaries and innovative tech startups. Common estimates show that the state’s creative industries presently include 10,000 companies with 27,000 employees and total revenues of $4.6 billion.

The event featured enterprises from the agriculture, fast-moving consumer goods, and construction industries together with a consultancy unit.

The state of Rheinland-Pfalz has pioneered in the chemical industry, pharmaceuticals, vehicle manufacture, chemistry, machinery and equipment production, and food industry. In terms of viticulture and wine production, Rhineland-Palatinate ranks first in Germany, accounting for more than 70 per cent of the country’s total output in this sector.

At the event, businesses from Vietnam and Germany met and interacted for mutual learning and fostering partnerships between investors from the state as well as German and Vietnamese businesses, contributing significantly to the promotion of comprehensive Vietnam-Germany cooperation.

Marc Ridder, CEO of Ridder GmbH told VIR, “We are looking for reliable partners here in Vietnam for a long-term partnership. The government has done a really good job for us to have all the conditions to be in a good position to sell here.” Ridder GmbH is a private company selling bathroom furniture and products for the elderly and disabled.

According to the General Department of Vietnam Customs, Vietnam-Germany trade turnover surpassed $10 billion in 2021, an 11 per cent increase on-year. In the first seven months of 2022, the figure sat nearly $7.3 billion, equivalent to 18.5 per cent compared to the same period in 2021.

As of September 20, Germany had over 430 active investment projects in Vietnam with a total registered capital of $2.33 billion. Meanwhile, Vietnam boasts 36 initiatives in Germany, totalling $283.3 million in registered capital.

Small and medium-sized enterprises, the backbone of the German economy, are seeking to diversify their investments and businesses in order to cut costs and respond to the current political conflicts and economic turmoil. German investors view Vietnam as an attractive market for shifting investment, trade, and strengthening economic ties, and numerous German business delegations have planned to assess the Vietnamese market before the end of 2022. Germany forecasts that there may be a shortfall of hundreds of thousands of qualified employees by 2030, whereas Vietnamese workers are plentiful.

Vietnam also has favourable natural resources for energy companies such as wind power and a long coastline. Wind power, solar energy, and hydrogen generation are examples of clean and renewable energy sources that Germany has the technology to create. In particular, Germany has lately backed the G7 in selecting Vietnam as a worldwide partner in the fair energy transition.

Apart from the benefits, there are obstacles that the two countries need to overcome in order to strengthen their cooperation. For instance, Vietnam would need to meet the strict requirements on food safety and environmental protection, technological standards, and other restrictions to successfully enter the German market. Germany also has severe sanctions for infractions of import laws.

The situation in Ukraine also had a significant influence on the German economy, particularly production, consumption, import and export operations, and investments with Vietnam, including increased logistical costs, supply disruptions, and restrictive spending. In addition, Vietnam’s exports must contend with severe international competition. The language barrier is another major challenge for German businesses wanting to operate in Vietnam.

Dr. Dieter Drohmann, managing director of the chemical consultancy agency Chemservice GmbH said, “We need people in Vietnam to understand the chemical regulations as we do not speak Vietnamese. And of course, we would need capabilities to get access to the Vietnamese business environment. This is a big challenge. And we would need somebody who can help us to promote our company in Vietnam.”