Japanese firms in Vietnam turn eyes to non-manufacturing industries

Hanoi (VNA) – There was a significant increase in Japanese investment in Vietnam’s non-manufacturing industries, such as retailing, education, healthcare, energy, finance and insurance, transport and real estate, according to a 2021 survey of the Japan External Trade Organisation (JETRO) on 700 Japanese FDI enterprises in Vietnam.

Some 51.7 percent of Japanese FDI firms in the manufacturing sector plan to expand business in Vietnam over the next one to two years, up 4.6 percent year-on-year, the survey has found. About 58.7 percent of non-manufacturing companies want to do the same, up 12.1 percent.  

Japanese enterprises are increasingly diversifying areas of operation in Vietnam, said Hirai Shinji, Chief Representative of JETRO in Ho Chi Minh City. Before most of Japanese firms in Vietnam were operating in manufacturing, he said, but now FDI flows into food production, fast-moving consumer goods, retailing and real estate are on a rise.

There is a shift from manufacturing to non-manufacturing sectors, Shinji told the Investment Review. This is a considerable transition of Japanese investors to consumer goods and retailing from industrial production, he added.

Despite input and labour costs have trended upward in Vietnam in the past several years, they are relatively lower than those in Japan. Vietnamese workers have also been regarded as dynamic and highly productive.

Many Japanese firms in the IT and retailing sectors, for examples, which post relatively larger labour costs, are growing and expect to expand business in Vietnam, he emphasized.

General Director of AEON Vietnam Furusawa Yasuyuki said there are major changes in the way Vietnamese consumers shop as a result of COVID-19, significantly impacting e-commerce and demand for necessity goods.

Japanese firms view these changes as an opportunity so investment into retailing will definitely surge, he remarked on the sidelines of the Conference on Investment Promotion held by the Investment Promotion Centre (IPC) South Vietnam in HCM City earlier this month.

“Vietnam has achieved encouraging economic growth so I think many Japanese companies are considering pouring investment into Vietnam,” he said.

He added that the services, equipment and consumer goods industries have huge potential for growth in Vietnam, given the country’s fast-growing population, good economic outlook and people’s improving living standard./.