Vietnam is located at the heart of ASEAN and holds a significant strategic position. It borders Thailand, Laos, Cambodia, and China, and enjoys innate advantages in international shipping and international trade, making it one of the most promising economies in the Southeast Asian market currently. Its proximity to the manufacturing center in southern China allows investors to leverage China's supply chain strengths and reap substantial investment potential.

The markets of China and Vietnam are closely linked, with deep integration of industrial and supply chains, and steady development of economic and trade cooperation between the two countries. In terms of trade, China has been Vietnam's largest trading partner, largest import market, and second-largest export market for many years, playing a pivotal role in Vietnam's foreign trade. How can Chinese enterprises efficiently and compliantly expand to Vietnam?

Today, the Match Point overseas business team presents the latest observation report on Chinese enterprises expanding to Vietnam, providing a reference for enterprises looking to go global in Vietnam.

Overseas Market Observation on Chinese Enterprises Expanding to Vietnam

Regional Overview 

Vietnam is located in the eastern part of the Indochina Peninsula, surrounded by the sea on three sides, slightly S-shaped, with a long and narrow territory, spanning 1640 kilometers from north to south and as narrow as 50 kilometers at its narrowest point from east to west, lacking depth in the east-west direction. It borders Cambodia, Laos, and China's Guangxi and Yunnan on land, and faces the Philippines, Brunei, Indonesia, Singapore, and Malaysia across the sea. It has rich mineral resources, with large reserves of coal, iron ore, bauxite, copper, rare earths, etc. The port advantage is prominent, with 43 major seaports in the country. As of August 31, 2023, Vietnam's total population is 99.815 million people. Vietnamese is the official language. Vietnam is in the UTC+7 time zone. Hanoi time is one hour behind Beijing time. Vietnam is a socialist country led by the Communist Party, with a generally stable political situation.

Country Overview: Vietnam Official 

Name: Socialist Republic of Vietnam 

English: Socialist Republic of Vietnam 

Vietnamese: Cộng hòa Xã hội Chủ nghĩa Việt Nam 

ISO Country Code: VNM 

Capital: Hanoi 

Currency: Vietnamese Dong 

Language: Vietnamese 

International Telephone Area Code: +84 

Domain Suffix: .vn

Economic Situation 

In recent years, Vietnam has continued to advance reforms and accelerate integration into the global economy, maintaining overall stability in its national economy. 

From 2016 to 2019, Vietnam's GDP grew at an average annual rate of over 6.5%. In 2020 and 2021, affected by the COVID-19 pandemic, Vietnam's economic growth slowed down but was still one of the few countries in the world to maintain positive growth. In October 2021, Vietnam resumed work and production amidst the pandemic. In 2022, Vietnam's GDP grew by 8.02% year-on-year, making it one of the fastest-growing economies globally. 

In 2023, affected by the slowdown in global economic recovery and the contraction of demand in major economies, Vietnam's export orders decreased significantly, dragging down economic growth, with GDP growth falling to 3.72% in the first half of the year. The Asian Development Bank revised its forecast for Vietnam's economic growth, lowering the 2023 GDP growth rate from 6.5% to 5.8%, and the 2024 growth rate from 6.8% to 6.2%. Despite this, Vietnam's economic performance is still better than most countries in the world and remains one of the most attractive countries for foreign investment globally. 

As of May 2022, the international rating agency Standard & Poor's rated Vietnam's sovereign credit rating as BB+, with a stable outlook.

Investment Environment 

Vietnam's investment advantages include: first, political stability, with the Vietnamese government having strong governance capabilities, policy continuity, and a focus on economic construction and improving people's livelihoods; second, relatively low labor costs; third, a superior geographical location with many ports and convenient transportation. It maintains deep integration of industrial and supply chains with China due to its geographical advantages; fourth, relatively relaxed policies and regulations, providing foreign investors with comprehensive legal protection and significant preferential policies; fifth, a high degree of openness to foreign investment, with 17 signed and ongoing free trade agreements, allowing investors to use platforms like RCEP and the China-ASEAN Free Trade Area to explore broader international markets; sixth, there is a significant demand for infrastructure construction. 

The unfavorable factors for investment include: first, insufficient macroeconomic stability, as Vietnam's economy largely depends on exports and is susceptible to the impact of the international economic environment; second, the overall quality of the labor force is not high, with relatively low education levels and labor efficiency; third, the supporting industry is relatively backward, and most of the machinery, equipment, and raw materials required for production depend on imports; fourth, strict foreign exchange control, investors face significant restrictions when using US dollars and are exposed to the risk of unstable Vietnamese Dong exchange rates; fifth, low administrative efficiency in government departments. 

The World Bank's "2022 Business Environment Report" shows that Vietnam ranks 65th among 190 global economies. 

The distribution of Chinese-funded enterprises in Vietnam is notably clustered in the north and south: the north, geographically close to China, has formed heavy industry and electronics industry clusters; the south, as a vibrant economic region, concentrates a large number of traditional industries, such as rubber and plastic, electrical industries, and other light industry clusters; the textile and apparel industry is spread throughout the north and south. At the same time, the joint construction and operation of industrial parks are also an important area of investment for Chinese enterprises in Vietnam.

Industries Currently Encouraged for Development in Vietnam

Digital Economy 

In 2022, the contribution of Vietnam's digital economy to GDP was about 14.26%. By sector, the industries contributing the most to the digital economy are information technology services (30% contribution), e-commerce (14.3%), and hardware manufacturing (12.8%). The number of newly registered digital technology enterprises reached 70,000, a year-on-year increase of 9.6%. 

The Vietnamese government has identified the information and communication technology industry as a vital driver of socio-economic growth and has formulated a national digital transformation plan for 2025, looking towards 2030, covering three major pillars: digital government, digital economy, and digital society, along with their development goals. 

Vietnam is the third-largest e-commerce market in ASEAN after Indonesia and Thailand. Shopee, TiKi, and Lazada are the three major e-commerce platforms in Vietnam, with mobile terminal devices being the main channel for Vietnamese e-commerce users. The public has a relatively low level of trust in online payments, with cash on delivery accounting for more than 80% of total transactions. 

Major Vietnamese e-commerce platforms have Chinese capital investment. JD.com acquired a 25% stake in Tiki for an undisclosed price, and VNG, a major shareholder of Tiki with a 28.9% stake, is backed by Tencent. Alibaba holds an 83% stake in Lazada. Tencent holds a 39.7% stake in Shopee's parent company, Sea. Didi Chuxing is one of the major shareholders of Grab.

Green Economy 

With the continuous growth of Vietnam's economy and electricity demand, it is expected that emissions from Vietnam's energy-related sectors will increase tenfold from 2010 to 2050. In 2021, at the 26th United Nations Climate Change Conference, the Vietnamese government pledged to achieve net-zero carbon emissions by 2050. 

To promote investment in renewable energy, the Vietnamese government has introduced high subsidy electricity prices (Feed-in Tariff, FIT) for the photovoltaic and wind power industries. In addition, renewable energy is an industry encouraged by the Vietnamese government for investment, enjoying preferential policies in taxation, land leasing, and loans. 

Currently, companies such as Guoxuan High-Tech, Xinwangda, and Tianneng have established joint ventures or subsidiaries in Vietnam, while CATL and Far East Battery have also cooperated with local new energy vehicle brands. At the same time, photovoltaic companies such as Trina Solar, JA Solar, Longi Green Energy, Jinko Energy, Canadian Solar have also laid out in Vietnam.

Suggestions for Chinese Enterprises Expanding to Vietnam

1. Thoroughly Understand Vietnamese Laws and Regulations, and Operate According to Law

Pay attention to issues such as resources, environment, labor, safety, and social governance that arise with business development (labor issues include not only salary and benefits but also working conditions and overtime limits; environmental issues include industrial pollution and ecological imbalances caused by resource development), and avoid introducing projects that the Vietnamese government does not encourage or prohibits due to outdated technology and severe pollution.

2. Strengthen Investment Risk Prevention

Follow regulations for domestic and foreign investment approval procedures. When signing investment contracts, consider the terms carefully and clarify the rights and obligations of both parties to prevent disputes without basis. Try to invest solely; if setting up a factory in Vietnam through a joint venture, understand the Vietnamese partners deeply and seek partners with good reputations.

3. Understand Vietnam's Natural Conditions and Socio-Cultural Environment

Vietnam is strict on fundamental political, territorial, and historical issues, and locals are sensitive to politics and religion. Chinese enterprises expanding overseas need to integrate Vietnamese culture and make products well-adapted to the local market.

4. Maintain Contact with Chinese Embassy (Consulate) Commercial Section in Vietnam

After completing investment procedures, report to the Chinese Embassy (Consulate) Commercial Section in Vietnam with documents such as the "Enterprise Overseas Investment Certificate" issued domestically and the "Investment License" and "Business Registration Certificate" issued by Vietnam. Regularly report on the company's production, operation, management, and other conditions to the Commercial Section. Report significant issues to the embassy (consulate) in a timely manner.

5. Implement Localization Management

Vietnam has a vast labor market. Chinese enterprises in Vietnam should hire local personnel, implement localized operations, not encroach on local employment opportunities, and coexist harmoniously with local enterprises for mutual development.

6. Exercise Caution in Payment Processes

Vietnamese businesses commonly use email for business communication, and some commercial information is susceptible to hacking to defraud or steal payments; confirm paper contracts before making payments, do not rely solely on electronic contracts. When choosing to import goods through border trade, be vigilant against the risk of transaction failure due to sudden changes in inspection methods by Vietnamese port authorities.

Currently, the Match Point overseas business team has helped many Chinese enterprises expand to Vietnam, completing the establishment of compliant business teams and recruitment of key talents, accompanying clients in their growth.

The Match Point overseas business team, relying on Match Point's more than 10 years of professional advantages and experience serving over 2000 clients, has successfully recruited key positions for industries such as manufacturing, automotive, and consumer goods, including country or regional business leaders, overseas marketing, overseas SQE, project management, government and public relations, sales and quality directors, HRBP, covering regions like Southeast Asia, the Commonwealth of Independent States, Europe and America, and Africa. With professional services and an efficient recruitment process, we have earned the trust and high praise of many clients.

In the future, we will continue to be committed to helping Chinese enterprises accelerate their integration into the global value chain, empowering Chinese enterprises to go global, and accompanying businesses in their growth.

We are dedicated to becoming the closest and most trusted human resource partner in the globalization strategy of enterprises! We recruit high-caliber talents for enterprises around the world with precision, build and improve R&D, production, and sales teams, and establish compliant and legal functional teams, ensuring that the operations of enterprises in different countries comply with local laws and regulations while being able to work efficiently and collaboratively to promote continuous business development.

We help enterprises establish and enhance their employer brand in overseas markets, attract outstanding talents, promote the integration of different cultures, and jointly drive the innovation and growth of enterprises.

Main Business and Advantageous Functions

Team Main Business

■ Overseas assignment of Chinese employees

■ Hiring foreign employees for overseas factories/offices established by Chinese enterprises

■ Foreign employees coming to China

Team Advantageous Functions

■ Marketing - Country head, sales head, product, channel, etc.

■ Production and operations - Equipment, quality, production, procurement, logistics, etc.

■ Functional - HR, legal, finance, etc.