Not only Japanese firms operating in China but those in Thailand are also eyeing Vietnam as a favorite destination for business, said Hirotaka Yasuzumi, managing director of the Japan External Trade Organization (JETRO) in HCMC.
Japanese investors in China are shifting some of their operations to Vietnam or looking for material supplies from Vietnam. Meanwhile, those active in Thailand have shown interest in Vietnam because labor cost in Thailand is rising, said Yasuzumi.
He was speaking at a press briefing on Wednesday on an upcoming exhibition in HCMC aimed at promoting supporting industries in Vietnam.
The trend of Japanese enterprises in China leaving for other nations started long ago but it has recently grown due to the rising labor cost in China and the tense relationship between the two countries, he said.
Meanwhile, the trend of Japanese companies in Thailand switching to Indochina began last year and is still continuing, with Vietnam being on their radar. Therefore, investment of Japanese firms in Indochina in general and in Vietnam in particular is forecast to increase.
Japanese enterprises invest more in Thailand than Vietnam, said Yasuzumi. The number of Japanese firms operating in Thailand is about three times bigger than in Vietnam, he estimated.
The biggest obstacle to Japanese businesses wishing to invest in Vietnam is the lack of supporting industries, he noted.
The percentage of local supplies for Japanese companies is only 28% in Vietnam, versus 61% in China and 53% in Thailand, according to a survey done last year by JETRO.
Over the past ten years, JETRO has conducted trades and organized exhibitions on supporting industries in a bid to foster the development of supporting industries in Vietnam. However, the percentage of local supplies has not improved much.
Yasuzumi ascribed this situation to the fact that local workers have limited skills, the domestic market is not big enough, and most enterprises active in supporting industries are small and medium.
In 2012, Japan represented more than half of the total foreign direct investment (FDI) in Vietnam. Since the beginning of this year, Japanese investors have poured nearly US$3.7 billion into Vietnam, accounting for 43% of the total number.
Last year the average for workers was US$6,734 per capita per year in China, US$6,704 in Thailand and US$2,602 in Vietnam.
As for managerial staff, the respective wages were US$19,761, US$27,204 and US$12,245 in China, Thailand and Vietnam.
Three exhibitions will take place at the same venue in HCMC this October.
Reed Tradex of Thailand along with JETRO and the HCMC Investment and Trade Promotion Center (ITPC) will organize three exhibitions at Saigon Exhibition & Convention Center (SECC) in HCMC’s District 7 from October 10 to 12.
Two of these exhibitions are METALEX Vietnam, an international exhibition on machine tools and metalworking solutions for production upgrade, and NEPCON Vietnam, an exhibition on surface-mount and testing technologies and supporting industries for electronics manufacturing.
The third exhibition is an exhibition of the coalition of enterprises active in supporting industries in HCMC. The event offers Japanese and Vietnamese entrepreneurs a chance to carry out trade of molds, electronic components and machines.