German businesses show resilience in Vietnamese market amid challenges

The survey highlights German investors’ confidence in their business performance and the robust nature of macroeconomic growth in the nation, thereby underscoring the country’s appeal as a key investment destination.

Accordingly, 81% of surveyed businesses are positive, as well as satisfied with their current operations, whilst 50% expect business growth and 35% plan to increase local investments. This shows an increase compared to spring (24%), with 35% anticipating economic growth in Vietnam over the next 12 months, while 54% are confident about Vietnam’s steady pace.

Elsewhere, 54% of respondents intend to maintain their workforce levels over the next 12 months, while 35% plan to hire new employees.

This year has seen German investment in the nation reach new heights, thereby reflecting a strong and growing partnership between the two nations. With over 530 German companies actively operating in the Vietnamese market, the country remains a key market for Germany's global expansion strategies.

German enterprises have invested an impressive US$3.6 billion, showcasing their confidence in the nation’s economic potential. These investments span diverse sectors, including manufacturing, advanced technology, logistics, and the rapidly growing renewable energy industry. All of these factors serve to underscore Vietnam's pivotal role in supporting sustainable and innovative growth.

Although German companies operating internationally remain optimistic about the future, they have identified several key challenges stemming from this volatile environment. Chief among these are subdued global demand (60%), economic policy uncertainties (30%), and infrastructure constraints (27%). Other pressing issues include trade barriers (24%), increasing labour costs (22%), legal uncertainties (22%), and ongoing supply chain disruptions (22%), all of which influence the strategic priorities of German enterprises, including those in Vietnam.

Additionally, German companies are defining factors influencing their general competitiveness in the Vietnamese market. The highest influences include the rising cost of preliminary products (47%), intense local competition (33%), and competition from third-market players (26%). These factors further highlight the complex landscape that businesses must navigate to sustain growth and remain competitive globally.

Despite challenges, German businesses have witnessed significant growth potential in the promising Vietnamese market. Over half (53%) of surveyed firms have noted a positive competitive position over the past five years. Indeed, the nation’s steady economic growth coupled with its strategic role as a manufacturing and export hub offer German companies a stable alternative amid global uncertainties, thereby enabling supply chain diversification and risk mitigation.

The country’s focus on renewable energy and sustainability aligns with German strengths in green technologies, presenting vast opportunities ahead for innovation and collaboration.

Insiders pointed out that a strong and growing German business community in Vietnam further underscores the potential that exists for partnerships and joint ventures. By addressing challenges like infrastructure gaps and local competition, German firms can strengthen their presence in Vietnam and leverage their dynamic economic landscape to achieve sustainable growth.