Why does Vietnam attract Japanese businesses?

Currently, Japanese enterprises are looking to foreign locations with plans to expand markets, increase investment capital, and develop production facilities. In this context, Vietnam boasts many advantages, continues to be considered an attractive investment destination, and is the "strategic" choice of the majority of Japanese enterprises. So what factors create "Vietnam's attraction" for Japanese enterprises?

According to the survey results announced by the Japan Bank for International Cooperation (JBIC) December 12, the nation comes in second position among the most attractive and promising foreign investment destinations for Japanese enterprises.

Over the past three years, the country has continuously improved its ranking in surveys conducted by JBIC, rising from fifth position a few years ago to fourth position in 2022, maintaining its place in second position since 2023.

According to Japanese economists, politicians, managers, and businessmen, the nation boasts many factors that attract businesses, not only from Japan but also from many other places.

According to Hiroshi Imano, Executive Vice President of THK Corporation - one of Japan's leading mechanical components companies in Japan, the first factor attracting foreign enterprises is that Vietnam has huge development potential.

For over a decade when THK first started investing in the Vietnamese market, this enterprise has gradually experienced the attraction of the nation. Especially, in recent years, many enterprises from China, the Republic of Korea, and Japan have all invested heavily in Hanoi.

In terms of development potential, the country has much greater advantages than others in the region. Therefore, THK has decided to continue investing in the Southeast Asian nation.

Furthermore, since 2022 the country has maintained its second position in the ranking of attractive destinations, behind only the United States, for Japanese enterprises, as announced by the Japan External Trade Organization (JETRO).

When voting for the nation, Japanese enterprises and officials highly appreciated the overall quality of Vietnamese human resources, viewing the country to an ideal destination for moving production facilities from abroad.

Regarding this, Hoshino Mitsuaki, director-general of the Bureau of Economy, Trade and Industry of Kyushu under the Ministry of Economy, Trade and Industry of Japan, said that the nation currently has an abundant source of trained human resources, including a team of highly-qualified engineers, who can meet all job requirements.

From this perspective, it can be said that the two countries are capable of complementing each other. Indeed, Hoshino suggested that both nations should start promoting the collaboration process from training co-operation, making use of high-quality human resources of each side.

Economists also analyzed that if in the past Vietnamese advantage were abundant human resources and low costs, now the increasingly improved capacity of human resources has become a "formidable" competitive advantage compared to other investment destinations.

However, there remains opinions that both sides need to continue to work together to resolve existing problems, in order to continue to bring bilateral co-operation to a new level.

Member of the Japanese House of Representatives Aoyagi Yoichiro, a Japanese legislator who is very sympathetic to Vietnam, said that the two sides need to continue to do one more thing, which is to further improve the overall investment environment.

In fact, the local investment process continues to pose difficulties for Japanese enterprises in administrative procedures. And vice versa, Vietnamese enterprises also face similar difficulties in Japan. This is a point that the National Assembly and the legislative bodies of the two countries need to co-operate on in order to resolve.

According to Aoyagi, last year, despite facing plenty of difficulties, there were Vietnamese enterprises listed on Japanese stock exchanges. This can be viewed as a welcome step and proof that working together can solve problems.

Japanese economists, politicians, legislators, managers, and businessmen also commented that the Vietnamese selective investment attraction policy is effective. In addition, it also boasts a favourable geographical location and abundant high-quality human resources.

Vietnam will therefore continue to attract many investors, not only from Japan, but also from many other countries in the region and around the world, greatly contributing to helping the national economy to take off in the near future.