1. Inhalt
  2. Navigation
  3. Weitere Inhalte
  4. Metanavigation
  5. Suche
  6. Choose from 30 Languages

Business

German Firms Big on Investing in Emerging Vietnam

More than 30 years after the end of the Vietnam War, the economy has become one of fastest growing in Asia and has attracted German investors, who regard its young population as the next "Asian Prussians."

Vietnamese woman in fishing boat

Vietnam's manufacturing and high tech sectors are replacing fisheries as a key export

Next to China and India, two of the biggest emerging economies in Asia, is the Socialist Republic of Vietnam, a sliver of land on the Indochinese peninsula with a population of 86 million.

The war-ravaged nation was politically isolated for more than a decade after the Fall of Saigon in 1975 that led to the integration of the southern half into a nation that came under complete Communist rule a year later.

Most Vietnamese today were born after the end of the war. Today a young eager workforce that has come of age has suddenly become immensely attractive to foreign investors and multinational companies.

One of world's fastest growing economies

US marine helicopter lifts off from landing pad during the evacuation of Saigon on April 30, 1975

It took many years after Saigon was evacuated in 1975 for Vietnam to open up

After a political opening and some market reforms that were introduced in the late 1980s, Vietnam has since managed to achieve an average annual growth rate of about eight percent annually, making it one of the world's fastest growing economies.

Although still a relatively poor country, Vietnam's two-way trade has exploded in the last decade or so, with commodities such as rice, coffee, tea and rubber, as well as fisheries being among its key exports. Its manufacturing base and high tech industries are also a fast-growing part of the domestic economy, as the country's agriculture output has significantly declined.

In January 2007, Vietnam joined the World Trade Organization and counts Japan, the US and western Europe among its chief trading partners.

A growing number of German companies are singing praises about gaining a foothold in a potentially lucrative market, where the workforce is predominantly young, eager, hard working and in some cases even highly skilled.

Potentially lucrative Asian market

Jan Noether is a go-between for German investors and companies at the German Industry and Commerce Vietnam. Most of the 250 German firms are active in trade, production and providing services.

Ever since Vietnam joined WTO, interest in doing business there has exploded, he said. In this year alone, Noether hosted more than 20 business delegations from Germany.

Still Vietnam as a country that has emerged from an impoverished state planned economy barely 20 years ago, needs to overcome various challenges in order to maintain its growth momentum. This means addressing infrastructural needs and more vocational training efforts, for example.

The young workforce is among the nation's greatest assets and the low wages are an incentive for foreign companies to set up production and manufacturing sites in Vietnam.

An unskilled worker earns $120 to $150 a month, but soaring inflation means that these minimum wages need to be adjusted. Next year, average wages are expected to go up to between $150 and $180.

Vietnamese workers put the finishing touches on a production line making athletic shoes at the Nike factory on the outskirts of Ho Chi Minh City, formerly Saigon

Low wages attract foreign investors to set up production sites in Vietnam

Better infrastructure needed

At present, the country's nascent infrastructure in terms of transportation logistics cannot keep pace with exponential growth in all other sectors. The dearth of paved roads to transport goods for instance has been a hindrance to business development.

Noether expects that the outfall of the world financial crisis will have a small impact on growth as well. This year Noether foresees a slight slowdown in the economy to little more than six percent, due to a reduction in consumer demand.

Still, German companies rank Vietnam ninth in the world as a favorable destination for investors, and Noether dubs the motivated, hard-working young Vietnamese as the next "Asian Prussians."

DW recommends