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Welcoming more big Japanese to Vietnam for business
Date: 8/3/2020 9:03:19 AM
The Japanese government has just announced that it will support money for Japanese businesses to leave China to invest in other countries, of which Vietnam is selected as a favorite destination.

For many years, Japanese investors have always been among the leading countries in terms of foreign direct investment (FDI) flows into Vietnam (VN). Currently, this trend continues. But to further strengthen Japanese capital flows and be able to take advantage of this opportunity to enter the global value chain, Vietnam needs to improve many factors, from infrastructure to human resources.

New wave of investment from Japan

The Ministry of Economy, Trade and Industry has just announced that it has started pumping money for dozens of Japanese companies to move factories to other countries in Southeast Asia or return to Japan. Accordingly, 87 Japanese companies have received 653 million USD to relocate their production lines from China (China) in order to avoid over-reliance on the supply chain in China and to build new supply sources.

According to the Japan Trade Promotion Organization (JETRO), initially 15 Japanese companies on the Japanese government’s receiving list have moved factories from China to Vietnam, including very famous ones. For example, Hoya Group was established in 1941, specializing in information technology and health care products. Or Shin-Etsu Chemical Co., Ltd. shifted the production of rare earth magnets from China to Vietnam.

"This initiative comes after many Japanese carmakers and other industries lack spare parts made in China due to the COVID-19 pandemic," JETRO explained.

This can be considered as the second wave of relocating factories from China of Japanese companies. Previously, in May, the Japanese government launched a huge support package of up to 2.2 billion USD for Japanese companies to withdraw production and business activities from China.

Economist Nguyen Tri Hieu acknowledged that due to recent geopolitical issues, the US-China trade war has not cooled down and the COVID-19 accretion caused Japanese businesses to have supply disruptions. . This is the reason why Japan provides financial resources for its business to leave China, although this country is the world’s factory that cannot be replaced. By this strategy, Japanese companies diversify their supplies, avoiding relying too much on one country.

“In fact, many Japanese companies have previously bet entirely on supply from China. But recent events have shown that the business is not stable, even easily broken if the only supply problem. Many Japanese companies produce products that are important for stabilizing the Japanese economy, so it is important to distribute risks and have backup supplies, ”Hieu said.

According to Mr. Takeo Nakajima, JETRO Chief Representative in Hanoi, in fact, nowadays, large and well-known Japanese enterprises are present in Vietnam. “FDI inflows from Japan continue to flow into Vietnam with various fields, from manufacturing, manufacturing, electronics, information technology to services. That shows the importance and significant position of Vietnam with Japanese investors, ”he said.

Many Japanese companies are expanding production and business activities in our country. In the photo: Japanese companies are exchanging and promoting pear to Vietnam. Photo: TU UYEN

Increase the attractiveness

Mr. Nguyen Van Tri, General Director of Lap Phuc Company, a unit participating in the supply chain for multinational corporations, said that when Japanese investors moved from China to Vietnam, this is an opportunity. Great for inland companies.

Because Japanese companies tend to look for qualified local companies to be their suppliers. Vietnamese companies will be conveyed by new corporations, resources and relationships to new modes of industrial production, even spending money on machinery investments.

According to Takeo Nakajima, JETRO Chief Representative in Hanoi, a survey with Japanese companies operating in Vietnam showed that up to 70% of companies said they continued to expand their business. In 2020, FDI inflows will continue to flow into Vietnam as many companies move factories from China due to rising production costs in the country and to disperse risks in the supply chain.

“Once you do well for multinational corporations, it means that Vietnamese businesses will master the new field. Over the time of accumulation, Vietnamese businessmen began to be able to compete with large companies, including China in the market and gradually rise to be a key company of the country "- Mr. Tri analyzed.

However, in order to increase FDI capital from Japan, Vietnam must own what the FDI enterprises seek and require. According to Dr. Can Van Luc, an economic expert, in order to make a difference for Vietnam to continue attracting foreign capital inflows, including big companies from Japan, the authorities need to review all industrial zones. for adjustments to be extended or newly built. At the same time, boosting investment, upgrading synchronous infrastructure from electricity, water, transport infrastructure, information, logistics to accompanying services. This is considered a strategic breakthrough to attract foreign investors.

“Vietnam also needs to design policies and packages to train skilled human resources and management skills soon. Continually maintaining macroeconomic environment and always ensuring the consistency, stability and suitability of mechanisms and policies. In particular, special attention should be paid to policies on land, taxes, labor and macroeconomic management so that foreign investors can feel secure and can formulate long-term investment plans in Vietnam. ” Hieu stressed.

Help Vietnam to form strong corporations

Andy Ho, CEO of VinaCapital Investment Fund, acknowledged that when FDI enterprises, including Japanese companies, poured into Vietnam, they would seek to hire local people as the labor force. Recruiting not only workers but also management. After a period of five years, people in management positions at multinational corporations began to accumulate enough knowledge and they yearned to set up their own companies.

Startups founded from former employees working at FDI enterprises are more likely to succeed because they have had a long history of accumulating experience on international standards. "After these businesses start growing and have a good workforce, they will form domestic companies capable of competing with multinational corporations themselves," said Mr. Ho.

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