Vietnamese enterprises "welcome" investment from Japan

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Factory of Masan High-Tech Materials in Vietnam.Photo: ST

The "wave" has started

Many Japanese investors said that they would choose Vietnam as their investment destination after the Covid-19 pandemic.Therefore, the wave of investment from Japan into Vietnam has continuously increased.Specifically, by the end of 2019, more than 2,000 Japanese enterprises have invested in Vietnam. As a result, Japan ranked second with a total registered capital of US$59.6 billion, accounting for 15.6% of total investment capital. Moreover, in the first nine months of 2020, Japan had 209 new investment projects in Vietnam, ranking third among investment partners.

Recently, the Japan Trade Promotion Organization (JETRO) has announced a list of 15 companies in this country (out of a total of more than 100 companies registering for supply chain diversification projects) receiving subsidies to change operations ofproduction from China to Southeast Asian countries, such as Vietnam, the Philippines, Malaysia, Thailand, and Laos.

Moreover, according to JETRO's survey of the situation of Japanese enterprises investing in Asia and Oceania in February 2020, 63.9% of Japanese enterprises doing business in Vietnam said they would continue to wideninvestment, the highest rate in ASEAN and third in Asia and Oceania.

With the above information, this is considered an opportunity for businesses to associate and cooperate with Japanese enterprises, especially businesses in the field of component manufacturing, supporting technology.

Recently, Masan High-Tech Materials Joint Stock Company (a member of Masan Group) and Mitsubishi Materials Corporation (Japan) signed a commitment to establish a strategic alliance towards the goal of developing a leading high-tech tungsten material platform, worth up to US$90 million.

Mr. Craig Bradshaw, General Director of Masan High-Tech Materials, said that the cooperation agreement will help businesses bring products and solutions with top quality.In addition, this alliance will also help a tungsten brand close to Asia's franchise, which is a piece of the company's development strategy.

In addition, Vietnam is also valued by Japanese enterprises for merger and acquisition (M&A) deals.According to the aggregate data, in the first nine months of this year, there were 19 M&A transactions between Japan and Vietnam.In which, notably Mitsubishi Corporation and Nomura Real Estate acquired 80% of phase II of Vingroup's Grand Park project; Aozora Bank bought a15% share of Orient Commercial Joint Stock Bank;Real Estate Group Haseko bought 36% shares of Ecoba Construction Company; ASKA Pharmaceutical Company purchased 24.9% stake in Ha Tay Pharmaceutical Company.

Opportunity does not wait at the door

According to businesses, the cooperation with Japanese partners has many opportunities but also challenges.Because this is always a "fastidious" partner, with many strict requirements not only regarding the quality of products and services but also inthe operating specifications of the factory such as: ensuring environmental protection, hygiene,labor safety, and benefits for workers. Therefore, businesses must also "clear the way" to welcome their partners, because opportunities are not waiting.

Representatives of Anh Duc Trading and Production Co., Ltd. (which specializes in manufacturing and supplying electronic components) said that doing business with Japanese enterprises is always difficult, because these partners always makevery meticulous requests, need sophistication in production components.For example, working with other partners, enterprises only spend part of the cost, labor effort, then working with Japanese partners, businesses have to spend 2-3 times the cost and effort.However, not only is the achievement the recognition from the partner, but also they have higher added value, increased prestige and brand name for businesses, creating a good image for businesses when negotiating with future partners.

Sharing the same point of view, Ms. Nguyen Thi Lan, Director of Quynh Chau Footwear Manufacturing Company, said that although exports are currently facing difficulties, the company still receives many orders from Japanese partners – both export and domestic component manufacturing partners. Ms. Lan said businesses had to spend a long time investing in infrastructure to meet the requirements of partners, and so when they are successful, businesses still receive invitations, cooperation and trade from Japan.

The above issues have posed a problem for Vietnamese enterprises, on how to always have the spirit of advancement and rise in cooperation with Japanese and other foreign partners.

According to many enterprises, with increasing attraction of Japanese investment, businesses as well as regulators should take measures to encourage technology transfer to help improve technology and the capacity of production of Vietnamese enterprises, thereby promoting cooperation in the spirit of mutual benefits.