Surpassing Japan, China accelerates investment in Vietnam

Surpassing Japan, China now ranks third among countries and territories with the largest investments in Vietnam since the beginning of the year.

Surpassing Japan, China now ranks third among countries and territories with the largest investments in Vietnam since the beginning of the year. (Source: VNE)

Increase investment

A few days ago, Mr. Nguyen Duc Trung, Chairman of the People's Committee of Nghe An province, presented the investment registration certificate to Greenwich Management Limited (part of Shandong Innovation Metal Technology Group - China) to implement the construction of the Innovation Precision factory in VSIP Nghe An. With a total investment of 165 million USD, Innovation Precision Vietnam is expected to quickly build a factory specializing in the production of aluminum alloys for the consumer electronics and green energy industries, aiming to be operational from October 2024. According to Mr. Thoi Quoc Xuong, Special Assistant to the Chairman of Shandong Group, this is Shandong's first investment project outside of China. Previously, during Prime Minister Pham Minh Chinh's visit to China, Minister of Planning and Investment Nguyen Chi Dung presented the investment registration certificate to Runergy New Energy Science and Technology Group. Again, Nghe An was chosen as a location by Chinese investors. With a total investment of $293 million, Runergy plans to manufacture electronic and semiconductor components, such as silicon wafers and semiconductor wafers, at Hoang Mai I Industrial Park. The project is scheduled to begin operations in mid-2025. Meanwhile, after three years in the Vietnamese market, Chinese electric motorcycle manufacturer Yadea has reached a significant milestone: the production of its 100,000th vehicle at its factory in Quang Chau Industrial Park ( Bac Giang ). Yadea also announced plans to expand production and begin construction of a new $100 million factory in Tan Hung Industrial Park by the end of this year. Yadea even plans to open an R&D center in Bac Giang. These are three of hundreds of projects recently undertaken by Chinese investors in Vietnam, marking a strong acceleration and breakthrough, especially since the economy officially reopened after a long period of zero-Covid measures. Data from the Foreign Investment Agency (Ministry of Planning and Investment) shows that in the first seven months of the year, Chinese investors registered over US$2.33 billion in Vietnam. Surpassing Japan, China ranks third among countries and territories with large investments in Vietnam. In fact, in terms of the number of new projects, China ranks first, with 325 projects. The reality is that since the US-China tensions erupted, Chinese investment in Vietnam has increased dramatically. Despite Covid-19, China continues to register significant investments in Vietnam and consistently ranks third or fourth among countries and territories investing in Vietnam. In 2020, registered capital from China into Vietnam was $2.46 billion, in 2021 it was $2.92 billion, in 2022 it was $2.5 billion, and now, after 7 months, the figure has almost reached the level achieved for the entire year of previous years. Cumulatively, China still ranks 6th, with over $25.5 billion. However, this ranking has improved significantly after the sharp increase in investment from China in recent years.

Promising big projects

Not only that, but it's certain that more large investments from China will flow into Vietnam. During his visit to China, Prime Minister Pham Minh Chinh met with leaders of a number of large Chinese corporations, such as Texhong, Runergy, Energy China, TCL, etc. A common point is that the leaders of these corporations all highly appreciate and have confidence in Vietnam's dynamic development; they also stated that they are operating efficiently and wish to continue expanding investment in Vietnam in several fields, such as energy, industrial park infrastructure, social housing, inland waterway ports, automobile manufacturing, research and development, and building supply chains in Vietnam. Highly appreciating this, the Prime Minister called on Chinese investors to increase investment in Vietnam, especially in strategic infrastructure projects such as railways and expressways. Recent information shows that the interest of Chinese investors in the Vietnamese market is genuine. Two leading Chinese battery and energy storage system manufacturers have planned to invest over $1 billion to build new and expand factories in Vietnam. Xiamen Hithium Energy Storage Technology may invest $900 million in a factory in Hai Duong, while Growatt New Energy will expand its Hai Phong factory with an investment of approximately $300 million. Meanwhile, the head of Pacific Construction Group recently met with the acting Chairman of the Quang Ninh Provincial People's Committee, Mr. Cao Tuong Huy, to share plans to explore investment opportunities in the province. A recent report in the South China Morning Post indicated that many Chinese investors are continuing to seek investment opportunities in Vietnam, driven by pressure from American clients to relocate production. This post-Covid-19 supply chain shift is creating many opportunities for Vietnam. However, as investment from China intensifies in Vietnam, concerns are beginning to arise. This issue has been raised since 2019, concerning concerns that Chinese businesses are choosing to invest in Vietnam to circumvent origin requirements for goods. Not to mention concerns related to outdated technology or environmental pollution… “Chinese investors tend to establish new facilities outside of China to meet origin requirements and take advantage of the host country’s trade commitments,” said Mr. Do Nhat Hoang, Director of the Foreign Investment Agency. This clearly presents many opportunities for Vietnam, but the worry about circumvention of origin requirements is not unfounded. Recently, the US Department of Commerce (DOC) announced anti-dumping and countervailing duties on hardwood plywood imported from Vietnam. 37 companies are subject to these duties after the US discovered that some products were manufactured in China or a third country and assembled in Vietnam. "We aim to attract selective, efficient, and sustainable foreign investment, prioritizing quality, technology, and environmental protection," Prime Minister Pham Minh Chinh stated at the Vietnam-China Investment and Trade Cooperation Forum. This is a crucial message in attracting and selecting investment from China in particular, and from foreign investors in general.

Besides investors from mainland China, in recent years, many businesses from Taiwan (China) and Hong Kong (China) have also increased their investments in Vietnam. Foxconn, Goertek, Winston, Compal… are typical examples. They are shifting production to Vietnam to expand their supply chains, at the request of upstream businesses, including Apple. In the first seven months of this year, investors from Hong Kong (China) registered investments in Vietnam exceeding US$1 billion, ranking fifth. Meanwhile, Taiwan (China) invested approximately US$1 billion, ranking sixth.

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