German businesses in Vietnam remain upbeat about future prospects

06:00 | 14/01/2021 Cooperation

(VEN) - German business representatives say they are optimistic about growth opportunities in Vietnam despite Covid-19 impacts, especially after the EU-Vietnam Free Trade Agreement (EVFTA) has taken effect.

german businesses in vietnam remain upbeat about future prospects
Hideko Ikeda, Managing Director, Merck Vietnam

Merck has been present in Vietnam for more than 25 years, long enough to witness and experience the growth and development of the pharmaceutical market.

We see that Vietnam is one of the fastest growing pharmaceutical markets in the Asia- Pacific region in recent years. The country has more than 90 million people and their income has increased during the last few years, so the patients’ demand is more and more focused on branded, high quality products, especially medicines confirming to EU-GMP or PIC/S-GMP standards. And foreign companies like us can meet this demand.

According to market research firm IBM, the size of Vietnam’s pharmaceutical industry may reach US$7.7 billion in 2021 and US$16.1 billion in 2026. This creates many opportunities for both foreign and Vietnamese pharmaceutical companies.

In the ASEAN (Association of Southeast Asian Nations) region, Vietnam is emerging as a very hot destination for German businesses. There is no doubt that Vietnam is not only attractive for German pharmaceutical businesses but also for European companies, especially after the EVFTA took effect in August 2020. EVFTA will be a magnet attracting more German businesses to Vietnam.

The EVFTA will allow easier access to high-quality, innovative drugs for the Vietnamese population. Furthermore, important improvements in intellectual property rights (IPR) compliance will make Vietnam more attractive for producers of pharmaceutical products. Germany is well-known for high quality and innovative pharmaceutical brands that can offer the Vietnamese market many choices in the premium products segment.

Despite the Covid-19 pandemic, the medicine and pharmaceuticals industry in Vietnam still grew in 2020. So we are still optimistic that the Vietnam pharmaceutical market will keep expanding in the years to come.

Merck Vietnam now is a member of the Pharma Group, the Pharmaceutical Sector Committee of EuroCham that represents the voice of the international, research-based pharmaceutical industry in Vietnam. With our new responsibility, we are striving every day to fulfill our mission to ensure the fastest and sustainable supply of high quality and innovative medicines for Vietnamese patients.

german businesses in vietnam remain upbeat about future prospects
Michael Krutil, Managing Director, A. Hartrodt Logistics (Vietnam) Co., Ltd.

I have lived in Vietnam for seven years and experienced the rapid development of Vietnam’s economy in general and logistics industry in particular.

Vietnam is continuously developing and currently at the top of emerging logistics markets. High economic growth, increasing domestic manufacturing, the rise in consumption, booming e-commerce and the strongly developing automation and manufacturing industries are some of the key drivers of the Vietnamese freight and logistics market. In addition, the Vietnamese government has facilitated growth with many policies to develop the logistics and transport industries. Moreover, the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA) give us and our clients a much greater scope to expand key import/export activities, simplify processes and, at the same time, promote long-term investments and strategic business partnerships.

Considering the achievements of the Vietnamese government against Covid-19 and the nation’s political stability, sustainable economic growth, abundant workforce, large market, increasing per capita income, intensive international integration, competitive incentives, plus its geographical location in the center of Southeast Asia, I am sure that Vietnam is going to be an attractive destination for German businesses in the years to come.

I am also firmly convinced that in the long term, there will be more foreign direct investment in high-quality projects in Vietnam, including from Germany. There will be an increasing flow of investment, not just directly from German small and medium-sized companies, but also from companies that have been investing in China for years and have chosen Vietnam as their next destination.

We have been present in Vietnam for 16 years, starting with a small team in 2004 in Ho Chi Minh City. Today, we have expanded our offices to Vung Tau and Hanoi. To achieve business goals in Vietnam, the important thing is to understand the market, conduct a professional market study, obey Vietnamese laws and abide by local culture and habits.

Currently, food & beverage has become a major industry in Vietnam, so we are looking forward to further sharing our knowhow in the F&B industry with those companies investing in Vietnam to further produce and import/export F&B products, helping cater to the demands of a growing middle class.

german businesses in vietnam remain upbeat about future prospects
Patrick Kemnitz, General Director, TRUMPF Vietnam Co. Ltd

TRUMPF is a high-tech engineering company providing comprehensive solutions in industrial machine manufacturing, laser engineering and electronics. In 2002, TRUMPF sold the first machine to the Vietnam market. In 2006, we opened representative offices in Hanoi and Ho Chi Minh City (HCMC), and decided to set up a full subsidiary in Vietnam in 2017. From 2018 onwards, TRUMPF Vietnam Co. Ltd. has expanded its local teams in HCMC and Hanoi to serve our growing customer base.

In our 2019-2020 fiscal year that closed on 30 June 2020, TRUMPF Vietnam achieved a dominant market position again. The installed base of machines and lasers in the market climbed to a new high.

Despite the Covid-19 pandemic, I am optimistic about our business growth in Vietnam for the next fiscal year 2020-2021. In my opinion, Vietnam as a manufacturing hotspot will play an increasingly key role. The EVFTA that took effect in August 2020 also lends a positive outlook for a wide variety of industries in Vietnam. In general, we only see advantages from this free trade agreement. It will stimulate more and more several markets and segments.

The forecast for Vietnam’s gross domestic product (GDP) growth in 2021 is around 6-7 percent, which shows a fast recovery after 2020. Overall, the signs for growth in the domestic market as well as for exports from Vietnam are looking good. We can see many new industrial parks coming up in Vietnam. This also means that more German or European companies will invest in Vietnam.

As Germany is well known for its engineering and machinery innovations, German companies in Vietnam are reliable partners for future growth in the manufacturing sector.

The metalworking industry in Vietnam has shown its flexibility in these times. The flexibility to adapt to new market situations remains important. With the market being dynamic and fast paced, manufacturers have to make quick decisions and amend strategies quickly.

Smart factories are also an important topic in Vietnam. The market is at the beginning of the digitalization process and taking first steps into automated factory processes and Industry 4.0. I am very confident that, with our comprehensive solutions for innovation and smart factory becoming a new trend under Industry 4.0, TRUMPF will be a leading partner for domestic and foreign direct investment (FDI) companies in Vietnam.

german businesses in vietnam remain upbeat about future prospects

Daniel Bacon, Co-Founder and Technical Director, GBC Engineers Vietnam LLC

gbc engineers is an owner-operated, multi-disciplinary German engineering firm of consultants and advising engineers.

We established the headquarters of gbc engineers in Berlin (Germany) in 2015. Just a year later, in 2016 we expanded to Vietnam and Cambodia. We realized that opportunities were coming up in Southeast Asia, and we decided to base our company branch in Vietnam as an important regional hub. Based in Vietnam, we can support our projects in Cambodia and expand to other markets in the ASEAN region.

We are focusing on the Vietnamese market because we see attractive opportunities in the country. Construction has been booming in recent years with many skyscrapers, shopping malls, office buildings and international manufacturing plants, requiring international standard services.

In our industry in general and at gbc in particular, human resources is the key to success. So staff training is a constant focus for us. We have a team specialized in carrying out training programs. Besides, we have collaborated with the German Industry and Commerce Vietnam (GIC/AHK Vietnam) by joining the dual vocational training program in which we are training 23 students currently to become professional engineering designers.

We are very lucky that in the difficult period of Covid-19, we were not impacted much by foreign markets. We were, therefore, able to ensure jobs for our employees. From the very beginning of the outbreak that became a pandemic, we took drastic measures to run the business smoothly while ensuring safety for our staff, like facilitating the availability of modern equipment for working from home, limiting the number of staff going to the place of work, and other measures.

The Vietnamese government has shown an extraordinary ability to handle the pandemic and I believe in the fast recovery of Vietnam’s construction market. Thanks to the political stability, the currency solidity, the reasonable manpower cost and the EU-Vietnam Free Trade Agreement (EVFTA), there will be even more FDI companies in general and German companies that will set up business in Vietnam in the years to come, contributing to the recovery of the construction market.

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