Vietnam’s expanding middle class makes the country an attractive investment destination for Japanese firms, only second to China.
Interest in Vietnam among Japanese companies is continuing to grow, boosting the Southeast Asian country to second spot behind China for the first time on the Japan External Trade Organization (JETRO)’s ranking of the countries and areas favorable for business expansion, according to a fiscal 2017 survey conducted by the organization.
“The Vietnamese economy is in good shape now and the middle class population has been increasing, which has led to growing consumption,” Japan Times quoted Hiroshi Yoneyama, director of JETRO’s International Economy Division, as saying.
The so-called “middle and affluent class” earning $714 a month or more in Vietnam will double to 33 million people, about a third of the population, by 2020, the Nikkei Asian Review reported, citing Boston Consulting Group.
Due to this, many service industry firms have high hopes for the Vietnamese market, with trade and wholesale business also enthusiastic about the country’s potential.
According to the survey, 37.5 percent of 938 companies that have at least one business based overseas and have plans to expand their global operations chose Vietnam on a multiple-choice questionnaire.
That figure was up from 34.1 percent in the fiscal 2016 survey and shows an increasing interest in the country, especially compared to the 20.3 percent recorded in the 2011 survey. The 2017 survey was conducted on a total of 9,981 companies looking into overseas business opportunities.
Japan was Vietnam’s largest foreign investor last year, pouring in $9.11 billion, or 25.4 percent of total FDI, according to the Foreign Investment Agency under the Ministry of Planning and Investment.
The Vietnam Chamber of Commerce and Industry (VCCI) is also working with SME Support, Japan (SMRJ) to bring more Japanese small and medium enterprises to Vietnam and vice versa.
“Many large Japanese corporations are already present in Vietnam, offering quality and competitive products in familiar markets. In the near future, when Japanese small and medium enterprises strengthen their investments in Vietnam, I am confident there will be more cooperation opportunities in new markets,” said Hoang Quang Phong, vice chairman of the VCCI.