Japanese capital streaming into Vietnam

Vietnam received over US$297 million registered capital from Japanese investors and over 100 Japanese businesses coming to learn about, survey and do investment procedures in the country during the first two months this year, recently reported Japan Trade External Trade Organization (Jetro).

Japanese food stalls in AEON supermarket, HCMC (Photo: SGGP)

According to Jetro, Japan is ranked second in the list of nations and territories investing in Vietnam with the total investment value of US$42.29 billion.
 
Japanese investors have chosen Vietnam because that is one of the potential markets with the crowded population of nearly 100 million people. The ratio of people in labor and consumption age accounts for 60 percent.
 
Upper middle class has increased quickly, making consumption demand on high quality food products likely increase in the upcoming time. Meantime Vietnamese consumers have predilection for Japanese products with diversified types meeting consumers’ different needs.
 
Japanese investors have paid heed to clean farm produce and food, one of segments short of supply sources in Vietnam.
 
The latest survey by Jetro covering 1,200 Japanese firms early February shows that 62.8 percent of Japanese firms in Vietnam are profit making and 60 percent of respondents said that they planned expansion in the country this year.
 
Many Japanese businesses have earned the profit of over 60 percent especially those in food processing industry.
 
Jetro forecast that Japanese firms will reduce investment in the previously familiar manufacturing industry and broaden fast-moving consumer goods and processed food fields.
 
Mr. Kazuhiro Takahshi, director of Jetro’s agricultural, aquaculture and forestry products center, said that Japanese companies were then intensifying direct connection with Vietnamese businesses ranging from distributors, restaurants to hotels to take their goods into Vietnam.
 
Domestic firms worry about diminishing market share
 
Amid Japanese expansion, many local firms have expressed concern about their shrinking market share.
 
A representative of HCMC Food and Foodstuff Association said that local food processing companies have already struggled to compete and exist in the market not including investment extension by Japanese businesses.
 
The competitive ability of local products has not been strong with 80 percent materials depending on import.

In addition, many modern distribution channels have been usurped by foreign giants, threatening to keep many Vietnamese enterprises out from the competition right in domestic market. Many have been forced to move to rural markets.
 
Director general of Vietnam Meat Industries Limited Company (VISSAN) Van Duc Muoi, says that difficulties which domestic businesses have met with have been long referred to without suitable solutions.
 
At present, over 90 percent of Vietnamese businesses are of small and medium scale. They need to connect together to exist and develop in the time of regional and global integration.  Still the connectivity has seemed to be difficult because they have been rivals of each other.
 
Another matter in need of considering carefully is that how connectivity should be in order not to break the Competition Law.
 
About material source, businesses have many times proposed the Government to implement material zone plans and assist them to build material processing plants. However the proposal has yet to be weighed. As a result, small assistant capital has been scattered and inefficient.

By Ai Van – Translated by Hai Mien

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