Vietnam is emerging into the spotlight as a cost-effective manufacturing location amid the rising costs of doing business in China and instability in other markets such as Thailand and Japan, consulting firm CB Richard Ellis said.
According to the company, rising labor costs, appreciating RMB and tightening labor regulations continue to put pressure on manufacturers in China.
As a result, Southeast Asian economies, such as Vietnam, are the places manufacturers are considering to move their production to, CBRE said in a statement prepared for an industrial networking event hosted by the American Chamber of Commerce last week.
The company said Vietnam had attracted several investors in the hi-tech sector including Intel, First Solar, Nokia, Samsung and Wintek.
The country is also drawing strong interest from auto and motorcycle producers, with major companies like Yamaha, Piaggo and Honda all in expansion mode, CBRE said.
"However, Vietnam needs improvement," it said, noting a strong supporting supplier industry for each of its industrial sectors will facilitate foreign investment.
While Vietnam has its obvious challenges such as infrastructure, taxation and provincial competition, the country is proving to be a feasible option for major multinational foreign firms with a long-term view, CBRE said.
It added that while pledges of foreign investment fell sharply this year, committed investment into industrial parks went up 15 percent in the first half.