Vietnam in position to benefit from Japanese investment trend

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Japanese and Vietnamese officials and businessmen discuss Japanese investments in Vietnam at a conference on March 14. Photo courtesy of Tuoi Tre

Kanematsu, a 124-year-old Japanese company, has a sushi factory in Hanoi that imports salmon, octopus and seasonings from Japan to be processed by its Vietnamese partners, and exports the final products back to Japan and to Europe.

Jun Suetake, a representative of the company, said they also expect to fulfill the demand coming from restaurants and retailers in Vietnam as well.

Experts attending a conference on March 14 said that many Japanese firms are looking into Southeast Asian markets in light of troubles at home and instabilities in China, giving Vietnam an opportunity to take advantage, if only it can make appropriate improvements, Saigon Tiep Thi reported.

The Japanese firms said Vietnamese food products still face many difficulties entering the Japanese market, but have a better chance when partnered with Japanese firms like Kanematsu.

Suetake said food is just part of the company's activities and that it has considered introducing other business ventures in Vietnam as well, such as those involving infrastructure and technology. 

Nakajima Kazuo from the Japanese consultancy company Brain Works, said at the conference organized by Tuoi Tre and Japanese newspaper Mainichi that overseas investment is an option for small and medium businesses in Japan, which account for 99.3 percent of the country's 1.8 million businesses.

Kazuo said the wave of overseas investments started after the Fukushima incident in March 2011, and Japanese firms have moved to other Asian countries like Vietnam.

He said Japanese firms want to save on energy costs, and are hindered by Japan's aging labor pool and the expensive cost for materials there. Many firms, according to Kazuo, are anxious to follow in the footsteps of Japan's economic trendsetters, many of which have set foot in Vietnam.

"For example, Aeon retail corporate has planned to set up 20 commercial centers in Vietnam, surely it will bring other businesses who want to be suppliers or retail partners," Kuzuo said.

Last year saw 225 more Japanese companies arrive in Vietnam, raising the number to more than 1,500.

Trade revenues between Vietnam and Japan have increased by an average of 18 percent each year over the past decade. Last year, Vietnamese exports to Japan totaled around $13 billion, while imports from Japan, mostly in the form of manufacturing machines and equipment, totaled about $12 billion.

Nguyen Trung Dung, a trade advisor to Japan, said Vietnam's trade with Japan has always been "stable and balanced" compared to other big markets, such as China, with which Vietnam usually suffers a trade deficit, or with the US, where there tends to exist a trade surplus.

Dung said by working with Japanese companies to produce exports for the exceedingly demanding Japanese market, Vietnamese businesses will benefit greatly from their exposure to the Japanese technical ways.

Becoming more attractive

Kazuo said the Vietnamese market is still discouraging to Japanese investors in terms of its red tape - unnecessary or inadequate regulations, and low-skilled labor force, but there is opportunity for improvement, as the market is immature and expanding.

But Dung said Vietnam will have to compete with Myanmar, Indonesia and Philippines and thus it needs to improve its legal system to become a friendlier market, and businesses also have to improve in order to be better partners.

Morifusa Ueda, sales director of Mainichi newspaper, said infrastructure projects are attractive to Japanese investors, and they have invested in several major endeavors in Vietnam. But they want their Vietnamese partners to be consistent, instead of changing plans every several months, he said.

There are also problems in the food production sector, Suetake said.

He said Japanese businesses are strict about hygienic conditions in food production as hand contact can lead to bacterial infections, while the use of fertilizers, pesticides and other chemicals is undesirable within the Japanese market.

Much of the seafood products in Vietnam come from small, non-brand providers, which according to Suetake, "need to be connected into a system," so that Japanese businesses can keep track of them in order to utilize their services.

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