The fifth and final post in our ‘Navigating Vietnam: The First Steps Series’ provides an overview of Vietnam’s landscape to help guide your research if you are at the early stages of your Vietnam journey.
Regions of Vietnam Overview
Vietnam, spanning roughly 331,000 square kilometers with a population of approximately 100 million people, is a geographically-blessed country. With more than 3000 kilometers of coastline and 163 active international seaports spanning from north to south, Vietnam is naturally positioned as a global hub for trade.
Fuelling Vietnam’s rapidly growing economy (averaging approximately 6% GDP growth per annum) are three major key economic regions: The South, The North and The Center.
The South
Ho Chi Minh City (formerly Saigon) is Vietnam’s economic capital and largest city. Home to more than 9 million people, Ho Chi Minh City’s economy is broad and diverse. 60% of its GDP comes from service industry sectors, which include retail, hospitality, finance, and professional services. Additionally, Ho Chi Minh City is a hub of innovation, with a rapidly growing technology sector, and is home to tens of thousands of local and international companies.
Surrounding Ho Chi Minh City are the key industrial provinces of Binh Duong, Ba Ria – Vung Tau, Dong Nai, and Long An. These provinces are home to sprawling industrial clusters for manufacturing of textiles, electronics, metals fabrication, furniture and many other products built for global export.
The Southern Region continues to attract the largest share of new investments in Vietnam and is a primary hub for companies looking at market entry, export and sourcing opportunities. While it also faces challenges, such as increasing land prices, labor costs and growing infrastructure pressures, The Southern Region’s critical mass of economic activity make it a key commercial hub of Southeast Asia that will continue to grow for years to come.
The North
Hanoi, Vietnam’s Capital City, and its surrounding provinces (the Northern Key Economic Region) have rapidly attracted new FDI projects over the past decade. Hanoi is not only the seat of power of government, but is also the home of head offices for the largest and most influential Vietnamese companies.
Vietnam’s third largest city, Hai Phong, is at the heart of Northern industry, given its coastal position as a logistics hub. 105 kilometers from Hanoi, it provides deepwater port access, and is connected to Hanoi via the Hanoi-Hai Phong Expressway. Additionally, modern rail and air logistics infrastructure are available.
Hai Phong has developed itself to become a major industrial powerhouse, focusing on industries including automotive, equipment, building materials, electronics and chemicals manufacturing.
Between Hanoi and Hai Phong are additional industrial provinces, such as Vinh Phuc, Bac Ninh, and Hai Duong. Offering expansive transportation infrastructure and land availability, the Northern Key Economic Zone will continue to rapidly develop in the years ahead, presenting an abundance of opportunities for global companies.
The Center
Central Vietnam is a tourism hot spot. Resort destinations such as Nha Trang capitalize on beautiful weather and white sand beaches. In relatively close proximity, the historical and cultural destination cities of Hoi An and Hue provide ample opportunities in the tourism and hospitality sectors to thrive.
Vietnam’s fourth largest city, Da Nang, is home to a strong tech and innovation sector in addition to its tourism and hospitality economy, with numerous universities and hi-tech parks providing a lower-cost destination for investment that offers availability of skilled workers, quality of life benefits and unique economic incentives for companies considering entering Vietnam.
Key Sectors
In future posts, we will dive in deeper on insights on key opportunities in Vietnam’s many sectors of interest. At a high-level, a few of the key industries in Vietnam to be aware of include:
Traditional Manufacturing
Largely focused on low-cost upgrading, traditional manufacturing in Vietnam includes the processing of raw materials for export and assembly. Categories of products include: food processing, furniture, textiles and garments, electronics, and building materials.
Advanced Manufacturing (hi-tech)
Combining Vietnam’s strategic logistics positioning, numerous free trade agreements and skilled labor availability with automation and technology to deliver high-value products and competitive prices, Vietnam’s advanced manufacturing capabilities are increasing rapidly. Automation, robotics and engineering and design capabilities make precision fabrication and other forms of hi-tech manufacturing very attractive in Vietnam.
Tech and Innovation
Parallel to advanced manufacturing, Vietnam’s tech sector is rapidly rising. With a strong skilled workforce and relatively low-cost environment, both local and international tech companies are present in Vietnam across a variety of sectors such as software development, cybersecurity, and fintech.
Agriculture
Vietnam is home to a thriving agriculture sector, leveraging its natural advantages in combination with free trade agreements and logistics capabilities. From fruits to seafoods to livestock production, Vietnam’s agriculture sector is of global interest and importance, providing abundant trade and investment opportunities.
Service Sectors
Ranging from tourism and hospitality, to retail, to banking and corporate services and everything in between, Vietnam’s service sector both supports the entire economy, and provides lower-cost, high-value solutions to customers around the world via outsourcing and offshoring solutions. Endless opportunities also exist for products and services that can support efficiencies, capabilities and the growth of Vietnam’s economy.
The Bottom Line
Understanding the local landscape is a key component of developing a winning strategy for your project in Vietnam, be it for sourcing, export, or market entry purposes, in conjunction with the other steps outlined in the ‘Navigating Vietnam: The First Steps Series.’
Fortunately, you don’t have to do it alone.
The Herbers Agency is here to be your trusted partner in Vietnam. Providing both inbound and outbound support, we will help you develop a winning strategy, engage with the right contacts on the ground, and support your project through to completion.
As a supporting partner or as your in-market agent, we are here to help you get results.
Contact us today to begin your Vietnam journey!
