The investment capital flow from China into Vietnam has increased sharply, and the demand for industrial real estate, especially in the country's northern region, is sought after.
Commenting on the trend of China increasing investment in Vietnam, experts say that Vietnam is holding many advantages to attract foreign investment.
Mr. John Campbell - Deputy Director, Industrial Services Department, Savills Vietnam, said that China's leading solar energy companies are expanding production in Vietnam, not only to penetrate the Eastern market. South Asia, but also use it as a "springboard" to participate in the European and American markets.
China is increasing investment in production in Vietnam.
Over the past 5 years, China has always been one of the top 5 countries with the largest investment in Vietnam.
Data compiled by the General Statistics Office show that in 2011, China's registered capital (including Taiwan) was 1.3 billion US dollars. By 2017, China's registered capital increased 2.7 times, an average annual increase of about 18%.
In particular, since the US-China trade war broke out, Chinese investment in Vietnam has increased sharply. Despite the COVID-19 pandemic, China still registered to invest heavily in Vietnam and always ranked 3rd and 4th among countries and territories investing in Vietnam.
According to the latest data released by the General Statistics Office on November 29, Singapore is the investor out of 70 countries and territories with newly licensed investment projects in Vietnam in the 11 months of 2023, with the largest investment with 3.31 billion USD, accounting for 20.2% of total newly registered capital.
Next is Hong Kong (China), with 3.15 billion USD, accounting for 19.2%; China, 3.06 billion USD, accounting for 18.7%; Taiwan (China) 2.05 billion USD, accounting for 12.5%.
Regarding investment volume, by the end of September, data from the Ministry of Planning and Investment showed that China had invested 2.92 billion USD in Vietnam, ranking second after Singapore (3.98 billion USD).
Up to now, Chinese investors have invested in Vietnam in over 4,032 projects, with a total registered capital of over 26 billion USD, according to Cong Thuong newspaper.
The reason why Chinese investors flock to Vietnam
According to a report just released by Savills Vietnam, the demand for solar energy product production is increasing in Vietnam, especially in the Northern region.
Trina Solar, a large corporation in Chinese solar batteries, is the largest investor in Yen Binh Industrial Park, Thai Nguyen province, with two factories operating steadily.
Trina also proposed implementing phase 3 of the Energy Development Plant Project in Thai Nguyen with an expected investment of 420 million USD. This is the Group's largest investment abroad in the field of photovoltaics.
The Banking Times also cited the explanation of Mr. John Campbell - Deputy Director, Industrial Services Department, Savills Vietnam, on why Vietnam attracts Chinese businesses, especially companies in the field of solar energy production.
According to Mr. John Campbell, the first is the geographical location advantage. Vietnam is adjacent to China, creating favorable conditions for transporting goods, raw materials and production lines.
In addition, Vietnam's northern key economic region has a geographical location close to China, with the advantage of competitive industrial land prices compared to the southern region, thereby creating attraction for the provinces in the region for Chinese investors.
Mr. John Campbell noted that Vietnam's high level of economic integration is remarkable.
In particular, Vietnam also possesses an abundant labor force, including a highly skilled workforce with competitive labor costs.
According to experts, Chinese enterprises are expanding production in Vietnam, not only to penetrate the Southeast Asian market but also to use it as a springboard to enter the European and American markets more easily.
Hunting for industrial real estate
Deputy Director of the Industrial Services Department, Savills Vietnam, said the recorded demand from businesses manufacturing electronic and solar energy products is huge.
To meet the increasing requirements of manufacturing units, many investors in Vietnam are gradually improving the quality of construction of their industrial parks and ready-built factories.
CNCTech is one of the most active investors, with significant investments in 6 provinces across Vietnam with 19 industrial parks spread over 5,487 hectares. The most prominent is the project in Vinh Phuc.
Currently, industrial parks nationwide generally have high occupancy rates (over 80%), of which the occupancy rate in key northern provinces reaches 83% and 91% in key southern provinces. Ready-built factories and warehouses also recorded an occupancy rate of 83% nationwide.
Therefore, experts note that finding vacant and suitable premises is a challenge for manufacturing businesses, and it is essential to receive support from experts and investors with a clear process.
Campbell emphasized that the industrial real estate market is changing with the participation of more investors. As the manufacturing and logistics industry grows, products such as prefabricated factories, warehouses, multi-story facilities, combined facilities, temperature-controlled buildings, and custom construction become increasingly diverse.
Therefore, industrial parks and ready-built real estate developers should focus on developing high-value-added services and incentives to attract the best businesses.
Experts also say that the Government needs to continue investing in infrastructure and improving skills for Vietnam's workforce to improve productivity and efficiency.
The Vietnamese government must also promote supporting industries and strengthen the supply chain. Simplifying investment and land use procedures and promoting digitalization are also key issues.
Similarly, CBRE recently noted that in the first 9 months of 2023, investors from China, Vietnam, Japan, the United States and the European Union sought the industrial real estate market. Actively searched for industrial land and warehouses in the Vietnamese market, accounting for about 70 - 80% of rental inquiries to CBRE in the Southern and Northern regions.
VnEconomy quoted CBRE's forecast as saying that in the next two years, industrial land rental prices in Vietnam are expected to increase by 6-10%/year in both the North and the South.
Positive demand from industry groups and tenant nationalities helps boost rental price growth in many localities. Additionally, ready-built warehouse rental prices are forecast to increase slightly by 2-4%/year in the next 2 years.
Thanks to the advantages of an export-oriented economy with many supporting policies, strategic geographical location, and preferential operating costs, experts consider the Vietnamese market a popular destination for investment options.
