Manufacturing household electrical appliances at a plant in the Vietnam-Singapore Industrial Park in Tan Uyen town, Binh Duong province. (Photo: VNA)HSBC commissioned the online survey of 3,509 businessesbased in nine markets - China, India, the UK, France, Germany, the US, Australia, HongKong (China), and GCC countries (United Arab Emirates, Saudi Arabia, Bahrain,Qatar, Oman and Kuwait).
According to the HSBC Global Connections survey, Vietnamwhich has become known for its rapid economic growth also stands out as one ofthe top performers in the ASEAN region given its strong economic resilienceduring and after the COVID-19 pandemic.
This resilience coupled with its hard workingskilled work force and competitive cost structures continues to attract strongFDI flows into the country.
The country's fast growing middle class is also areal opportunity for international companies who are looking to tap into theconsumer story that will see Vietnam become the 10th largest consumer market inthe world by 2030, said Tim Evans, CEO of HSBC Vietnam.
Several international businesses see Vietnam’sgrowing consumer market as an opportunity, with 27% highlighting the appeal ofincreasing consumer prosperity.
Business decision makers from Chinese and Indiancompanies were likely to highlight the opportunity to scale quickly in itssizeable market, with 32% and 41%, respectively, pointing to this marketattribute.
Indian businesses also point to the opportunity todevelop and test new products and solutions, with 45% of them saying thisattracted them to expand there. About a quarter of all business also seeadvantages in Vietnam’s demographics and young population.
Vietnam has a high smartphone penetration rate and avibrant start-up sector, and the growth of e-commerce is a key selling pointfor many international businesses: 23% say they are attracted by the country’sgrowing digital economy.
Three in 10 respondents believe the Vietnameseeconomy will see significantly increased economic growth during the next 10years due to technological change.
Vietnam’s importance in global trade flows isreflected in strong interest in free trade agreements. Overall, 63% ofcompanies in the survey intend to make use of the EU-Vietnam Trade Agreement,which entered into force in August 2020 with the goal of eliminating 99% oftariffs and reducing trade frictions between the two partners.
However, cultural differences and regulatorydevelopments are the top challenges for foreign firms operating in Vietnam, with 31%of foreign companies pointing to cultural difficulties, and 30% to thechallenge of adapting to fast-changing regulations and policies within themarket.
Australian companies were especially likely to saythey had dealt with cultural issues, with 40% saying they had faced these inVietnam. US and Hong Kong firms both stated the challenge of adapting toregulation as their primary challenges, with 32% and 34% of companiesrespectively reporting this./.
VNA
