Chinese enterprises outbound to the world – investing in Vietnam is a top choice!

Colin Ngo – The outbound investment of Chinese enterprises has been a trend, in which investment into Vietnam seems to be a top choice. This would be an opportunity for Vietnamese enterprises to cooperate and grow.

We have just attended the office inauguration event of Broad in Hangzhou City, Zhejiang province. Broad, headquartered in Singapore, is a consulting company assisting Chinese enterprises to invest abroad by providing services of legal, financial, tax, and business set-up, factory settings, management, finance, and onto the floor (IPO), etc. In China, businesses that want to invest overseas need to create an overseas direct investment project (referred to as ODI), Broad first is to provide this service to the Chinese enterprises.

Two things make me surprised in this attendence.

First, more than a contemporary wave, the outbound investment of Chinese enterprises has been a trend. The speed of propagation of this movement is very fast and has wide coverage. Most of the discussion themes of Chinese enterprises today is related to outbound investment. They ask each other about the Southeast Asian markets, where they should invest or when there will be survey trips overseas, etc.

The investing overseas of Chinese enterprises hasn’t been new when the initiative Belt and Road was introduced in 2013. It was expected to repeat the splendor in trade of old “the Silk Road”. Some positive results have been there when 2016 witnessed the outbound investment from China reached 196 billion U.S. dollars. Unfortunately, COVID-19 has defeated these efforts. The value of China’s outbound investment only reached about two-third (2019) and about three-fourth (2021, 2022) compared with 2016.

Things changed after 2020. That when foreign businesses have gradually withdrawn from China and the US and China still conflict commercially promotes the necessity of outbound investment of Chinese enterprises. Data from the Ministry of Commerce of China reported, in the first 8 months of the year 2023, investment abroad of China (excluding financial investments) has reached 80 billion U.S. dollars, an increase of 18,8% compared with the same period last year. The Chinese businesses shared the outbound information with each other and invited to invest overseas together. They see this move both inevitable and a chance to develop globally.

Second, for Chinese enterprises nowadays, investing into Vietnam is a top choice. In 2023, the majority of our customers whom we received are Chinese investors. They came to Vietnam by themselves, through the ODI consultancy like Broad, through the participation in trip surveys organized by the business Association and the China-stated agency who supports Chinese enterprises going abroad and so on. We thought that they come to investigate the investment environment of Vietnam is a normal thing as they conduct surveys of other Southeast Asian countries.

But we realized this matter deeply while attending the event in China. The inviting company, in the introduction to their services throughout South East Asia, America, and Europe, spent two presentations about investment in Vietnam along with inviting an enterprise who has had a 15 years of investment in Vietnam to share their experiences. The presentation contents were well prepared with a sound understanding of the situation in Vietnam.

In the panel discussion, I was one of four speakers to attend. There are also representatives of Southeast Asian countries others to join. We had another chance to share our insights on the business climate and attractiveness of Vietnam. After the panel chapter, there are many businesses who came to me to ask more information about the matters that they are interested in.

Through the questions the Chinese enterprises asked, I realize that they have a deep interest in investing in Vietnam. No question about the need to compare this or that issue between Vietnam and other Southeast Asian countries. They did not put the question like why we should invest in. With the businesses who haven’t been to Vietnam, they expressed the desire to soon go visit because they received so much information about Vietnam, and they seems to be left behind if they don’t come.

This trend would also be an opportunity for Vietnamese enterprises to cooperate with Chinese investors since the Chinese enterprises in this investment wave are mainly manufacturing corporations, in which there are many high-tech enterprises.

Written in Hangzhou, 13 Dec. 2023.