Japanese investors have shifted their focus from manufacturing industry to service as the growing domestic market in Vietnam offers a very promising prospect for the sector.
HCM City(VNA) – Japanese investors have shifted their focus from manufacturing industryto service as the growing domestic market in Vietnam offers a very promising prospectfor the sector.
Japanese investorspoured money into 549 projects, both new and existing, in Vietnam last yearwith the number of projects in retailing and hospitality doublingthat of a year earlier. By contrast, manufacturing projects accounted for only 20percent of the total new ones, down from 30 percent in 2015.
Supermarket, conveniencestore and shopping mall operators from Japan, such as Aeon Mall, Family Mart,Ministop and Takashimaya, have been accelerating the expansion of their presencein Vietnam.
Japanese investorshighly appreciate the political and social stability in Vietnam; and they haveturned their attention to producing consumer goods to meet rising demand in thecountry besides developing distribution network, said Chief Representative ofthe Japan External Trade Organisation (JETRO) in HCM City Takimoto Koji.
It is a natural trendfor a developing economy like Vietnam to move from primary sectors –agriculture, forestry and fishing – to the service sector, Teramoto Ryohei, aJapanese market researcher explained.
With robust economicgrowth and a young population, Vietnam is an alluring market for Japanretailers, he added.
The middle class inthe country is explosively expanding and rising income encourages spending;Vietnamese consumers also favour high-quality goods and services from Japan.
At the same time, thedecrease in investment in manufacturing is attributable to the fact that Vietnamhas become less competitive in costs of labour and input materials as thecountry’s minimum wages have been raised over years. Moreover, local suppliersof components are only capable of meeting 20-30 percent of Japanesemanufacturers’ needs.
To keep investors aswell as attract more manufacturing projects, Vietnam should work towardsimproving technologies and worker skills. Experts suggested the country sendits workers to Japan for vocational training and put more effort to developsupporting industries.-VNA
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Illustrative image. (Photo: VNA) 
