Introduction
Vietnam is attracting attention as one of Southeast Asia’s leading economies in terms of growth. With a population of about 100 million, a young average age in the early 30s, and a high level of education, ranking high globally in the OECD’s PISA rankings, it can be considered a market with high future potential.
This article is intended for small and medium-sized Japanese enterprises considering new entry or re-expansion into the Vietnamese market. It is particularly essential for companies, regardless of whether they are in manufacturing or services, that want to develop their business long-term while capturing local demand, to understand Vietnam’s business environment.
While it is an attractive growth market, there are also many points to be aware of when entering, such as an underdeveloped legal system, cumbersome administrative procedures, challenges in local procurement, and difficulties in securing human resources. Furthermore, competitors include not only local companies but also Chinese, South Korean, and Western companies, making it difficult to differentiate based on price competitiveness alone.
This article will provide an overview of this environment, explaining the background of Japanese companies’ increasing market share, the challenges they face, and specific strategies and countermeasures, with examples.
Challenges and Background
Market Data
Since 2010, Vietnam has maintained an average GDP growth rate of about 7% and continues to have high growth potential. The population has reached about 100 million, the average age is in the early 30s, and a high literacy rate of over 95% supports the business foundation. The country ranked 8th in the world in the OECD’s PISA academic achievement survey, indicating a distinct educational advantage compared to other ASEAN countries.
Furthermore, the relocation of production bases to Vietnam, mainly by Japanese and Chinese companies, is progressing remarkably. Spurred particularly by the U.S.-China trade friction, there have been 106 production transfers from Japan between 2019 and 2024, and more than half of the transfers from China have chosen Vietnam.
The performance of Japanese companies in Vietnam is also strong, with 64.1% securing profits in 2024. The percentage of companies actively considering business expansion is also high at 56.1%, a high level even among ASEAN countries. The progress of profitability, especially in non-manufacturing industries, suggests future potential in the sales and service sectors.
Risk Presentation
Legal System and Administrative Procedures
A major challenge in Vietnam’s business environment is the underdeveloped legal system and the complexity of administrative procedures. There are many cases where companies face demands for informal fees and ambiguous regulatory enforcement when obtaining investment permits or work permits for expatriates.
Constraints in Labor and Infrastructure
Rising labor costs and the instability of the power supply are also serious risk factors. In the northern region, in particular, competition for talent is intensifying with the entry of foreign companies, requiring a flexible system to respond to wage increase pressure and recruitment difficulties.
Intensifying Competition
In the domestic market, price competition from Chinese, South Korean, and local companies is strengthening. Chinese companies, in particular, are on the offensive with products branded as “Japan Brand,” and strategies to attract consumers with apparent quality or origin are also conspicuous. In this context, Japanese companies need to appeal to genuine quality and reliability.
Product and Service Introduction
Features
Vietnamese consumers are highly conscious of quality and safety, but also sensitive to price. Products from Japanese companies are favorably received from the perspectives of “reliability,” “long life,” and “peace of mind,” and the image of the “Japan Brand” is particularly excellent.
On the other hand, counterfeit products and products with Japanese-style brand names are also in circulation, and there are cases where the brand image is exploited. This can be said to indicate the high level of recognition and influence of the Japan Brand.
Furthermore, the advancement of smart city concepts, the expansion of investment in education, and the rapidly growing e-commerce market offer new business opportunities for many industries, including IT, education, logistics, telecommunications, and payment sectors. Especially with the high penetration rate of smartphones, promotion strategies utilizing social media and e-commerce malls are extremely important.
Case Studies (Before → Action → After)
- Company J (Domestic-oriented Retail): A Japanese retail company dealing in daily necessities. Initially struggled with price competition against local and Chinese products, but implemented a sales promotion strategy emphasizing “Japanese quality” and “hygiene and safety.” By increasing awareness through POP advertising and social media, they succeeded in increasing the purchase unit price and repeat rate.
- Company K (Durable Consumer Goods): Sells Japanese brand home appliances manufactured in neighboring countries in Vietnam. They do not engage in local production, specializing in import sales. Through social media marketing, they appealed to values such as “meticulous manufacturing” and “environmentally friendly design,” attracting the interest of the younger generation. They achieved a rebranding and expansion of their customer base.
Hasegawa’s Reliability
Quality Control and Certification
Since its founding, Hasegawa has prioritized safety and quality in its product development. In the Vietnamese market as well, we have established a manufacturing and management system that complies with international quality standards such as ISO9001 and JIS (Japanese Industrial Standards), and have earned a high reputation for “products that can be used with peace of mind.”
Furthermore, by repeatedly conducting verifications based on actual use in the field, we have realized quality assurance based on a “field-first principle” rather than mere numerical management. This means that the safety standards cultivated in Japan are applied in Vietnam without any compromise.
Customization and Support System
In Vietnam, where various industries are expanding, the specifications and functions required at each site differ greatly. Hasegawa flexibly responds to custom designs and specification changes based on local needs. At sites requiring work at heights, such as construction sites and logistics warehouses, we conduct preliminary hearings to propose solutions that take into account working conditions and personnel allocation.
In addition, through collaboration with local partner companies, we have a complete after-sales service and repair system. We strive to build trust through prompt and courteous service, including delivery times and transportation.
Data Box
| Indicator | Value/Content |
| Population | Approx. 100 million (as of 2024) |
| Average Age | Approx. 32 years old |
| Literacy Rate | Over 95% |
| Profitability of Japanese Companies (2024) | 64.1% |
| Willingness to Expand Business (Japanese Companies) | 56.1% (Top in ASEAN) |
Source: JETRO Overseas Business Information
Conclusion (Key Points / CTA / Related Links)
While the Vietnamese market has various attractions such as growth potential, demographics, and high educational standards, it also faces challenges that must be overcome, including the legal system, infrastructure, human resources, and competitive environment. It is necessary to correctly understand these dual aspects and effectively leverage the strengths of being a Japanese company.
We hope this article has helped you grasp the overall picture of business in Vietnam and will be of assistance in designing your company’s future strategy for expanding into the local market. In particular, a sincere attitude of conveying the value of the Japan Brand, strengthening local response capabilities, and enhancing collaboration with local partners will be essential keys to future success.
▶ For consultations or to request materials, please feel free to contact the Hasegawa Vietnam Local Office.
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