Business opportunities in the ASEAN region are considered attractive. Among them, Vietnam emerges as a bright spot.

Surpassing China, ASEAN is attracting foreign direct investment (FDI) in the manufacturing sector. Even China is focusing more investment capital on Southeast Asia. These new indicators have also had an impact on Vietnam as a member of ASEAN and also a trading partner of China.

FDI Markets recently released data showing that foreign direct investment (FDI) in the manufacturing sector is now more than in China, and said that this could be seen as evidence of the view that “ASEAN’s gain means China’s loss” in the context of geopolitical tensions pushing international businesses to diversify. supply chain their.

However, HSBC experts believe that this conclusion lacks two facts and does not fully reflect the actual situation. Ms. Amanda Murphy, Head of Commercial Banking for South and Southeast Asia, HSBC Asia Pacific, said: ASEAN and China work together in trade and investment.

As evidence for this view, according to HSBC experts, Chinese manufacturers themselves are expanding their operations in Southeast Asia. FDI Markets data also shows that a third of the region’s manufacturing FDI last year came from China, more than three times more than investment from the US, South Korea or Japan. In Vietnam alone, leading Chinese manufacturers increased investment in 2023, with nearly 20% of newly registered FDI coming from China, accounting for the largest share among investors in Vietnam.

Second, what key indicators don’t capture is that China’s investment in ASEAN is not just about low-cost assembly, but also includes advanced manufacturing, technology, and even professional services. And China is not only ASEAN’s largest source of FDI, but its investment in the region is driven by ASEAN’s overall fundamental strengths, not just smaller ambitions like supply chain diversification or lower production costs.

Taking a closer look, Mr. Ahmed Yeganeh, Country Head of Commercial Banking, HSBC Vietnam, said: We see the investment trend in our own client base. HSBC noted that the number of Chinese enterprises entering new markets in Southeast Asia in 2023 increased by 80% compared to 2022. “Our Chinese clients are most interested in expanding to Singapore, followed by Vietnam, Thailand, Malaysia and Indonesia,” Mr. Ahmed Yeganeh emphasized.

ASEAN’s appeal is attributed to growth opportunities, according to experts. A survey of 3,500 global businesses conducted by HSBC last year found that a skilled workforce, a growing digital economy, competitive wages and a relatively large regional market are the attractions of ASEAN, including Vietnam. According to Ahmed Yeganeh, 28% of businesses participating in the survey said that the stability of the Vietnamese economy is a prerequisite for attracting international businesses. Vietnam is known as an economy with strong GDP growth and is expected to grow the fastest in ASEAN at 6.5%.

In fact, ASEAN is already China’s largest trading partner and the region offers diverse growth opportunities for Chinese businesses, thanks to its strong economic fundamentals, increasingly sophisticated manufacturing capabilities, efficiency in supply chains and logistics, cultural similarities and a growing middle class.

HSBC experts analyzed that for Vietnam, China China and Vietnam are now trading partners with bilateral trade exceeding US$106 billion, mainly in the electronics, textiles and machinery sectors. In the 10 years since 2014, trade relations between China and Vietnam have risen to become one of the world’s top 20 trade corridors. Regional agreements such as the Regional Comprehensive Economic Partnership (RCEP) mean that economic links between China and Vietnam will continue to grow closer, with a greater focus on digitalization.

According to the e-Conomy SEA 2023 report, Vietnam is the fastest growing digital economy in ASEAN with an impressive growth rate of 20%. In terms of total transaction value, Vietnam has the potential to become the second largest digital technology market in the region by 2030, behind only Indonesia. The expected growth will be achieved by a rapidly developing e-commerce ecosystem, supported by a growing consumer base and poised to become the 10th largest consumer market in the world by 2030, larger than Germany, the UK and Thailand.

From the reality of trade and investment, experts say that the synergy between China and ASEAN is very clear. Over the past few decades, China has taken the lead in many of the sectors that shape today's economy, such as digitalization, advanced manufacturing, renewable energy and electric vehicles. ASEAN's growth journey means that the region is also in a position where countries in the region can also produce or develop products in those sectors, and there is a large-scale demand for these products. Opportunities, proximity and complementary strengths will continue to drive growth in the ASEAN-China economic relationship, including Vietnam.