German firms expand in Vietnam despite global economic headwinds

Despite the ongoing global turmoil, 38% of German companies plan to increase investment and 43% expect to hire more staff this year, according to the Spring 2025 AHK World Business Outlook Survey conducted by the Delegation of German Commerce and Industry in Vietnam (AHK Vietnam).

These numbers are up 3% and 8%, respectively, from the Fall 2024 survey conducted last December.

The report also highlighted that 80% of German companies in Vietnam rated their current business situation as good or satisfactory, unchanged from Fall 2024 while 54% of respondents expected better business conditions over the next year, up 4% from the fall survey.

"These figures confirm Vietnam's dual role as a strong manufacturing hub and a strategic alternative in the Indo-Pacific," the report said. "German companies in the country are facing both opportunities and challenges as they adapt to a changing global economy."

Although the survey was conducted around the time the US announced new tariffs, many respondents had yet to fully assess the potential impact of these policies. Nevertheless, the findings showed Vietnam's continued appeal to German investors amid rising global volatility.

While some companies may not be directly affected by reduced consumer demand in the US, many are indirectly affected through partners tied to this market. This makes long-term planning particularly difficult for manufacturing and distribution companies.

AHK Vietnam affirmed that Vietnam remains a stable anchor thanks to its neutral stance and central role in ASEAN manufacturing. The EU-Vietnam Free Trade Agreement (EVFTA) is also proving effective in boosting trade and investment between the two partners.

In 2024, bilateral trade exceeded €18.8 billion (US$20.4 billion). In terms of investment, several German companies expanded their operations in Vietnam last year.

In early April, Südwolle Group, the world's leading manufacturer of wool yarn, inaugurated a $21 million yarn dyeing plant in the central province of Ninh Thuan.

Last year, Ziehl-Abegg, a global leader in ventilation, control, and drive technology, opened a $20 million factory in the southern province of Dong Nai to produce advanced ventilation systems and electric drives for domestic and international markets.

Another investor, Kärcher, a global provider of cleaning solutions, opened a $19.4 million facility in the central province of Quang Nam to manufacture cleaning equipment. The expansion supports the company's broader strategy to meet growing demand in the Asian market.