China FDIs in Vietnam 2023: Integration and Outstanding Development

Relationships between Vietnam and the People’s Republic of China (PRC) were formally established in the early 1950’s, with 73 years of history and 19 major conferences up to now.

On December 12th 2023, President Xi Jinping made an official state visit of 2 days to Vietnam, setting an extremely meaningful milestone considering the historical connection between the two countries, with the signing of 36 cooperation documents which are aimed to strengthen the China-Vietnam friendship.

Particularly, Foreign Direct Investments (FDIs) inflowing from China to Vietnam have also increased significantly over the past 5 years, as China is Vietnam’s third largest source of FDIs. In fact, in the first half of year 2023, China has poured nearly 1.3 billion USD into 233 projects in Vietnam, ranking 6th among the144 countries and territories investing in Vietnam.

· For the production of electronic components and devices, BOE Technology Group, a supplier of Samsung and Apple, will invest 400 million USD to build a remote-control system factory worth 150 million USD and screen manufacturing factory with a value equal to 250 million USD.

· For the automotive sector, the electric vehicle manufacturer BYD Auto, the rival Tesla in China, is planning to build a 250 million USD factory in Phu Tho province to produce auto parts. Furthermore, Cherry Automobile invested 800 million USD in Thai Binh province in cooperation with Geleximco, and SAIC Motor sold 4,300 MG cars in Vietnam and plans to build a production factory here.

· For the energy industry, solar panel manufacturer Trina Solar raised its total investment in Vietnam to nearly 420 million USD and northern province of Quang Ninh granted an investment registration certificate for the Jinko Solar Hai Ha Vietnam photovoltaic battery project with an investment capital of 1.5 billion USD on October of this year.

· For the textile and garment sector, the billionaire Ma Jianrong operates Worldon Vietnam and Gain Lucky for supporting the production activities of his textile “giant” Shenzhou International Textile Group, with more than 700 million USD of investment and recruiting nearly 8,000 new workers at the end of 2023.

· For the logistics industry, with the launch of its premium warehouse facilities in strategic locations on April 2023, Cainiao Vietnam, the logistics arm of Alibaba Group, is meaningfully contributing to the development of this sector in Vietnam. In addition, it’s worth the mention the already well-established presence in the territory of companies such as SF Express, Sinotrans, and Oocl.

· Outstanding projects in the manufacturing field have been also carried out by China’s CAYI Group, a world-leading wholesaler of stainless steel utensils that recently established a factory in Bac Ninh province and a representative office in Hanoi, and by Yangjie Electronic Technology, a Chinese IDM manufacturer who is building new production base in Vietnam to expand its capacity in mostly discrete semiconductors.

Currently, FDIs inflow from China to Vietnam are increasing in many fields, as PRC is now encouraging domestic enterprises to invest abroad to bring profits back home. Moreover, the geographical location of Vietnam and China adjacent to each other is also a favorable factor for both countries to support each other in the national development.

In conclusion, the prospects and potentials for trade and investment cooperation between Vietnam and China are still very large, especially when both countries have complementary interests, and the world is aiming to reduce carbon emissions to build a green and circular economy.

The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.