Despite the tough economic climate, many foreign companies are continuing to expand operations in Vietnam in hope that their strategy will pay off when the recovery happens.
BlueScope Buildings Vietnam, formerly known as BlueScope Lysaght Vietnam, inaugurated a US$4 million steel plant in Hanoi two weeks ago.
The plant, located in the Quang Minh Industrial Park, aims to tap into what the company sees as growing demand in the northern market.
The company, a fully owned subsidiary of Australia-based BlueScope Steel, began operations in Vietnam in 1993. It has gradually expanded its market into lower segments.
“The market is in a downturn, but we are confident that we can achieve a six-fold growth in the next three years with the new plant,” said Hoang Thai Anh, marketing director at BlueScope Buildings Vietnam.
“Our strategy is not just for the market at the present, but for the future market. The new plant in the northern region is the preparation for a market recovery,” he said. “We will continue to invest in research and development of new productsâ¦ We don’t withdraw our money just because the market slows down.”
Meanwhile, German group Bayer said it positions Vietnam as a priority market in Asia, alongside China, India and Indonesia. Bayer Vietnam, which started in 1994, has posted an average growth rate of 12 percent a year, with revenues reaching $121 million in 2010. The company is targeting revenues of $300 million in 2015.
David Champion, managing director of Bayer Vietnam, said the company now has 12 production lines in Vietnam, and they are planning to build five more in 2012.
He said Vietnam is one of Bayer’s production centers for plant protection products and the company is also developing a hybrid rice project in the central region. The country has the potential to become a production base from which Bayer will expand to other markets in Southeast Asia, he said.
All the profits made by Bayer Vietnam have been used for reinvestment here, Champion said, adding that his company is in the list of 1,000 largest taxpayers in Vietnam.
While several reports released during the year, including those from the World Bank, the World Economic Forum, and the European Chamber of Commerce in Vietnam, indicate that there has been growing concern over Vietnam’s economic and investment environment, existing foreign investors seem to think otherwise.
According to the Foreign Investment Agency, even though new FDI pledges fell 16 percent in the first 11 months of 2011, to $9.91 billion, more capital has flown into existing projects. The agency said 324 FDI projects were injected with a combined additional capital of nearly $2.78 billion in the 11 months, up 50 percent from the same period last year.
Experts said the commitment of foreign investors to stay and expand in Vietnam amid the global economic downturn shows that the market has room for growth in the long term.
Some also said despite the current conditions, now is actually a right time to boost investment in Vietnam because land prices have fallen to reasonably low levels and may rise again.