Ziehl-Abegg, a German manufacturer of electric motors, air conditioning equipment, and fans, last week unveiled its plan to kick off a new production facility in Vietnam, marking a significant step towards expanding its global footprint.

The company’s newly formed subsidiary, Ziehl-Abegg Vietnam, held its inauguration ceremony on July 11 in Ho Chi Minh City.

German business steadfast in investment intentions

With construction already underway for an advanced facility near the city, Ziehl-Abegg aims to address the surging customer demand by commencing production at the Vietnamese site in the first half of 2024.

Joachim Ley, Ziehl-Abegg’s production director, stressed the critical importance of expanding production capabilities worldwide to meet the escalating demands of customers.

“The new facility in Vietnam holds particular significance for the Asian and Australian markets, allowing us to continually provide our customers with optimal solutions,” Ley emphasised.

Elsewhere, Roding Mobility, a German firm specialising in technical consulting services and product design in the transportation sector, last month entered into a partnership with Thai Binh Hung Thinh JSC to accelerate research, development, and production of compact electric vehicles within Vietnam.

Franz Ferdinand Heindlmeier, CEO of Roding Mobility, expressed great optimism regarding Vietnam’s small e-vehicle sector and highlighted the importance of collaboration and strategic investment to unlock the nation’s immense potential.

“Under this partnership, Roding Mobility will lend its technical expertise across various stages of the product development cycle, including design, standard compliance, supply evaluation, and production techniques,” he said.

The latest move by Deutsche Bank further solidifies Germany’s interest in Vietnam’s thriving economy. The financial giant in late May announced plans to inject an additional $100 million into its Ho Chi Minh City branch, increasing its total investment in Vietnam to over $200 million.

Alexander von zur Muehlen, CEO and member of the board of Deutsche Bank Asia-Pacific, underscored the bank’s unwavering belief in Vietnam’s rapid and enduring developmental trajectory.

“This infusion of capital exemplifies our confidence in Vietnam’s future prospects and underscores the strategic significance of the Vietnamese market for our valued clients,” von zur Muehlen explained.

The investment arm of Germany’s state-owned development bank KfW, DEG, has also shown a keen interest in Vietnam.

DEG in February approved an $18 million investment in the latest fund of Vertex Ventures, which specifically focuses on Southeast Asia. This equity investment will play a crucial role in backing innovative technology companies operating in traditional industries, thereby supporting sector development and improved resource utilisation.

DEG earlier committed to invest $30 million in the latest private equity fund of Singapore-headquartered Asia Partners and another $25 million in debt financing to Vietnam-based water treatment and distribution company Ninh Duong Water Environment.

According to newswire InternationalBanker, Vietnam is making significant strides towards its own set of net-zero targets, with major players like Siemens, the Germany-based industrial technology conglomerate.

Moreover, the central city of Danang, one of Vietnam’s major port cities, is undertaking an ambitious journey to engage in pioneering projects that promise innovation and modernisation, with a specific focus on German investment.

“German businesses are increasingly recognising the investment opportunities in Danang and its surrounding region,” said Elmar Dutt, chairman of the German Business Association (GBA) in Vietnam at last month’s signing ceremony on investment promotion between Danang and the GBA.

Ho Ky Minh, Deputy Chairman of Danang People’s Committee, added, “While Germany stands as Vietnam’s most substantial trading partner within the EU, it is essential for Danang to attract a larger share of German investment. The current statistics, with only 11 ventures and registered capital of $10.3 million, do not adequately reflect the significant opportunities for collaboration between the two parties.”

To tip the balance and attract more German investors, Danang has formulated comprehensive plans to draw projects characterised by advanced technology, modern management practices, and innovative creativity. The city is particularly interested in projects that have the potential to significantly impact various domestic economic sectors, such as IT, electronic component production, high-tech industries, research and development, supportive industries, logistics services, high-value tourism real estate, finance, healthcare, and education.

According to the AHK World Business Outlook for spring 2023 released earlier in July, 91 per cent of German companies plan to invest in or expand production in Vietnam, with 40 per cent aiming to increase their workforce in the next year. Some 88 per cent of the surveyed participants have expressed confidence in their business situation in Vietnam; nearly half of the German respondents anticipate consistent economic growth, while 21 per cent believe that the economic situation will improve even further.

Despite global challenges, German companies in Vietnam are optimistic about the stable economic growth and confident in their business situation. Risks identified include low global demand, economic policy concerns, skilled personnel shortage, and potential supply chain disruptions.

“Vietnam is expected to experience economic growth, driven by free trade agreements, shifting supply chains to Southeast Asia, and green investments. German companies prioritise diversifying their supply chains, with Vietnam, Malaysia, and Thailand being top choices,” the report revealed.