The investments were made through subsidiaries in third countries and other international corporate structures where the ultimate owner is German, the Current Status of German Investments in Vietnam 2026/27 report said.

Manufacturing investment shifts toward faster market entry

Manufacturing remains the largest segment in terms of capital intensity. The roughly 120 German manufacturers in Vietnam operate across industries including apparel, chemicals, machinery, automotive components, electronics, medical technology, and consumer goods.

The AHK assessment also points to changes in how German manufacturers establish operations. About 71% of reviewed manufacturers operate company-owned facilities in industrial parks, while around 27% use ready-built factories. Built-to-suit facilities remain relatively uncommon.

The growing use of ready-built factories reflects companies' preference for faster market entry and lower initial capital requirements.

Southern Vietnam accounts for about 58% of identified German manufacturing investments. Northern Vietnam represents around 25%, while central Vietnam accounts for about 16%.

Though manufacturing remains the most capital-intensive segment, sales and service operations account for the largest share of identified German business functions, with over 250 German companies.

German firms have also expanded their programming, technical consulting, engineering, and outsourcing operations. Software development, industrial engineering, automation, and digital services teams are active in HCMC, Hanoi, and Danang.

The shift suggests Vietnam is increasingly being viewed not only as a manufacturing base but also as a regional platform for customer support, engineering, and business services.

Southern Vietnam remains the main investment hub

The Greater Ho Chi Minh City region remains the leading destination for German companies, accounting for about 70% of the German business presence in Vietnam, the report shows.

The region contributes about 40% of Vietnam's national GDP and provides access to a population of around 21 million people. German companies are particularly concentrated within roughly 40 km of central Ho Chi Minh City. Established supplier networks, logistics infrastructure, industrial parks, and access to customers have helped maintain the region's appeal.

The Hanoi-Hai Phong corridor in the north is the second major destination for German investors. Its proximity to China, access to Hai Phong city's deep-sea port, and growing industrial infrastructure have supported investment in northern Vietnam.

Central Vietnam, particularly Danang city, is also attracting interest as companies look for lower-cost locations and new growth opportunities.

Supply chain diversification supports future investment

Several factors are expected to continue supporting German investment in Vietnam, including political stability, competitive labor costs, improving workforce quality, access to regional supply chains, and a more open investment framework, according to the report.

Supply chain diversification is another key driver, as many German companies are positioning Vietnam as an additional manufacturing and sourcing base rather than replacing operations in other markets. The country's network of free trade agreements and ongoing infrastructure development further support its role in regional supply chains.

The growing availability of engineering and technology talent could also encourage German companies to expand digital, technical, and outsourcing operations in Vietnam.

As a result, future German investment is likely to extend beyond traditional factories, with greater emphasis on engineering, technology, customer services, and regional business functions, the report noted.