How have member companies of the Korean Chamber of Commerce in Vietnam overcome 2024’s complexities?

Choi Bundo, chairman of the Korean Chamber of Commerce in Vietnam

2024 has indeed been a challenging year for South Korean companies amid global economic uncertainty and rapidly changing market conditions. However, member companies have been tackling these obstacles creatively by leveraging their strengths.

For instance, to counter the low-cost strategies of local Vietnamese and Chinese competitors, South Korean companies are focusing on improving product quality, enhancing customer service, and increasing production efficiency. Efforts to diversify sales markets are also noteworthy; many are expanding beyond Vietnam to North America and Europe, mitigating risks through market diversification.

Additionally, to address skilled labour shortages and rising wages, member companies have been implementing robust employee training programmes and adopting advanced technologies like automation systems. By doing so, they are turning challenges into opportunities.

How has South Korean investment in Vietnam flowed this year, and were there any major differences from previous years?

Unlike the past when they focused on traditional manufacturing, we are now seeing a shift towards high-tech industries such as semiconductors, electric vehicles, and renewable energy.

For example, Samsung is maintaining its annual investment scale of approximately $1 billion while adding $1.8 billion to build a new display factory. Similarly, LG Electronics is committing $4 billion to transform Vietnam into a key production hub in Asia.

What sets 2024 apart from 2023 is that South Korean companies no longer see Vietnam merely as a production base. They now view it as an innovative business partner, focusing on technology development and sophisticated business models.

What is the South Korean business perspective on the local business climate?

The Vietnamese government has been making consistent efforts to improve the business environment to attract foreign investment. Its commitment to enhancing the investment climate and providing stronger support for foreign-invested enterprises is particularly commendable.

However, challenges remain. Delays in VAT refund processes, inconsistencies in administrative practices across regions, and sudden policy changes continue to pose difficulties for businesses. To address these issues, it is essential to streamline administrative procedures, ensure policy consistency, and enhance transparency.

Additionally, to drive long-term economic growth, greater support for small- and medium-size enterprises in key industries such as materials, components, and equipment is crucial. These businesses serve as the backbone of the economy, and strengthening them will contribute significantly to the stability and growth potential of the entire industrial ecosystem.

If the government implements these improvements and support measures, both foreign-invested and local enterprises will gain the confidence needed to actively contribute to Vietnam’s socioeconomic development.

Looking forward, what are their expectations and plans in Vietnam?

Green growth, sustainability, and digital transformation will indeed be central themes in 2025.

In green growth, renewable energy projects are expected to expand further, with active investments from South Korean companies in sectors like solar and wind energy.

For sustainability, there will be a greater focus on environmental, social, and governance standards, sustainable supply chain management, and business models incorporating social responsibility.

Regarding digital transformation, investments in advanced technologies such as AI and cloud services will rise. We will also see accelerated adoption of cashless payments and smart manufacturing technologies. South Korean companies specialising in smart manufacturing are likely to play an increasingly prominent role in Vietnam.

One of the top expectations from companies is increased administrative efficiency. Simplified investment procedures and reduced administrative costs for foreign-invested companies would significantly streamline operations.