Hsin Mawh Enterprise, located in Thai Binh province in northern Vietnam, manufactures various wood products. (Photo by Chen Mei-ling)
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For three days beginning July 26 last year, thousands of visitors mingled in and around the Saigon Exhibition and Convention Center in Ho Chi Minh City for Taiwan Expo 2017. Themed Greener Tech, Smarter Life, the exhibition showcased more than 4,000 Taiwan products and services for home and industrial use and led to US$27 million in business deals.
“Vietnam is the brightest star among emerging economies in the Association of Southeast Asian Nations [ASEAN],” said James C. F. Huang (黃志芳), chairman of the Taiwan External Trade Development Council (TAITRA), at the expo’s opening ceremony. “The exhibition presents the best technologies we have to offer. It’s our hope that Taiwan will be a valuable partner for Vietnam as it moves on to its next stage of economic development.”
Geared toward Vietnam’s industrial and market needs and designed to enhance Taiwan’s image, the event highlighted cutting-edge solutions in areas such as agriculture and fisheries, green energy, health care, information and communication technology, machinery and tourism. It also included cultural performances, industry forums and trade meetings. The show was funded by the Republic of China (Taiwan) Ministry of Economic Affairs (MOEA) and organized by the government-supported TAITRA, which is tasked with promoting the nation’s brands in foreign markets.
John Tang (唐明輝), director of TAITRA’s Taiwan Trade Center in Ho Chi Minh City, pointed out that local consumers are largely unaware of Taiwan and its products. He said that it is necessary to boost the nation’s profile in order to strengthen trade with Vietnam, which has a population of some 95 million.
“Vietnam’s consumer market has been growing at an annual rate of 10 percent in recent years and has plenty of room to expand in the next three decades,” Tang said. “Taiwan companies shouldn’t hesitate to tap into this lucrative market.” In addition to manufacturers, he encouraged Taiwan’s retail and service industries to develop their businesses in Vietnam.
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Favorable Business Environment
Richard R. C. Shih (石瑞琦), representative of the Taipei Economic and Cultural Office in Vietnam, said the Southeast Asian nation possesses ample natural resources and a large labor force. The Vietnam government has signed trade agreements with many countries and instituted a range of preferential policies on land and taxes in an aggressive bid to boost foreign investment.
“Taiwan and Vietnam have long maintained close interactions and engaged in collaborative efforts across a broad spectrum of areas owing to their complementary economies, geographical proximity and social similarities,” Shih said. “Also, ties have developed more quickly in recent years under the New Southbound Policy.”
A key plank of President Tsai Ing-wen’s (蔡英文) national development strategy, the initiative seeks to deepen Taiwan’s agricultural, business, cultural, education, tourism and trade ties with the 10 ASEAN member states, six South Asian countries, Australia and New Zealand.
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According to statistics released by Vietnam’s Ministry of Planning and Investment, Taiwan companies invested a total of about US$30.8 billion between 1988 and September 2017. Most of this came from manufacturing firms, leading to the creation of over 1.6 million jobs, Shih said.
Thus far, around 5,000 Taiwan businesses have established Vietnam branches, marketing offices or production facilities. The Council of Taiwanese Chambers of Commerce in Vietnam (CTCVN) has set up 14 offices across the nation to foster mutual support among its members.
Efforts by both the public and private sectors to boost economic exchanges between Taiwan and Vietnam have borne fruit over the years. Statistics compiled by the MOEA’s Bureau of Foreign Trade show bilateral trade volume rose from US$8.81 billion in 2010 to US$12.3 billion in 2016, with Taiwan enjoying a surplus of US$6.8 billion. Vietnam is now Taiwan’s ninth biggest trading partner and seventh largest export market. However, competition has intensified as an increasing number of Japanese, mainland Chinese and South Korean companies have set up shop there.
“Vietnam offers more investment opportunities than any other Southeast Asian nation,” according to ROC national Henry Hsieh (謝明輝), president of Chin Li Plastic Industrial Co. in southeastern Vietnam’s Binh Duong province. He added that despite rising wages, there is still considerable room for growth in the manufacturing sector.
Chin Li, which has operated in the region for over 20 years, is currently working to increase its talent pool of managers and sales associates. It has forged cooperation agreements with 16 Taiwan universities by offering internships to students, and plans to found an international school with a bilingual Chinese-English curriculum from the kindergarten to high school levels. There are a large number of Taiwan enterprises operating in Binh Duong, Hsieh said, adding that the proposed school will act as an extra incentive for employees to stay in the area over the long term.
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Understanding the Market
For Taiwan businesses to succeed in Vietnam, it is vital that they learn about the country’s culture and market conditions, according to Hsu Yu-lin (許玉林), president of CTCVN. He established his company, Daipha Food, in Ho Chi Minh City in 1995, and currently operates two cafes and 11 bakeries, in addition to exporting his own brand of frozen food. Hsu attributed much of his good fortune to understanding the local market and learning the language, noting that in recent years his company’s sales have risen 20-30 percent annually.
Cheng Wen-chung (鄭文忠), general manager of Viet Dai Construction Co. in Ho Chi Minh City, similarly stressed the importance of becoming familiar with local practices. He came to the city in 1996 and witnessed Vietnam’s economic growth and the rise of the middle class. “When I first arrived here, there weren’t any tall buildings. Now, there are high-rises everywhere,” he said. “The key to success is to stay in the country for a good period of time to get acquainted with the local legal and tax systems and develop and maintain relationships.”
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Established in 2008, Cheng’s firm is mainly engaged in factory planning and construction, and targets Taiwan enterprises looking to launch local operations. He said business is booming, but that the Vietnam government is increasingly concerned with environmental problems and has implemented stricter regulations for manufacturing facilities.
Taiwan companies, cognizant of the market’s lucrative potential, are adapting to new environmental legislation. Chin Li, for example, which employs around 1,500 workers at two factories making chemical products and rubber soles, is building a new facility with top-of-the-line equipment that will shorten the production cycle and reduce pollution. The plant will include refuse recycling and wastewater treatment systems and utilize LED lighting.
Despite the challenges that come with operating a business in a rapidly industrializing nation, the benefits can far outweigh the costs. ROC national Jimmy Wu (吳俊德), managing director of Hsin Mawh Enterprise, shifted his company’s manufacturing operations from mainland China to Vietnam after conducting fact-finding tours in several Southeast Asian nations.
“I decided to set up operations in Vietnam in view of its abundant raw materials and lower wages,” said Wu, whose company has made wood products since 2008. “Another plus is that many investment incentives relating to corporate income tax, import duties and land rental are available to foreign investors.” Vietnam’s expanding network of preferential trade agreements continues to bolster its export competitiveness, he said, adding that he is growing his company’s presence in markets such as Europe, Japan and the U.S.
Representative Shih is equally upbeat on Vietnam’s investment potential and the development of ties between the two sides. “Taiwan has invested about US$96 billion in Southeast Asia, with about one-third of that going to Vietnam. This demonstrates that the country is a favorable investment and manufacturing destination,” he said. “I’m confident that intensifying cooperation in all areas of common interest will be of enormous benefit to both sides.”
