Current Status of German Investments in Vietnam 2026/27

Vietnam continues to strengthen its position as one of the most attractive destinations for German investment in Southeast Asia. Supported by a competitive workforce, an increasingly diversified industrial base, and ongoing supply chain shifts, the country has become a key location for German companies seeking growth opportunities in Asia. This overview provides insights into the current footprint of German investments in Vietnam and the factors shaping future business activities.

1. OVERALL INVESTMENT STATUS

1.1 Historical Overview

German companies began investing in Vietnam shortly after the country opened its economy to foreign participation. Early investments by companies such as Bültel and Tatonka in the early 1990s were followed by stronger investment inflows after Vietnam joined the WTO in 2007 and further reforms improved the investment environment.

Over more than three decades, German companies have contributed to Vietnam's industrial development, renewable energy transition, infrastructure modernization, and business environment through a range of landmark investments and projects.

Today, around 620 German investment projects have been identified in Vietnam. These projects represent an estimated USD 3.7 billion in investment volume and have created at least 55,000 direct jobs. Around 120 manufacturing enterprises currently operate in the country, while many more companies are active in services, sales, sourcing, engineering, consulting and digital industries.

The figures presented in this analysis apply a broader methodology than conventional foreign direct investment statistics. In addition to direct investments from Germany, the assessment also includes investments undertaken through third-country subsidiaries and international corporate structures when ultimate ownership remains German. This approach aims to provide a more realistic picture of the actual German business footprint in Vietnam.

1.2 Industrial and Functional Focuses

Germany is internationally recognized for manufacturing excellence, yet the German business footprint in Vietnam extends far beyond production activities. Sales and service operations account for the largest share of identified German business functions, supporting machinery, appliances, industrial solutions and technical services throughout the Vietnamese market.

At the same time, German companies are increasingly active in programming, technical consulting, engineering services, sourcing and business process outsourcing. More than 250 companies operate in sales and service functions, while programming and BPO activities have developed into an important component of German investment in recent years. This diversification demonstrates that Vietnam is no longer viewed solely as a manufacturing location, but also as a regional platform for customer support, engineering and business services.

Vietnam's expanding pool of engineering and technology talent has also contributed to the growth of German digital and outsourcing operations. German companies active in software development, industrial engineering, automation and digital services have established teams in Ho Chi Minh City, Hanoi and Da Nang, supporting both local and international operations. This development further broadens the scope of German investment activities beyond traditional manufacturing sectors.

1.3 Investment Destinations

The most important destination for German investment remains the Greater Ho Chi Minh City Region. Approximately 70% of German companies are located in Ho Chi Minh City and surrounding areas. This concentration reflects the region's role as Vietnam's largest economic hub, contributing around 40% of national GDP and providing companies with access to a population of approximately 21 million people.

German investments are particularly concentrated within a radius of roughly 40 kilometres around Ho Chi Minh City's central area, benefitting from established supplier networks, logistics infrastructure, industrial zones and access to customers. While rising land and labour costs increasingly influence investment decisions, the region remains the primary gateway for many German companies entering Vietnam.

Outside the south, the Hanoi-Hai Phong corridor has established itself as the second major destination for German investment. The region benefits from its proximity to China, access to Hai Phong's deep-sea port and strong inbound investment into industrial infrastructure. Central Vietnam, particularly around Da Nang and Quang Nam, continues to gain attention as companies evaluate lower-cost alternatives and emerging investment locations.

1.4 Investments by German regions

German investments in Vietnam originate from all major economic regions of Germany. Particularly strong engagement comes from Baden-Württemberg, Bavaria and North Rhine-Westphalia, whose companies are active in manufacturing, engineering and industrial technology. Business centres such as Hamburg and Frankfurt further contribute through trade, logistics and sourcing activities, highlighting Vietnam's increasing importance as a strategic hub in German companies' Asian operations.

The geographic distribution of investors closely mirrors Germany's industrial landscape. Baden-Württemberg and Bavaria are home to many of Germany's leading automotive, machinery, automation and precision-engineering companies, while North Rhine-Westphalia represents the country's largest industrial region and an important centre for chemicals, manufacturing and logistics. The strong presence of companies from these regions reflects Vietnam's attractiveness not only as a production location, but also as a destination for technology-driven investment, supplier development and long-term industrial partnerships.

2. MANUFACTURING INVESTMENTS

2.1 Overview

Manufacturing remains the largest investment segment in terms of capital intensity. Approximately 120 German manufacturing enterprises currently operate production facilities throughout Vietnam. These facilities are active across a broad range of industries, including apparel, chemicals, machinery, automotive components, electronics, medical technology and consumer goods.

Many manufacturing investments support global supply chains, while others primarily serve the domestic market. Compared with previous decades, manufacturing activities have become more geographically diversified and increasingly integrated into Vietnam's industrial ecosystem.

A notable development highlighted in the 2026/27 analysis is the evolution of investment models. Approximately 71% of reviewed German manufacturers operate company-owned facilities in industrial parks, while around 27% utilise ready-built factories. Built-to-suit solutions remain comparatively rare. The increasing popularity of ready-built factories reflects investors' preference for faster market entry and lower initial capital commitment.

2.1 Regional Manufacturing Focuses

German manufacturing activities are distributed across three principal regions. Southern Vietnam remains the largest manufacturing hub, accounting for approximately 58% of identified manufacturing investments. Northern Vietnam hosts around 25%, while approximately 16% are located in central Vietnam.

The Hanoi-Hai Phong corridor benefits from logistics infrastructure, industrial clusters and access to China. The Greater Ho Chi Minh City Region offers a mature supplier ecosystem and strong connectivity. Meanwhile, Da Nang and neighbouring provinces continue to attract investors looking for lower operating costs and emerging growth opportunities.

3. Future Investment Trends Outlook

Several factors continue to support German investment in Vietnam. These include a relatively stable political environment, competitive labour costs, improving workforce quality, strategic access to regional supply chains and an increasingly open investment framework.

Supply chain diversification remains another important driver. Rather than replacing existing operations elsewhere, many German companies increasingly view Vietnam as an additional manufacturing and sourcing location within broader regional strategies. The country's extensive network of free trade agreements and ongoing infrastructure development further strengthen its attractiveness as an investment destination.

Conclusion

The continued growth of German investment in Vietnam reflects the country's increasing importance within the international strategies of German companies. As businesses evaluate manufacturing, sourcing and market opportunities across Southeast Asia, Vietnam is expected to remain a key investment destination. Through its longstanding engagement with German investors in Vietnam, AHK Vietnam continues to support companies in understanding local market conditions and evaluating investment opportunities.