Current Status of German Investments in Vietnam 2025/26

Vietnam has emerged as an increasingly attractive location for German investment. Key factors contributing to this trend include a competitive and skilled labor force, a liberalized investment climate, and a steadily expanding domestic market. This overview outlines the current investment landscape and provides insights into the presence and development of German manufacturing operations in Vietnam.

OVERALL INVESTMENT STATUS

Historical Overview

German companies began investing in Vietnam shortly after the country opened its economy to foreign participation. In 1992, Bültel—known for producing fashion for brands such as Camel Active—established operations in Binh Duong. That same year, outdoor brand Tatonka launched a backpack production line in Ho Chi Minh City (HCMC). German investment activity accelerated following Vietnam’s accession to the World Trade Organization in 2007 and gained further momentum with the 2015 revision of the Enterprise and Investment Law. As of today, 576 German companies have invested a cumulative adjusted total of 3.7 billion USD in Vietnam. These investments have contributed to the creation of at least 50,000 jobs across the country.

Industrial and Functional Focuses

Germany is widely recognized as an industrial leader, particularly in high-quality and high-tech manufacturing. However, contrary to common perception, the majority of German investments in Vietnam originate from the service sector rather than manufacturing.

Nearly half of the investment projects in Vietnam are concentrated in the service sector. These include branches such as consulting, business process outsourcing/IT outsourcing (BPO), and logistics. Given the substantial bilateral trade volume (ranging between 16 and 18 billion USD annually) there is also significant investment from German companies involved in the trade of machinery, chemicals, and food products. These sectors benefit from Vietnam’s strategic location and growing infrastructure.

In terms of operational focus, most German companies in Vietnam concentrate on sales and aftermarket services. A notable example is Zott, which markets its products (including the popular "Monte" pudding) with a workforce of over 750 employees in Vietnam. Currently, 117 German companies operate manufacturing facilities in the country. Messer stands out as the largest single manufacturing investment, with further details provided below.

Business process outsourcing and IT offshoring/outsourcing (here referred to as “BPO”) have emerged as increasingly attractive avenues for German investors. The sector benefits from competitive labor costs paired with a highly qualified workforce, making Vietnam a compelling destination for such operations. To date, 71 companies have been established in this field, with activities concentrated in software development and post-processing services. The largest employer within business process outsourcing is Digi-Texx, which operates primarily out of HCMC and employs over 1,500 staff. Bosch has employed 4,000 employees in its IT and engineering division.

Investment Destinations and Sources

The most important investment destination by far is HCMC. Over half of all German companies in Vietnam have been established here. When taking a look solely at sales/service functions, 75% are located in HCMC. This makes sense because the greater HCMC area contributes over 40% of Vietnam’s GDP. It therefore has to be considered the most important market and the first point of entry into the country. Hanoi comes in as a distant second while Ho Chi Minh City and Dong Nai are first and foremost attractive locations for manufacturing operations. 

Although Germany comprises 16 federal states, more than half of the investments in Vietnam originate from companies headquartered in just three: Baden-Württemberg, North Rhine-Westphalia, and Bavaria. These states are not only the most populous but also serve as Germany’s key industrial hubs. Given their economic weight, this concentration of outbound investment is to be expected.

Germany ranks among the most active European investors in Vietnam, with its companies making significant contributions to the country’s socio-economic development.

• German enterprises are widely regarded as attractive employers and are committed to workforce development. This is reflected in their support for dual vocational training programs and partnerships with local universities.
• By introducing global standards, German companies help raise the bar in Vietnam—implementing cutting-edge technologies, promoting environmental sustainability, and adhering to the highest levels of compliance.
• Wherever feasible, German firms collaborate with local suppliers, thereby facilitating the transfer of managerial and technological expertise into the Vietnamese economy.

Moreover, German investors typically pursue long-term commitments. Once established, they tend to remain engaged and demonstrate strong interest in the development of local communities.

MANUFACTURING INVESTMENTS

Overview

Currently, 117 manufacturing sites operated by German companies are located across Vietnam.

• As illustrated below, the majority of these facilities are active in the apparel sector. Germany has a longstanding tradition in textile manufacturing, with regions such as greater Reutlingen renowned for their successful textile suppliers and original equipment manufacturers (OEMs), including Hugo Boss and Trigema. Both types of players, OEMs and suppliers, are now present in Vietnam.
• In addition, many chemical companies have invested in the country. Unlike other industries that primarily use Vietnam as an export-oriented manufacturing base, chemical enterprises tend to serve local customers. Among them, family-owned Messer Gases stands out as the largest player.
• Vietnam has yet to emerge as a major automotive manufacturing hub. As a result, German companies have not developed a broad supplier network in this sector. Nevertheless, firms such as Schaeffler, Bosch, and Dräxlmaier represent some of the most substantial German investments in Vietnam’s automotive industry.

The largest German manufacturing investments in Vietnam have been made by Bosch (automotive), Stada – Pymepharco (pharmaceuticals), and Messer Gases (chemicals). Bosch operates a major production complex for pushbelts in Dong Nai and maintains research and development centers in HCMC and Hanoi. Stada – Pymepharco manufactures pharmaceuticals at its facility in Phu Yen province, located in south-central Vietnam. Messer Gases supplies industrial gases to domestic clients such as Hoa Phat, with its primary production hubs located in Haiphong (northern Vietnam) and Quang Ngai (central Vietnam).

Most German manufacturing operations in Vietnam are concentrated in the southern region, particularly in Dong Nai and HCMC. In the north, the capital Hanoi and its port city Haiphong serve as the key investment destinations. In central Vietnam, Da Nang is emerging as a promising location for foreign investment. This province offers low land and labor costs, combined with excellent living conditions, making it increasingly attractive for long-term industrial development.

Regional Manufacturing Focuses

Investments in northern Vietnam concentrate on the economic corridor between Hanoi and Haiphong. B.Braun and Messer are some of the oldest and biggest investments here. Latest additions have been Harting (electronics supply) as well as RRC (batteries) and Certoplast (adhesives) in Haiphong.

German investments in central Vietnam are primarily located in the provinces of Gia Lai and Dak Lak, as well as in the greater Da Nang region. The Da Nang area, in particular, offers a compelling mix of relatively low land prices and competitive labor costs, making it an increasingly attractive destination for foreign investors. Recent additions to the region include Kärcher (cleaning equipment), Lecka (nutritional snacks), and OBE (eyewear components) in Quang Nam, as well as Leonhard Kurz (automotive supplies) in Gia Lai.

The vast majority of German manufacturing investments in Vietnam are concentrated within a 30 to 40-kilometer radius of HCMC's central business district. This region has long served as the traditional epicenter of foreign direct investment in the country. It hosts some of the earliest German ventures, such as Bültel and Batonka/Mountech, alongside major industrial complexes operated by companies like Bosch and Schaeffler. The area is notably diverse: HCMC functions as the administrative and economic core, Dong Nai is home to well-established manufacturing hubs, and Tay Ninh is emerging as a promising destination for new investments.

Drivers for Manufacturing Investments

A key driver behind recent German manufacturing investments in Vietnam has been the adoption of "China Plus One" strategies. This approach reflects a growing trend among companies with existing operations in China to diversify their production footprint in response to various challenges in the Chinese market. Vietnam presents a compelling alternative, offering labor costs at roughly one-third of China's, a liberal and welcoming investment environment (with most sectors open to wholly foreign-owned enterprises (WFOEs) and a business culture that shares many similarities with China due to geographic and cultural proximity. While companies generally maintain their existing manufacturing operations in China, given their continued satisfaction with performance and the market's strategic importance, new capacity expansions are increasingly being directed toward Vietnam. This shift allows German investors to broaden their presence in Asia and mitigate country-specific risks through geographic diversification.

Looking for Support in Manufacturing Investments?

A significant share of new German manufacturing plants in Vietnam is established with support from specialized advisory services by AHK Vietnam. These investors benefit from tailored assistance in identifying and securing suitable locations, as well as accessing relevant investment information. The location analysis team of AHK Vietnam is facilitating this process with a strong network to local industrial zones and service providers, ensuring efficient and informed site selection. For companies considering an investment in Vietnam, this support can be a valuable resource.

Further information is available at: https://vietnam.ahk.de/en/services/investment-location-analysis