HSBC commissioned the online survey of 3,509 businesses based in nine markets - China, India, the UK, France, Germany, the US, Australia, Hong Kong (China), and GCC countries (United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Oman and Kuwait).

Manufacturing household electrical appliances at a plant in the Vietnam-Singapore Industrial Park in Tan Uyen town, Binh Duong province.

According to the HSBC Global Connections survey, Vietnam which has become known for its rapid economic growth also stands out as one of the top performers in the ASEAN region given its strong economic resilience during and after the Covid-19 pandemic.

This resilience coupled with its hard working skilled work force and competitive cost structures continues to attract strong FDI flows into the country.

The country's fast growing middle class is also a real opportunity for international companies who are looking to tap into the consumer story that will see Vietnam become the 10th largest consumer market in the world by 2030, said Tim Evans, CEO of HSBC Vietnam.

Several international businesses see Vietnam’s growing consumer market as an opportunity, with 27% highlighting the appeal of increasing consumer prosperity.

Business decision makers from Chinese and Indian companies were likely to highlight the opportunity to scale quickly in its sizeable market, with 32% and 41%, respectively, pointing to this market attribute.

Indian businesses also point to the opportunity to develop and test new products and solutions, with 45% of them saying this attracted them to expand there. About a quarter of all business also see advantages in Vietnam’s demographics and young population.

Vietnam has a high smartphone penetration rate and a vibrant start-up sector, and the growth of e-commerce is a key selling point for many international businesses: 23% say they are attracted by the country’s growing digital economy.

Three in 10 respondents believe the Vietnamese economy will see significantly increased economic growth during the next 10 years due to technological change.

Vietnam’s importance in global trade flows is reflected in strong interest in free trade agreements. Overall, 63% of companies in the survey intend to make use of the EU-Vietnam Trade Agreement, which entered into force in August 2020 with the goal of eliminating 99% of tariffs and reducing trade frictions between the two partners.

However, cultural differences and regulatory developments are the top challenges for foreign firms operating in Vietnam, with 31% of foreign companies pointing to cultural difficulties, and 30% to the challenge of adapting to fast-changing regulations and policies within the market.

Australian companies were especially likely to say they had dealt with cultural issues, with 40% saying they had faced these in Vietnam. US and Hong Kong firms both stated the challenge of adapting to regulation as their primary challenges, with 32% and 34% of companies respectively reporting this.

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Source: VNA