U.S. Ambassador to Vietnam Daniel J. Kritenbrink and his team have been recruiting companies in the Southeast Asian country for a business delegation to Washington, D.C., which sparks a broader question: Is it time for Vietnam’s firms to go abroad?
“Investing in the United States is one of the best decisions that Vietnamese firms can make, especially as the country’s economy continues to rapidly expand,” Kritenbrink said. “As firms benefit from this expansion, they should look to expand into new markets and it’s only natural to consider one of Vietnam’s largest export markets, the United States.”
U.S. economic officers have been holding events in Hanoi and Ho Chi Minh City throughout the year to lobby them to join the delegation to Washington, which is scheduled for June 10-12.
The proposition comes as Vietnam’s economy is maturing, prompting more companies to consider if this is the time for them to take the next step in their growth and expand beyond the country’s borders.
As Kritenbrink noted, the U.S. is the biggest market for Vietnamese products, which is a reminder that the communist country already has a big presence in the international arena, having established itself as an export powerhouse in the past two decades.
But Vietnam thinks it would be a major achievement if companies take it to the next level, no longer just shipping goods overseas, but actually setting up operations and offices overseas.
Some corporations have done so already, whether it’s the electronics conglomerate FPT going to Japan or the telecommunications giant Viettel servicing markets from Burundi to Peru.
The trend, however, is broadening to businesses that are not as well resourced. Saigon Innovation Hub (Sihub) announced a program last year to provide support to startups that want to go abroad, a program known as Runway to the World.
“Following our strategy toward 2020, Sihub targets to gather all local and international resources to realize the key mission of boosting economic growth,” Huynh Kim Tuoc said for the launch. He is the managing director of Sihub, which is under the Ho Chi Minh City Department of Science and Technology.
Supporters say going global is the natural next step in Vietnam’s evolution. In the 1980s, the communist government started allowing business activities typical of a market economy. In the 1990s, the United States lifted its trade embargo, and in the early 2000s, Vietnam joined the World Trade Organization. It has since become a leading exporter of rice, textiles and garments, and phones to the international market.
Standard Chartered Bank executive Nirukt Sapru said the context helps, as Vietnam is still seeing increases in gross domestic product, foreign direct investment (FDI) and FDI-driven manufacturing.
“Vietnamese mid-corporate manufacturers can capitalize on this and shield themselves from headwinds by pursuing strategies, such as investing in technologies and exploring new markets, which will help them move up the value chain,” said Sapru, who is the chief executive officer for Vietnam, Southeast Asia, and South Asia at the bank. “In fact, we are seeing an increasing number of local electronics players expressing interest to venture overseas for growth.”
The headwinds he mentioned include trade challenges that could hurt Vietnam’s exports if they hurt the global economy, such as the trade war between China and the United States, slowing growth in China that could affect demand for products and services elsewhere, and U.S. President Donald Trump’s other tariff fights, such as with Japan and the European Union.
By going abroad, Vietnam’s companies hope not just to strengthen their home economy from foreign trade tensions, but also to help build the national brand around the world.