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Vietnam - Germany Bilateral Trade: Much Room for Growth
Over the past years, the German Business Association (GBA) has helped its members as well as visiting business delegations understand Vietnam, and also acting as a bridge bringing German investors to Vietnam. Vietnam Business Forum talks with Mr Alex Bischoff, Chairman of GBA, about Vietnam-Germany cooperation.
Could you describe the milestones of Vietnam-Germany economic cooperation in the last 35 years?
Recently, there are more milestones. At the beginning there were some trading companies which entered Vietnam very early. Some Bosch equipment and even a complete cement factory by Polysius are still in use today, from the early years. The next big milestone was the fall of the Berlin-Wall and the introduction of “doi moi” (renovation).
One milestone was the first regular flight of Lufthansa to Vietnam 20 years ago, which brought many entrepreneurs who started their own companies. In November 1995 our former Chancellor Helmut Kohl visited the Technical University, Hanoi and Ho Chi Minh City with his delegation and was a guest of honour for the ground breaking ceremony of the Mercedes Benz factory. Soon after that there was an exchange of political and economical delegations from various provinces. The transport agencies, with Schenker and Kuehn & Nagel, as well as Lufthansa Cargo, arrived in Vietnam. Bayer and Siemens came early and started production, and Bosch also continues to invest in expending their facilities.
The bilateral trade agreement with the Unites States of America also cleared the way for many German decision makers, who now saw the willingness of Vietnam to welcome all foreign investment. Many more factories opened and with the development of the work force, the investments expanded beyond pottery and garment manufacturing into higher technology products. Welcoming Vietnam as the 150th member of the World Trade Organization (WTO) was instrumental in working on the legal structure necessary to be competitive globally. As much as the multi-national companies have an important role, the backbone of the German economy is small and medium sized entities.
Those were the early investors who paved the way and introduced German culture to their workers and their families. The great work of the diplomatic corps both in Hanoi and Ho Chi Minh City, and the German Industry and Commerce organization helped win over many potential investors. I am happy that the German Business Association could help its members and visiting delegations to better understand Vietnam and enrol many new German investors over the past years.
Vietnam needs better technology to reach its target of being an industrialized country by 2020. How do German companies get involved in this process?
German companies are very open to knowledge transfer. It all starts with a well educated future work force. Therefore, the Vietnam German University is another milestone to help educate the youth of Vietnam. All German companies invest in their work force and in training. There are many companies who send their staff on exchange programs to Germany to help them to specialize. Besides, the products manufactured in Vietnam become increasingly technical. Also, through joint ventures and other partnerships, German companies bring more technology to Vietnam. Every visit of a German technician to a factory helps to increase knowledge and awareness.

The kind of equipment now being installed in Vietnam is more complicated and more technical. To install, maintain and repair such equipment, companies have to use specialists with a very good educational background. German companies are greatly contributing funds to the German Vietnam University. Also those companies that invest in German production equipment will benefit and help Vietnam with its goal. 
Two-way trade reached over US$ 4.5 billion in 2009, does it match the two countries’ potential?
Of course, there is room for improvement, as it has grown over recent years and will continue to grow. By GDP, Germany is the leading economy in Europe, and number 4 worldwide, whereas Vietnam, with position 57, has strong potential to continue its growth. Over the last 35 years, both countries have strongly developed sales overseas. Vietnam has grown in the export of foods such as rice, coffee and especially sea food. The demand for the latter has increasing drastically and therefore growth is to be expected. With high quality and stable products, Vietnam can develop its own brand name “made in Vietnam” which will be important. We see this trend already in the area of sea food, garment, shoe, pottery and furniture.
After China, Germany is the second biggest exporting nation in the world and Vietnam climbed to rank 46. There are many machines, as well as services and knowledge from education, which are needed in Vietnam to foster continued strong growth over the years.

What is the investment trend of German companies in Vietnam?
As mentioned above, education will be one of the key industries in the future. The Vietnam German University is one example and there are other projects in the pipeline. Well educated people are the building blocks for the sustainable growth of any country.
The investments we see are for high end products. Based on experience, Vietnam is highly qualified to attract high end production. German manufacturers here talk about low waste of raw materials and a work force that is quality oriented. These are very good conditions to meet the requirements for the quality and value-oriented German investments in the production sector. There is a significant expansion of already existing factories.
We have our production sights on the automotive, garment, textile and shoe industries. TanTech has its state of the art green tannery in Vietnam, and pharmaceutical companies like Stada and Fresenius Kabi have factories, food manufacturers and so on. Our service sector is represented by forwarding companies, lawyers, architects, computer and software related companies, hospitality service and of course many trading companies. We see a greater mix of the represented German companies both in production and service. On the high technology side, there will be future investments in the fields of renewable energy, water treatment and production automation.
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