South Korea's foreign direct investment (FDI) in Vietnam is undergoing structural changes amid global value chain (GVC) restructuring and trends toward digital and green transitions. South Korean capital, which accounts for about 18% of total FDI in Vietnam, is moving from a manufacturing focus to high-tech and value-added sectors, significantly impacting Vietnam's industrial structure and supply chains.
On May 15, local time, Vietnamese media outlet Cong Thuong reported that a research team led by Professor Do Thi Minh Hue at the National Economics University in Hanoi analyzed these trends in their paper titled "South Korean Direct Investment in Vietnam: Trends and Strategic Business Implications." The team examined changes in the scale, structure, and strategies of South Korean FDI based on secondary data from domestic regulatory agencies and international organizations, drawing implications for businesses and policies.
According to the research, as of the end of 2024, Vietnam's cumulative FDI is expected to reach approximately $502.8 billion, with 42,002 projects. Last year, new registered capital of about $38.4 billion was added, projecting the cumulative total to rise to around $540 billion.
South Korea is identified as a key investor, with a notable concentration in the processing and manufacturing sectors. Approximately 75% of South Korean FDI is concentrated in this area, leading to the establishment of large-scale production and export clusters focused on electronics, textiles, supporting industries, and chemicals. Major projects from companies like Samsung and LG have transformed regions such as Bac Ninh, Thai Nguyen, Hai Phong, and Ho Chi Minh City into global production hubs for electronics and mobile devices.
There is a clear trend of investment being concentrated in areas with well-developed industrial and logistics infrastructure. However, the research notes that some capital is beginning to shift to new regions, considering land availability, labor costs, and infrastructure connectivity. This movement is interpreted as a strategic effort to diversify risks and optimize costs.
The nature of investments is also rapidly changing. South Korean FDI, which traditionally focused on assembly and textiles, is now expanding into high-tech electronics, semiconductors, renewable energy, data centers, and finance and logistics sectors. The researchers view this as a signal that Vietnam is evolving from a simple low-cost production base to a strategic regional hub that integrates manufacturing and services.
However, deep connections between South Korean and Vietnamese companies remain limited. Many South Korean firms prioritize existing regional supply chains due to factors such as technological gaps, quality standards, delivery capabilities, and financial capacity, which ultimately hinders the level of localization. Institutional support programs for suppliers are also noted to be insufficiently systematic.
The research suggests that Vietnamese companies need to move beyond simple subcontracting and more clearly define their roles within the value chain, including components, semi-finished products, supporting services, and research and development (R&D). It emphasizes the need for active investment in technological capabilities, quality management systems, digital transformation, and human resource development. The government is also urged to shift from a quantitative approach focused solely on attracting investment to a "selective FDI strategy" that prioritizes high-tech and high-value projects and connections with domestic companies.
* This article has been translated by AI.
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