Vietnam on the Economic Map: Business Opportunities for Israeli Companies

Vietnam’s first step within the framework of the free trade agreement with the European Union positioned it as a strong economic player, likely to surpass its neighbor China in the coming years. However, it seems that Vietnam still needs Israeli high-tech to advance to the next level, while Israeli manufacturers and companies require Vietnam’s fertile lands and the variety of opportunities it offers.

Are business relations with Vietnam worthwhile today, and why are Israeli companies now finding Vietnam an increasingly popular destination for expanding their business operations? Everything you need to know is here in this article.

Since 2016, Vietnam’s economy has been growing at an impressive pace, positioning itself among the major players in the global economy. Among other factors, Vietnam promoted the free trade agreement with the European Union and began implementing economic reforms alongside collaborations with regional economic powers. All these developments create business opportunities for Israeli companies—it's truly a win-win situation. On one hand, Vietnam needs Israeli technologies to advance, as Israel is known as a technological powerhouse globally, and on the other hand, Israeli manufacturers and companies need Vietnam's accessible and affordable production.

Vietnam's Success During the COVID-19 Crisis

Despite not having the strongest healthcare infrastructure in the world, Vietnam managed to recover relatively quickly from the COVID-19 crisis by developing testing kits and impressively tracking cases. In fact, the pandemic didn’t stop Vietnam's economy, which actually strengthened during the crisis. According to data, the economy grew by 2.9% in 2020—a remarkable achievement given the pandemic. Additionally, the crisis led companies worldwide to start producing their products in Vietnam due to the need to diversify their supply chains.

Vietnam vs. China

In the last decade, Vietnam has been leading growth charts, and in the past two years, it has even surpassed its neighbor China, considered a global export powerhouse. Why did this happen? Importers worldwide began seeking alternatives as labor costs in China increased. The ongoing trade war between the U.S. and China made China a less attractive place for manufacturing, with various export restrictions in place. Many international companies started operating in Vietnam, including global tech giants like Apple and Samsung. To give an example, Apple manufactures its premium AirPods in Vietnam.

Looking back, the pandemic that began in China severely impacted the country. Being one of the first countries to impose lockdowns due to COVID-19, China’s supply chain dominance became a liability for many companies that depended solely on it, leading them to explore other sources—Vietnam being the most attractive option.

The Free Trade Agreement Between Vietnam and the European Union and Its Impact on Israel

The trade agreement between Vietnam and the European Union significantly boosted exports to Europe and also impacted Israel. During a 2017 visit to Vietnam, Israeli President Reuven Rivlin expressed his aim for trade between Vietnam and Israel to reach $3 billion annually. As part of the agreement, collaborations were established between the countries in various fields such as technology, which Vietnam urgently needs, as well as agriculture, which is highly developed in Vietnam, textiles, furniture, food, and more.

Key Advantages of Trading with Vietnam

Vietnam's rapidly growing economy offers numerous opportunities for import companies while maintaining social and environmental responsibility. Additionally, Vietnam's very low production costs present a wealth of business opportunities. It’s also worth mentioning that Vietnam’s cooperative and moderate approach contrasts with China’s more rigid regime, adding to its appeal. Therefore, Vietnam serves as a springboard for expanding business activities and new opportunities.

Lynden Group opens the door for Israeli companies and manufacturers to establish extensive business operations in Vietnam. Our office in Vietnam focuses on providing classic accounting services through outsourcing to reduce costs, business development, and fostering business relationships. The service includes guidance from a local business consultant to identify business suppliers, negotiate with suppliers, and provide personal support until achieving the desired outcome.

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