With the recent strengthening of the yen against the dollar, Japanese enterprises are shifting their investment funds to the retail and distribution market in Vietnam .
Several Japan-owned production factories in Vietnam could be even shut down and the money diverted to the retail market in the country that shows promising potential, analysts say.
Yoshida Sakae, managing director of the HCM City office of the Japan External Trade Organisation (JETRO), told the Tuoi tre (Youth) newspaper that Japanese enterprises often imported raw materials from Japan for operating their factories in Vietnam .
However, recently the enterprises want to build shops here and in other ASEAN countries and sell their products imported from Japan or production facilities in other countries, he said. The trend has become more visible as the free tax commitment among ASEAN countries is set to take effect in 2015, Sakae said.
He cited the example of Japan-owned chain Family Mart, which has eight branches in HCM City . In the near future, it will develop to a chain of 200 stores all over the country. The Japanese Aeon Retail Corporation, which has opened a branch in Vietnam , will officially begin operations in 2013.
Sony Corporation has stopped producing television sets and shut down its factory in Vietnam to open another in Malaysia . It now focuses on selling the products in the country.
From now till 2015, several Japanese enterprises will follow Sony's path as they want to save expenses by setting up large facilities elsewhere and importing the products. This is a less expensive way of doing things because of the inflation that Vietnam is experiencing right now.
" Vietnam is still a place with investment potential for Japanese enterprises. However, in recent years, the macroeconomic instability has worried Japanese enterprises. Inflation is the biggest concern for them," Sakae said.
There are still many Japanese enterprises that want to build large-scale factories in Vietnam to prepare for the ASEAN market. In the last four months, the number of Japanese investors registering as members of the Japan Business Association of HCM City (JBAH) has increased rapidly.
According to the Ministry of Planning and Investment's Foreign Investment Agency, there are 1,573 Japanese projects in Vietnam worth a total of 22 billion USD.
In the first eight months of this year, 108 Japanese projects with 642.2 million USD were granted investment licences./.