In a survey conducted by JETRO (Japan External Trade Organization) with the participation of 652 out of 1,345 Japanese enterprises operating in HCMC, 65.1 per cent of businesses reported gaining profits, slightly increasing compared to that of 2016.
However, the proportion of profitable Japanese enterprises in Vietnam is the lowest compared with that in other countries in region.
According to information from JETRO, nearly 70 per cent of Japanese businesses in Vietnam intend to expand their operations while this percentage in Philippines, Malaysia and China is 63.4, 51.3 and 4.3 respectively.
The two main reasons they want to expand their recent operations are increasing revenue and high potential.
Takimoto Koji added that the growth and potential of Vietnam are higher than that of other countries and Japanese businesses highly appreciate the stable social and political situation, good living environment and cheap labor cost of Vietnam.
However, some of these advantages may not be available in the future because Japanese enterprises are facing five major difficulties which are increasing labor cost; incomplete legal system, unclear law enforcement; complex taxation mechanisms and procedures; undeveloped supply of raw materials and components and language barriers.
52.5 per cent of Japanese enterprises in Vietnam said that labor cost in this country is still relatively cheap but it is increasing.
In 2016, only 58.5 per cent of Japanese businesses worry about that but in 2017, this percentage has risen to 61.6. Vietnamese employees are constantly asking for higher salaries with higher turnover rate and lower employee quality.
To overcome this problem, Japanese companies want to produce high value added products but they cannot because they meet difficulties in managing quality and finding materials from Vietnam market.
Normally, higher growth rate of economy is, higher domestic supply rate is but in Vietnam, it is not. In 2016, the domestic supply rate of materials and components in Vietnam for Japanese companies was 34.2 per cent while this figure of 2017 was lower.
Takimoto Koji emphasized that during trade promotion events, JETRO always tries to increase domestic supply rate by connecting supply and demand businesses, which will help Vietnam to gain the most profit.