Japan’s Successful Courtship of Vietnam

Japan has been cultivating a relationship with Vietnam for years with infrastructure assistance and business deals, and now that investment is paying off.  The Motley Fool says Japan needs Vietnam and vice versa because they complement each other — with Japan facing a debt bomb and an age bomb and Vietnam offering geographic proximity, growing consumerism, and an enviable young labor force that costs 3% of Japan’s labor.

That’s why Japanese investment into Vietnam doubled to $1.8 billion last year and surged to $2.3 billion so far in 2012 — including a $575 million tire factory near Haiphong complemented by a new port Japan is helping build.  Many Japanese companies, including Panasonic, Toyota, and Suzuki, are treating Vietnam as Japan’s Southeast Asian hub, a healthy development that offers resistance to China’s economic influence..

Meanwhile, Vietnam is reciprocating by giving Japan favored trade status: lower import taxes for Japanese autos, a drop from 70% to 5% in taxes on Japanese buses, tax reductions for electronics to be implemented in 2014, elimination of taxes on certain cameras, and tax reductions for garments from 13% to 9% and for household items from 19% to 14%.

More on Japan’s preferential treatment in Vietnam and the Japan-Vietnam connection

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