The geography of East Asia includes two bookends, similar in size and shape and close in population, that frame the world’s most populous country — and today those two countries are working purposefully to build an investment bridge over China.
Japan and Vietnam have been collaborating for years on business and development projects, Japan manufacturing popular consumer products in Vietnamese factories, and Vietnam relying on Japanese technology for everything from bridge construction to nuclear power generation.
Now tensions between Japan and China, and between Vietnam and China, are leading to even warmer Vietnam-Japan relations. The Japan Business Association in Vietnam expects growing Japanese investment in Vietnam.
Toyota and Nissan, both active in Vietnam, halted production at some plants and Panasonic reported damage to its operations in China because of protests sparked by China-Japan territorial dispures. Japanese retailers that closed more than 200 stores in China are likely to begin relocating in Vietnam. Japan’s Chamber of Commerce led a business delegation of 100 Japanese firms to Vietnam last month.
So far this year, Japanese companies invested more capital in Indonesia ($3.6 billion) and India ($2.3 billion) than in Vietnam ($1.9 billion). Even so, Vietnam’s attractive young workforce and proximity to China are likely to increase its share of Japan’s foreign investment.