Nearly 57% of Japanese companies want to continue expanding business in Việt Nam

Customers at Aeon Long Biên’s supermarket in Hà Nội. — Photo vietnamplus.vn

HÀ NỘI — Nearly 57 per cent of Japanese companies want to continue expanding business in Việt Nam, according to a recent survey on the current situation of Japanese businesses abroad in fiscal year 2023 by the Japan External Trade Organisation (Jetro).

The survey aims to reveal the actual operating situations of Japanese businesses, mainly in the field of processing and manufacturing industries, in Asia and Oceania.

Survey results show that 54.3 per cent of Japanese businesses operating in Việt Nam expect to be profitable in 2023, down 5.2 points compared to the previous year, equivalent to the level in 2021 during the COVID-19 pandemic. This ratio is 6.6 points lower than the ASEAN average.

The “profitable” rate in the years 2017-2019 before the COVID-19 pandemic always reached around 65 per cent, exceeding the ASEAN average.

Regarding the prospect of business profits in Việt Nam, 32 per cent of Japanese businesses said that their 2023 business forecasts will improve (down 15.6 points compared to the previous year) while the percentage forecast to worsen is 35.7 per cent (an increase of 13.1 points compared to the previous year). Once again, this number decreased to the same level as in 2021, the period during the COVID pandemic, with an improvement rate of 31.4 per cent and a worsening rate of 36.6 per cent.

The biggest reason cited for improving business profit expectations in 2023 is increased demand in export markets, followed by improving productivity and cutting costs.

Japanese businesses with worsening profit forecasts cited declining demand as the main reason. This exceeds the main reasons for the decline in 2022 such as raw material purchase costs, increased labour costs or fluctuations in exchange rates.

In addition, the Diffusion Index (DI) in 2023 will be negative in 10/20 countries or territories, of which Việt Nam is at -3.7, a significant decrease compared to 28.7 points last year.

Việt Nam ranked second, after Singapore, in the Asia-Oceania region. The DI Index is expected to recover to 42.1 points in 2024.

Forecasting business profits in 2024, 50.4 per cent of businesses expect it to improve and 8.3 per cent of businesses expect it to worsen compared to the business profit forecast for 2023. Many companies are hopeful of improvement thanks to the 2023 recovery.

Regarding business deployment direction in the next one or two years, 56.7 per cent of Japanese businesses intend to expand in Việt Nam (down 3.3 points compared to the previous year).

Although expansion ambitions remain high, Việt Nam is the only country among the six key ASEAN countries to have a decrease compared to the previous year.

The proportion of Japanese businesses expecting to shrink, withdraw or move to a third country is 2.5 per cent (an increase of 1.4 points compared to last year).

The reason Japanese businesses expand their business in the next one or two years in both manufacturing and non-manufacturing industries is to choose to expand domestic market demand and increase exports.

The rate of Japanese businesses expanding sales functions due to growing domestic market demand is 62 per cent.

Jetro surveyed 14,018 Japanese enterprises investing in 20 countries/regions, including five countries/regions in Northeast Asia, nine ASEAN countries, four Southwest Asian countries, and two Oceania countries.

In Việt Nam, the number of surveyed enterprises is 2,122 enterprises. — VNS