September 14, 2020 / Internationalization

Vietnam: the new growing production hub and the free trade agreement with the EU

The increase in production costs related to wage growth in China, together with the tariff war with the USA, pushes more and more companies to rethink your expansion choices and to head to Asian markets other than the Chinese one. One of the most attractive countries is Vietnam, as:

– Covers one strategic position inside theASEAN, central to all of Southeast Asia
– Has a large working age population. The 48% of the population has between 25 and 54 years old, and it is estimated that in 2050 the country will reach i 120 million of the people living there
– It is the first Asian country for investments in infrastructure, with more than 250 industrial parks, and spend the 5.8% of GDP in education
– Over the years it has implemented important policies trade liberalization. The latest is the pact with the EU, the EVFTA

It was signed in Brussels on 30 March 2020 the Free Trade Agreement between the European Union and the Socialist Republic of Vietnam, which entered into force on August 1, 2020.

The pact provides for the almost total elimination of customs duties between the EU and Vietnam, to be implemented within a period of 7 years, also on the main European export products to Vietnam: machinery, cars and chemical products. As a result, exports from Vietnam to the EU are expected to grow by €15 billion per year while EU exports to Vietnam would increase by €8.3 billion per year. In fact, in recent years our imports have decreased by 14,57% while our exports grew by 12,11% leading to an improvement in the balance, which still remains a deficit for Italy.

This agreement is therefore aimed at promoting EU trade with a rapidly expanding country, with a annual growth of 6-7%, where European investors will certainly have considerable development opportunities.

Octagona can help your company expand your business in Vietnam, as it is directly present in the country with its own headquarters, local staff, consolidated experience and a network of professionals in the main ASEAN markets.

Our team of professionals is available for a free initial consultation and specializes in:

– International Advisory
– Sales & Marketing (Direct & TEM)
– Digital Export
– Foreign regulatory analysis and assistance