In the past ten years, many companies from America and Europe have started considering or already have set up a legal entity in Asia. As a result, Asia is one of the fastest-growing continents in the world for businesses. However, before opening a firm in an Asian country, companies must understand which country is the business hub of Asia.
It’s always crucial for businesses to have an insight into the next hub for their industry. There have been recorded growths and business rumours that favour Vietnam as one of Asia’s new business hubs (especially in Southeast Asia).
Numerous businesses have begun to invest in Vietnam or are considering moving their business to the thriving country. Hence the article will explain the factors that prove Vietnam may be the new business hub of Asia. Additionally, why companies will advantage from working with or in Vietnam.
Brief Information About Vietnam
Vietnam, also known as Viet Nam, is a long, narrow nation located in Southeast Asia. The country is neighbour to countries such as China, Laos, Cambodia and is relevantly close to Thailand. East of Vietnam faces the sea allowing a large amount of marine traffic. The capital of Vietnam is Hanoi, but Ho Chi Min is also known as another modern Vietnamese city.
The country is famous for its tourism, history, and manufacturing industry. Vietnam remains a growing country and is currently a second-world country.
However, the constant development and foreign investments in Vietnam is predicted to push the nation to a first-world, developed country by 2045.
What Factors Could Push Vietnam to Be the New Hub of Asia?
Vietnam’s economy is always growing and began to grow faster due to the attracted attention from western companies seeking to transfer production from China. Hence recently, Vietnam has been known as the new manufacturing hub of Asia due to its low costs and high quality.
The southeast country’s economy is also greatly affected by the increase in tourism and population. Vietnam population now in 2023 is around 98 million, with a speedy rise in the middle class and Vietnamese customer spending.
Vietnam economic experts aim to become an upper-middle-income country by 2030 and a high-income nation by 2050. The average GDP growth is predicted to be around 7% for 2021-2030, and GDP per capita will reach US$7,500 by 2030.
These statistics and constant growth proves the economy of Vietnam is attractive to businesses worldwide. Therefore, it is a great factor to push Vietnam as the new business hub of Asia, especially developing cities like Hanoi & Ho Chi Min City.
However, companies should consider trade credit insurance when doing business in Vietnam or working with Vietnamese enterprises. Trade credit insurance covers non-payments due to bankruptcy, insolvency, political risks, and government bans. As the country is expanding and dealing with more and more clients, there are more risks of unpaid costs due to various reasons. Locals and foreign businesses in Vietnam should purchase the insurance to avoid economic risks.
Increase In Talent
Many professionals from all over the world are deciding to move to Vietnam due to the growing opportunity and increasingly diverse cities. Businesses have begun to notice a large increase in young Vietnamese talent compared to the past Vietnam demographics.
The increase in talent allows international companies to run in the Asian country with mainly local employees, which is a cheaper and economically better option. For example, a software engineer with five years of experience in Vietnam will cost a monthly salary of approximately US$2574. This value is almost half the salary of an employee in Singapore with the same experience and skills. In addition, Vietnamese employees are also known for their hard work and trustworthiness.
Moreover, companies investing in Vietnam are leading to more job opportunities, modern structures, and motivation for higher education. Eventually, the professional migration will help promote the country and its talent as the hub of Asia.
Companies hiring local talent must appreciate their employees and purchase employee compensation insurance. The insurance will cover the cost of work injuries and illness. Employee compensation insurance will reimburse medical bills, salary during recovery and compensation expenses. Each Vietnamese employee deserves to be secure for their hard work. Vietnamese employees are the perfect solution to many businesses’ current talent gap.
When predicting a new Asia hub to invest in, it is mainly Vietnam vs Malaysia, although Vietnam seems the better option due to the lack of political risks. The Vietnam Government is known for its stability and flexible diplomacy. It is a one-party nation under the political control of the Vietnam Communist Party.
John Beeman, Citibank General Director in Vietnam, supports these facts with his statement– “Viet Nam’s economic and political stability is a great advantage of the country compared to other Asian nations”.
A stable and inviting government is crucial for any ASEAN country to be the next business hub of Asia. However, businesses working in or working with Vietnam must ensure they have the appropriate insurance to cover their political risks. These insurances include trade credit insurance and more, depending on your industry risks. Therefore, it is better to directly discuss with your insurance provider to discuss the accurate risks and the best policy. As policy might differ for each company.
International Business Opportunities
Vietnam is always inviting more and more businesses to join their market and be part of the possible hub of Asia. The above factors make running a business in Vietnam much easier and will improve as the country develops. Additionally, the Vietnamese Government continuously offers a wide range of investments and tax incentive schemes to encourage foreign investment.
For example, the Vietnamese Government have signed various free trade treaties such as bilateral trade agreement (BTA) between Viet Nam and overseas countries. The agreement benefits both Vietnamese and foreign companies importing & exporting to different markets. As a result, the free trade agreement makes Vietnam one of the most open markets in Southeast Asia.
Therefore due to the incentives, low labour costs and free trade, Vietnam is an ideal country for business. Hence many companies are making the smart step and taking advantage of their resources before it gets too expensive.
No matter where a company does business – they need liability insurances. Liability insurances will protect a business that provides products or services from claims due to negligence, product defects or internal company misconduct. These insurances include professional indemnity, director and officer, product liability and public liability insurance. Each insurance will protect companies liability in the next business hub of Asia or anywhere in the world.
How Can Insurance Help Businesses in Vietnam – Hub of Asia?
Insurance is crucial when doing business in any country worldwide. Especially when beginning new relationships in an upcoming country. Insurance is one solution that can save companies millions if things go wrong, and opportunities become risks.
Even if Vietnam is favoured to be the next hub of Asia, there are always risks for every industry. However, companies in Vietnam or businesses working with Vietnam companies can cover their finance with insurance.
Numerous insurances are currently helping cover international business risks in Vietnam, allowing companies to focus on growing and migrating.
To Learn More about various insurance and cover your business risks in Vietnam, the possible Hub of Asia, contact Red Asia Insurance.