1. Vietnam - A strategic destination in the sights of Japanese businesses.

For more than a decade, Vietnam has continuously been in the key market group of foreign direct investment (FDI) flows from Japan. According to data from JETRO, by 2024, Japan will be one of the largest investors in Vietnam, with more than 4,900 projects and total registered investment capital exceeding the 70 billion USD mark.

This investment wave is not only limited to traditional manufacturing industries such as electronics and automobiles, but also expands to the fields of services, finance - banking, retail, logistics and renewable energy. In the context of geopolitical fluctuations, costs in China are increasing and the strategy isAs supply chain diversification outside of China is increasingly popular, Vietnam is becoming an important alternative in the global supply chain of Japanese corporations.

The question is: Which form should I choose to penetrate and expand in the Vietnamese market - M&A or new investment (Greenfield Investment)?

2. M&A - A shortcut but many "obstacles".

Outstanding advantages of M&A:

• Fast market access: Through acquisition or cooperation with domestic businesses, Japanese investors can quickly own a ready-operated system include factories, distribution channels, customer networks and human resources.
• Save time and startup costs: Not having to build from scratch significantly shortens the time to enter the market.
• Ability to take advantage of local knowledge: Domestic partners have deep knowledge of consumer tastes, legal corridors and business specifics in Vietnam.

Big challenges to note:

• Different management cultures: Many M&A deals fail in Vietnam because of the difference between Japanese management thinking (strict, procedural) and the highly flexible and improvisational operating style of Vietnamese businesses.
• Legal risks and information transparency: Many Vietnamese businesses lack standards in accounting, auditing or other legal matters.implementing a risk management system, making valuation and integration after M&A difficult.
• Low independence: Japanese investors may have difficulty applying corporate culture or global standards if they cannot control a large enough ownership ratio.

3. New investment - Building from scratch, long-term shaping

Advantages of new investment:

• Full control: Japanese businesses can design operating models, production systems and organizational culture according to global standards right from the start first.
• Quality synchronization: For manufacturing corporations such as Canon, Toyota, Daikin or Nidec, investing in building new factories in VVietnam helps maintain Japanese quality standards.
• Enjoy preferential policies: The Vietnamese government is currently prioritizing attracting investment in high-tech industries, renewable energy, infrastructure and digital transformation - with a series of incentives on taxes, land and access to labor.

Disadvantages to consider:

• Large investment costs: Requires strong financial resources and long-term commitment.
• Long capital recovery time: Licensing, construction, recruitment and training process Creation can last from 12–24 months, slowing down the speed of reaching the market.
• Fierce competition: In many fields such as retail, logistics or technology, new Japanese businesses ando the market must confront "players" who have dominated market share.

4. Strategic analysis: Should you choose M&A or new investment?

Choosing between M&A (merger and acquisition) and new investment (greenfield investment) is not only a financial decision, but also reflects strategic thinking and the ability to adapt to the business environment in Vietnam. Each form has its own advantages and disadvantages, depending on the long-term goals, internal capacity and level of market understanding of Japanese businesses.

For small and medium-sized Japanese businesses: With limited resources and little experience in the Vietnamese market, M&A is a reasonable strategy to shorten the time to penetrate the Vietnamese market.p, take advantage of available facilities and personnel. This is also a way to "learn" the market and test the business model before expanding the scale.

For large corporations with a long-term vision: Japanese businesses with strong financial potential and methodical investment strategies should prioritize new forms of investment, especially in the fields of high-tech manufacturing, logistics, energy, and R&D. This form allows the application of global management standards, quality control and building a long-term value chain.

Hybrid Strategy - Actual trend: Many Japanese corporations are currently applying the "combination" model:

+ Phase 1: M&A to penetrate quickly, taking advantage of the local networkLocation.

+ Phase 2: New investment to expand core activities, especially production, distribution centers or research centers.

This model not only helps businesses adapt quickly, but also builds sustainable competitiveness in the long term.

5. The choice must be associated with a long-term vision

Vietnam is not only a potential consumption market with more than 100 million people but also a strategic production center in the ASEAN region. Whether choosing M&A or new investment, Japanese businesses need to build a long-term strategy based on a deep understanding of the business, legal, cultural and people environment in Vietnam.

Support from organizationsIntermediaries like JETRO, M&A consulting firms, local lawyers and Vietnamese investment promotion agencies will play a key role in minimizing risks and optimizing opportunities.

The Vietnamese market is wide open - but only for investors who truly understand and prepare carefully.