Germany's Scholz visits Vietnam as manufacturers eye shift from China

BOSCH

13/11/2022 10:55

By Francesco Guarascio
       HANOI, Nov 13 (Reuters) - German Chancellor Olaf Scholz
discussed energy and trade ties with Vietnam's Prime Minister
Pham Minh Chinh during a visit to Hanoi on Sunday, the first for
a German leader in more than a decade.
    Scholz's stop in Vietnam on his way to the G20 leaders'
summit in Indonesia, highlights Vietnam's growing role in global
supply chains as many German firms consider diversifying their
manufacturing operations by expanding their presence beyond
China, their main hub in Asia.
    At a joint news conference with Chinh, Scholz said Berlin
wanted deeper trade relations with Vietnam and would support the
country's transition to a greener economy, including through the
expansion of the metro system in Hanoi, Vietnam's capital.
    The Hanoi visit follows Scholz's trip to China last week,
the first by a Western leader in three years since the start of
the COVID-19 pandemic. He will next visit Singapore before
heading to the G20 summit on Nov 15-16. 
    Vietnam and Singapore are the only countries in Southeast
Asia that have a free trade agreement with the European Union.
As a result, they are the EU's biggest trading partners in the
region.
    Germany is Vietnam's second-largest trading partner among EU
states after the Netherlands, with exchanges worth $7.8 billion
last year, according to law firm Dezan Shira - far less however
than the United States, China, Japan and South Korea.
    About 500 German firms operate in Vietnam, of which around
80 have manufacturing plants in the country, according to the
German chamber of commerce in Vietnam, AHK. 
    Among them are engineering giant Bosch  BOSH.NS , energy
firm Messer, and several smaller companies involved in the
global automotive supply chain.
    Many more are looking to diversify some of their activities
away from China where about 5,000 German companies operate, AHK
head in Vietnam, Marko Walde, told Reuters. 
    Over 90% of German firms planning such a move look at
Southeast Asia as their preferred choice, Walde said, noting
that Vietnam and Thailand were favourites in the region. 
 (Reporting by Francesco Guarascio; additional reporting by
Sarah Marsh in Berlin)
 ((Francesco.Guarascio@thomsonreuters.com;))