24 Dec, 2018

Where to invest in Vietnam? Episode 2: Hanoi or Ho Chi Minh City?

When it comes to selecting a business location in Vietnam, the very first considerations which might come to mind, are the two biggest and most important hubs: Hanoi and Ho Chi Minh City. In this article, we will see all the pros and cons of doing business in these two cities.

You can read the first episode of this series about Quang Ninh Province here

However, we will also explore some alternatives in this series of articles about the most suitable locations for your business.

There are a few very important aspects that we cannot ignore when choosing a location for the business:

  1. Infrastructure
  2. Space availability and rental prices
  3. Labor availability
  4. Average monthly wages in the area
  5. Environmental aspects
  6. Demand for your line of business in the area

Ho Chi Minh City – The biggest economic hub

Ho Chi Minh City, also known as Saigon, is Vietnam’s economic and financial centre. The key benefits of the dynamic HCMC are:

  • Availability of workforce
  • Main hub for corporate headquarters
  • Railway access and proximity to seaport

HCMC is the economic centre of Vietnam with a 7.5% GDP growth rate and a total of FDI of US$4.12 billion in the first seven months of 2018, accounting for 17,9 percent of the total investment capital. This dynamic city of over 8 million inhabitants is widely seen as one of the fastest growing markets for technology and manufacturing in the region.

The manufacturing sector is seeing increasing investment into new factories, particularly from companies relocating from China where labor costs have risen to 3 times the average wage of Vietnam. Many multi-national corporations are locating or expanding their manufacturing plants to Vietnam. The various industrial parks and economic zones around this metropolis are counted for around 25% of Vietnam’s industrial production.

Hanoi – The country’s political centre

Hanoi is the capital and well-known for its colonial architecture and historical monuments, delectable cuisine and expansive lakes. Since it’s a home of most legislative and government bodies, Hanoi’s property market witnessing rapid development across various sectors back by vast improvements in infrastructure and connectivity within the city’s boundaries and to nearby industrial zones.

With a total registered FDI of $6.17 billion, accounting for 26,9 per cent of total investment capital in the first seven months of 2018, Hanoi surpassed the second place of Ho Chi Minh City. According to the Foreign Investment Agency (FIA), nationwide, foreign investors have invested in 17 industries, of which the manufacturing and manufacturing sector is attracting foreign investors attracted a total of $9.63 billion, accounting for 41,95 percent of the total registered capital.

Hanoi is the second most economically developed in Vietnam and that results the lower labor and also living costs compare to HCMC. In addition, both cities are very attractive to young, talented labor however, due to the fact that most headquarters are in HCMC, more and more northern people move to the South for job opportunities and higher monthly wage.

Whichever destination is more compatible to your business needs and personal expectations, both HCMC and Hanoi are listed as the world’s most dynamic cities:

The differences between Hanoi and Ho Chi Minh City may help you decide where to locate your business, but there are also opportunities in many of the other Vietnamese cities.