Japanese brands, factories gain traction in Vietnam despite Korean competition

By Hankookilbo

• Published Oct 8, 2026 12:00 AM KST

At Thang Long Industrial Park, Japanese companies win workers' loyalty with stability, strong brand reputation

HANOI — About a 30-minute drive northwest of downtown Hanoi on Friday, the entrance to Thang Long Industrial Park came into view after crossing Nhat Tan Bridge, which connects Hanoi with Noi Bai International Airport.

At factories throughout the industrial complex, Vietnam’s red flag with a yellow star flew alongside Japan’s flag.

Developed by Japanese trading house Sumitomo Corp., the industrial park is, in effect, a cradle of Japanese manufacturing. Beyond the entrance, signs for more than 100 Japanese companies, including Panasonic, Canon and Fujitsu, stretched across a 2.73-million-square-meter site. Some 60,000 Vietnamese workers stream into the complex every day.

A female worker at Panasonic said Japanese companies were regarded as more stable, even though Chinese and Korean firms paid higher wages, adding that many employees stayed for years.

“Many skilled workers have been here for more than 10 years, and new employees join every month, so the atmosphere is good,” she said.

Nguyen Thanh, 32, a management employee at the industrial park, said it had reached full occupancy, leaving no room for new tenants.

From Thailand to Vietnam, factories reshape local communities

Panasonic halted refrigerator and washing machine production in Thailand in May 2020 and moved its production lines to Thang Long Industrial Park in Vietnam. About 800 Thai workers were subject to layoffs at the time. Facing intensifying competition from Chinese manufacturers, the company chose Vietnam for its lower labor costs.

Japan is Vietnam’s largest provider of official development assistance (ODA), but Japanese companies have generally been slower than their Korean counterparts to establish a presence in the country. Recently, however, Japan has increasingly been selecting Vietnam as a manufacturing base and quietly accelerating its expansion.

Kim Chung village, across a six-lane road from the industrial park, is home to Vietnamese factory workers. At its entrance, construction was underway on four or five large dormitory complexes, each lined with hundreds of windows.

The neighborhood had traditionally consisted of tightly packed villas four or five stories tall. But as demand for housing has surged, it has been transformed into a large-scale dormitory district.

Supermarkets, open-air cafes and Japanese language schools have sprung up around the dormitories to serve workers.

Hoang, 20, an employee of Sumitomo Electric Industries’ Vietnam operation, SEEV, said he had worked there since graduating from high school.

“Monthly rent is relatively cheap at around 2 million dong (about $76), so many young workers who want to save money live here,” he said.

Japanese factories spread across Vietnam

Japanese industrial parks have expanded beyond Hanoi into northern and central Vietnam. After Thang Long Industrial Park in Hanoi reached capacity, Sumitomo Corp. developed Thang Long 2 in Hung Yen Province and Thang Long 3 in Vinh Phuc Province. The company is also building Thang Long 4 in Thanh Hoa Province in central Vietnam, with an opening targeted for 2027.

Individual Japanese companies are also expanding their investments.

Toyota decided in August to invest an additional $283.7 million in its factory in Phu Tho Province to produce hybrid vehicles. Murata Manufacturing, an electronic components maker, also decided in May last year to expand production lines for inductors and coils at its factory near Ho Chi Minh City.

Japanese companies’ expansion into Vietnam is underpinned by solid business prospects.

According to a survey released by the Japan External Trade Organization (JETRO) in September last year, 67.5 percent of Japanese companies operating in Vietnam expected to post operating profits, far exceeding the 17.6 percent that anticipated losses. Vietnam also ranked first among countries in the Association of Southeast Asian Nations (ASEAN), with 56.9 percent of respondents saying they planned to expand their businesses within the next one or two years.

Vietnam is increasingly establishing itself as a manufacturing hub for Japanese companies. In a 2024 survey of Japanese companies operating in ASEAN, JETRO found that of 473 firms that had relocated factories from other countries to the region, the largest number — 181, or 24.8 percent — had moved to Vietnam.

That figure far exceeded the numbers for Thailand, a traditional favorite among Japanese manufacturers, at 99, and Indonesia, at 68.

The power of Japanese brands

Japanese retailers are also stepping up their efforts to capture the Vietnamese market.

Near Hoan Kiem Lake in central Hanoi, a Uniqlo flagship store occupied the first and second floors of a French-style building. Since opening its first store in Ho Chi Minh City in 2019, the Japanese clothing retailer has expanded to 32 outlets nationwide and plans to add two more this fall, bringing the total to 34.

Thuy Linh, 25, an office worker who was shopping at the store, said Uniqlo was popular for its durable stitching and effective UV protection.

“The designs are also simple and clean, so I’d rather buy one item at Uniqlo than several pieces on Shopee,” she said.

Vietnamese consumers have considerable confidence in Japanese brands. According to a June survey by Q&Me, a Vietnam-focused market research firm, 59 percent of respondents said they viewed Japanese products very positively. Japan ranked first, ahead of the United States at 42 percent, Korea at 25 percent and China at 15 percent.

Some 81 percent rated Japanese products as high-quality, while 78 percent said they were trustworthy.

Japanese retailers are accelerating their expansion in Vietnam in response to this favorable reputation.

Retail giant AEON announced in August that it would withdraw from Thailand’s supermarket business, which it had operated for 40 years, and concentrate 60 percent of its ASEAN investments in Vietnam.

Takashiaya, the Japanese department store operator with a 200-year history, is also building its first mixed-use shopping complex in Hanoi’s Starlake new urban area, with an opening targeted for fall 2027.

Japan eager to narrow gap with Korea in Vietnamese market

Japan entered Vietnam before Korea did. For years, Japan was Vietnam’s largest ODA donor, supporting projects including Terminal 2 at Noi Bai International Airport, Nhat Tan Bridge and Ho Chi Minh City Metro Line 1. Toyota, Honda and Panasonic were among the leading foreign investors in Vietnam in the 1990s.

The balance began to shift in the 2010s, as investment by Korean companies such as Samsung, LG and Hyundai Motor surged.

In a report published in January last year titled Korea Takes Root in Vietnam, JETRO estimated that around 9,000 Korean companies operated in Vietnam, compared with approximately 2,500 Japanese firms.

Japan, despite having established an early foothold, has found itself playing catch-up.

The Japanese government is now seeking to narrow the gap. In May, Japanese Prime Minister Sanae Takaichi met with Vietnamese Prime Minister Le Minh Hung in Hanoi and agreed to raise bilateral trade to $60 billion by 2030, up from $51.4 billion last year.

However, that target remains well below Korea and Vietnam’s bilateral trade of $94.6 billion last year and their goal of reaching $150 billion by 2030.

As speed and flexibility become increasingly important in emerging markets, attention is turning to how quickly Japan can translate its renewed push into results.

“Japan entered Vietnam before Korea, but its investment pace was relatively slow because of its cautious decision-making,” said Kim Hyung-mo, head of the Korean Chamber of Commerce and Industry in Vietnam.

“With Korean companies having established a strong foothold through rapid investment, competition in Vietnam will intensify further if the Japanese government and private sector step up their efforts.”

This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.