67.5% of Japanese Companies in Vietnam Are Profitable—Yet Retrenchment Is Rising: Five Factors That Separate Winners

JETRO found that 67.5% of Japanese-affiliated companies in Vietnam expected an operating profit in 2025, the highest share since 2009. A further 56.9% planned to expand over the next one to two years, placing Vietnam first in ASEAN for a second consecutive year. Yet the share planning to scale down also rose to 4.2%, reaching 16.7% in transport equipment and parts.

Strength and struggle can coexist. As the market grows, differences in customer mix, sales capability, pricing, recruitment and local sourcing become more visible in company performance. Vietnam is moving from a phase in which presence itself was an advantage to one in which companies need a local system for being chosen.

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1. Profitability confirms that demand is real

The profitable share reached 74.1% in manufacturing and 61.2% in non-manufacturing. Companies most often linked improvement to stronger demand in export and local markets. For 2026, 47.6% expected profits to improve further.

Demand, however, does not guarantee selection. Japanese quality or heritage is less likely to be sufficient on its own. Sales materials and the website must make the same case: who the offer is for, which problem it solves and why it is superior to Vietnamese, Korean, Chinese or Western alternatives.

2. Expansion is increasingly about sales, not only production

Among companies expanding functions, 57.5% of manufacturers and 67.1% of non-manufacturers cited sales. After investing in production capacity, companies are building local sales, marketing and customer-service capability to capture domestic demand.

Translating headquarters materials is rarely enough. Pricing, cases, delivery, warranty and contact methods need to match the decision criteria used by Vietnamese customers. Local teams require both the responsibility and authority to add this information.

3. Retrenchment reveals delays in responding to structural change

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Transport-related businesses face the EV transition and proposals to restrict petrol motorcycles in major cities. More than 10% of respondents in general machinery and textiles or apparel also expected contraction. Overall market growth does not protect an existing product category.

Customer investment, regulation, competitor launches and recruitment should be treated as leading indicators. Quarterly customer interviews and disciplined loss-reason records can reveal change earlier than market reports.

ALIVE Vietnam supports companies in Vietnam with marketing strategy, branding, websites, UI/UX, content, video and measurement. Talk to our team even if you are still defining the problem and priorities.

4. A 38.1% local procurement rate represents both opportunity and constraint

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Local procurement reached 38.1%, while purchases from Vietnamese-owned companies rose to a survey high of 18.3%. At the same time, Japanese buyers still cited missing raw-material suppliers, insufficient quality or technical capability, and missing parts suppliers.

A local supplier cannot stop at saying it delivers high quality. Machine lists, tolerances, certificates, inspection processes, capacity, traceability, and Japanese or English support should be published clearly. This reduces the buyer’s search and preliminary qualification cost.

5. Talent and administration must be built into the growth model

Top risks included complex administrative procedures at 67.5%, unclear legal systems or implementation at 58.7%, and rising labour costs at 57.3%. Recruitment had become more difficult for 48.2% of companies and for 76.0% of northern manufacturers.

An expansion plan should include realistic hiring capacity, training time, delegated authority and permitting buffers—not only a revenue target. When every decision waits for headquarters, execution capacity reaches its limit before market opportunity does.

Conclusion

Japanese companies in Vietnam are broadly positive, but the formula for success has changed. Local sales, customer understanding, talent, sourcing and regulatory response must work as one management system. In a market where expansion and retrenchment rise together, competitive advantage comes from the ability to decide locally as conditions change—not simply from being present.

ALIVE Vietnam supports companies in Vietnam with marketing strategy, branding, websites, UI/UX, content, video and measurement. Talk to our team even if you are still defining the problem and priorities.