Swiss-Viet Officials Meet, Discuss Progress on FTA

Vietnamese and Swiss officials met this week ahead of the 52nd anniversary of diplomatic relations between the two countries later this year. In this light, we look at how trade between Switzerland and Vietnam is faring.

The Swiss ambassador, Thomas Gass, met with National Assembly Chairman, Vuong Dinh Hue earlier this week ahead of the 52nd anniversary of diplomatic relations between Switzerland and Vietnam later this year.

The two officials discussed bilateral trade and investment with progress on negotiations of a free trade agreement between Vietnam and Switzerland high on the agenda.

Vietnam and the European Free Trade Association (Iceland, Norway, Lichtenstein, and Switzerland) have been working on an agreement since 2012. With at least four rounds of official negotiations completed, an outcome is expected in the near future.

In this context, we take a quick look at what business relations currently look like between these two nations.

Swiss FDI projects in Vietnam

Swiss firms have initiated a total of 198 projects in Vietnam since diplomatic relations were normalized. Collectively, these have been to the value of US$1.89 billion dollars.

One of the biggest Swiss investors in Vietnam has been Nestle. The food and beverage behemoth has invested millions of dollars in its operations in the Southeast Asian nation and it is continuing to do so.

In February, it announced a further US$132 would be used to expand its operations, doubling the volume of high-quality coffee products it makes in Vietnam

See also: Vietnam FDI Tracker

Switzerland’s exports to Vietnam

Switzerland’s exports to Vietnam totaled US$622.5 million dollars in 2022 with machines, equipment, tools, and instruments its biggest export to the burgeoning Southeast Asian nation. These accounted for a total of US$164 million.

Switzerland’s exports to Vietnam by value, 2022

Source: General Department of Statistics

Machine, equipment, tools, and instruments

Renowned for high-quality manufacturing, Switzerland’s biggest exports to Vietnam are machines, equipment, tools, and instruments. Across the board, Switzerland produces a range of machinery and tools that are in high demand in countries thirsty to develop their manufacturing bases.

Computers, electrical products, spare parts, and components thereof

Switzerland produces a range of computer components and parts that are in short supply in Vietnam. As a result, this was Switzerland’s second biggest export to the Southeast Asian nation in 2022, totaling just over US$96.5 million.

Pharmaceutical products

Switzerland is home to some of the world’s leading pharmaceutical manufacturers and has a strong reputation for producing high-quality and innovative drugs. Many of these pharmaceutical companies have established a presence in Vietnam, either through joint ventures, direct investments, or distribution deals–Ferring Pharmaceuticals, for example.

Vietnam’s exports to Switzerland

Vietnam exported US$183.7 million worth of goods to Switzerland in 2022. These were mostly manufactured goods and construction materials, however, food products featured prominently too.

Vietnam’s exports to Switzerland by value, 2022

Source: General Department of Customs

Computers, electrical products, spare parts, and components thereof

Vietnam has a low cost of production compared to many other countries, which makes it an attractive location for manufacturing electronic devices. This is essential in the highly competitive electronics industry.

One of the world’s wealthier nations, Switzerland has a high demand for high-tech computers and electronics, which is reflected in the volume of computer products it imports from Vietnam.

Footwear

Vietnamese footwear manufacturers produce a wide range of products, including casual and sports shoes, sandals, and boots. These orders are often for big brands based in Europe that choose to utilize Vietnam’s favorable production costs and skilled labor.

Big brands producing footwear in Vietnam include the likes of Nike and Adidas. Both firms have extensive manufacturing networks throughout Vietnam where they produce a range of athletic footwear.

See also: Where are Nike’s Factories Located in Vietnam?

Fishery products

Landlocked Switzerland relies heavily on imported fish and seafood. Vietnam has a well-developed fishing industry and can supply Switzerland with a wide variety of fish and seafood products.

Vietnamese companies produce a wide variety of fishery products, including shrimp, squid, and fish filets. This variety of products makes it easy for Swiss businesses and consumers to find fishery products that meet their specific needs and preferences.

The future of trade between Vietnam and Switzerland

After almost 52 years of diplomatic ties, bilateral trade between Switzerland and Vietnam has strengthened in line with Vietnam’s outward-looking approach to international trade. Already a member of a broad range of free trade agreements – one of the most recent and being with the European Union – Vietnam appears keen to add at least one more with the EFTA. With four rounds of negotiations complete this could see an agreement reached in the not-too-distant future.

For advice on importing and exporting from Vietnam, contact the experts at Dezan Shira and Associates.

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