Chinese automaker Geely Auto has announced plans to invest nearly $170 million in Vietnam to expand production and establish a vehicle assembly plant. In an increasingly competitive electric vehicle market and amidst unpredictable external conditions, Geely's move has garnered significant attention.
The joint venture agreement with Hanoi's Tasco Joint Stock Company will create a factory with an annual production capacity of 75,000 vehicles, expected to break ground in 2025 and deliver its first cars in 2026. The facility will not only serve the Vietnamese market but is also slated to export to countries with which Vietnam has free trade agreements.
In recent years, as the U.S. and EU have imposed tariffs on Chinese electric vehicles, many Chinese automakers have shifted their focus to overseas investments to circumvent trade barriers. Geely's investment arises in this context, with Bloomberg reporting that numerous Chinese car manufacturers are looking toward Southeast Asia and other markets to maintain their competitive edge in a fierce global landscape.
Additionally, Geely's establishment of a research and development center in Vietnam, along with investments in building a local supply chain, signals that this endeavor goes beyond simple production outsourcing—it's part of a more complex market strategy. By creating a complete local industrial chain, Geely can better manage production costs and enhance its market responsiveness.
Vietnam's market potential also supports Geely's decision. While the country's automotive market is currently relatively small, its growing middle class and increasing purchasing power undoubtedly attract foreign investment. Furthermore, the Vietnamese government has actively promoted the development of the automotive industry, improving transportation infrastructure and creating a favorable environment for foreign investments.
However, the Vietnamese market is not without challenges. Despite recent increases in sales, Vietnam's automotive sector remains relatively weak compared to other Southeast Asian countries. Geely will need to conduct thorough research into local consumer preferences and devise strategies to stand out in a competitive environment.
Geely's investment plans reflect profound changes in the global automotive market. Ongoing pressure from the U.S. on Chinese manufacturing has posed greater export challenges for Chinese carmakers. In response, these manufacturers are actively seeking new markets and production bases to reduce their dependence on the U.S. and European markets.
This wave of "going global" investments highlights the process of repositioning Chinese manufacturing within the global supply chain. In this context, Vietnam serves as a "foothold" for Chinese enterprises, poised not only to attract more investment but also to secure a significant role in future competition.