Japanese investment in Vietnam reached a turning point in 2025, marked by strong profitability and renewed expansion momentum. JETRO FY2025 Survey on Business Conditions of Japanese Companies Operating Overseas shows broad business confidence and clear plans to scale up operations. Vietnam is increasingly shifting from a cost-based manufacturing site to a strategic production and market hub, supported by export orientation, trade agreements, and deeper local sourcing. Despite ongoing labor and digital challenges, the country has entered a phase of structural investment consolidation and accelerated growth.

Overview of Japanese firms’ situation in Vietnam 2025

As of 2025, Japan continues to solidify its position as a leading strategic economic partner for Vietnam, with approximately 5,635 active FDI projects and a total cumulative investment exceeding $79.4 billion, maintaining its rank as the third-largest investor in the market[1]. The presence of the Japanese business community remains exceptionally strong, with over 2,000 active companies, primarily concentrated in the processing and manufacturing sectors[2]. Among the 90 countries and territories with newly licensed projects in Vietnam in 2025, Japan ranked fourth (behind Singapore, China, Hongkong) with 1.62 billion USD, accounting for 9.4% of total value[3].

In the first eight months of 2025 alone, capital inflows from Japan remained robust, with an estimated $2.33 billion in investment. According to JETRO’s latest survey of Japanese companies operating across Asia and Oceania, 2025 notably marked a record milestone as 67.5% of Japanese firms in Vietnam reported a profit, the highest level in 15 years and ranked 3rd in the SouthEast Asia region (behind Philippines and Indonesia). The shift from low-cost assembly to high-tech industries, semiconductors, and green infrastructure is not only elevating Vietnam’s position in the global supply chain but also driving Japanese enterprises to express their intent to further expand production in the near future[4].

Operating profit forecast for Japanese firm in Vietnam (2023 – 2025)

Source: JETRO [4]

Historically, profitability among Japanese firms in Vietnam declined sharply during the COVID-19 period, reflecting significant operational and market disruptions. From 2021 onward, profitability gradually recovered as production resumed and export demand strengthened. After a brief slowdown, the recovery accelerated and ultimately surpassed pre-pandemic levels, indicating that Vietnam has moved beyond a cyclical rebound and entered a phase of more resilient and sustainable post-COVID growth.

Time-series data of profitable Japanese companies in Vietnam

Unit: %

Source: JETRO [4]

In addition, in 2025, the share of Japanese firms expecting their operating profits to increase year-on-year stands at 42.3%, placing Vietnam among the top 3 performers in ASEAN (after Cambodia and the Philippines). When looking ahead to 2026, optimism strengthens further, with 47.6% Japanese companies projecting profit increases compared to 2025 forecasts.

Operating profit forecast for 2025 (by country/region, compared to 2024) 100% = 836 companies	Operating profit forecast for 2026 (by country/region, compared to 2025) 100% = 830 companies

Source: JETRO [4]

Expansion Intentions of Japanese Firms

The profitability surge is translating directly into expansion plans. A remarkable 56.9% of Japanese companies in Vietnam intend to expand their business operations over the next one to two years, ranking Vietnam among the highest in ASEAN for expansion appetite and significantly above the regional average of 46.8%. This expansion share is not only the highest in the group but also substantially exceeds the proportion of firms intending to maintain current operations in Vietnam (38.2%), indicating a clear growth-oriented stance rather than a defensive or wait-and-see approach.

At the same time, the low levels of reduction (4.2%) and transfer or withdrawal (0.7%) suggest that downside risks are perceived as limited. This combination of high expansion intent and minimal exit pressure reflects strong business confidence and reinforces Vietnam’s position as a preferred investment destination within ASEAN.

The direction of business development over the next 1-2 years by some Southeast Asian countries in 2025

Unit: %

Source: JETRO [4]

From a historical perspective, over the 2016-2025 period, Vietnam consistently records a higher share of Japanese firms planning expansion than China and the ASEAN average, demonstrating strong and resilient growth confidence even during periods of regional and global disruption. After a sharp dip in 2020, Vietnam’s expansion intentions rebounded quickly and remained above 56% from 2022 onward, reaching 56.9% in 2025.

The percentage of companies expecting to expand in the next 1-2 years (2016 – 2025)

Unit: %

Source: JETRO [4]

The nature of planned expansions also reveals strategic depth. For business development over the next 1 to 2 years in Vietnam, 51.1% of companies in Manufacturing and 61.7% of companies in Non-manufacturing answered “expansion”, with Non-manufacturing exceeding Manufacturing by 10.6 percentage points. Among Japanese companies planning to expand, 63.2% cite sales function enhancement, while 27.4% plan to expand production of high-value-added products, and 26.4% will expand general-purpose product manufacturing. This dual focus, strengthening market presence while scaling production capabilities, suggests Japanese firms view Vietnam as both an increasingly important consumer market and a strategic manufacturing hub.

Functions to be expanded in Vietnam

100% = 511 companies

Source: JETRO [4]

In addition, expansion drivers align closely with Vietnam’s economic fundamentals. An overwhelming 60.1% of Japanese companies planning expansion cite “increase of local market demand” as their primary motivation. This focus on domestic market potential represents an evolution from Vietnam’s earlier role as primarily an export platform. Additionally, 39.1% cite “increase of exports,” indicating Vietnam’s continued importance in global supply chains.

Reasons for planning to “expand” business over the next 1-2 years in Vietnam in 2025

100% = 509 companies

Source: JETRO [4]

Vietnam also plays a significant export-oriented role in Japanese firms’ regional operations, with an average export ratio of around 48% of total sales, which is notably higher than both the overall average (36.7%) and the ASEAN average (approximately 40%)[5]. Compared with more domestically oriented markets, Vietnam exhibits a balanced but export-leaning structure, reinforcing its strategic importance in Japan’s regional supply chains and its role as a key hub for outward-oriented production in ASEAN.

Conclusion: Vietnam’s Moment Has Arrived

The convergence of record profitability, strong expansion intentions, and fundamental strategic shifts in global manufacturing positions Japanese FDI in Vietnam at an inflection point. After years of investment through uncertainty, including the global financial crisis, trade tensions, and pandemic disruption, Japanese companies are experiencing vindication of their Vietnam strategies through the strongest profit performance in 15 years.

For companies already invested, 2025 represents an opportunity to capitalize on hard-won operational maturity and favorable market conditions through aggressive but calculated expansion. For those still deliberating entry, the message is increasingly clear: Vietnam has transitioned from an emerging opportunity to an established platform delivering concrete returns.

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[1] https://en.vneconomy.vn/vietnam-japan-forum-2025-held-in-hanoi.htm

[2] https://laodong.vn/thoi-su/khoang-2000-cong-ty-nhat-ban-dang-hoat-dong-tai-viet-nam-1374483.ldo

[3] https://en.vietnamplus.vn/fdi-inflows-into-vietnam-exceed-38-billion-usd-in-2025-post335419.vnp

[4] https://www.jetro.go.jp/ext_images/en/reports/survey/pdf/2025/EN_Asia_and_Oceania_2025_r.pdf

[5] https://www.jetro.go.jp/ext_images/en/reports/survey/pdf/2025/EN_Asia_and_Oceania_2025_r.pdf