Korea and Vietnam: Growth, Investment, and Partnership

Over the past few decades, the relationship between South Korea and Vietnam has flourished to become essential to the global electronics supply chain. What started as diplomatic ties in 1992 has evolved into a deep connection that continues to shape the future of a comprehensive partnership. Today, Korea is one of Vietnam’s most crucial trading partners, with Foreign Direct Investment (FDI) and manufacturing partnerships at the heart of this relationship.

A Partnership Built on Economic Collaboration

Since the establishment of formal diplomatic relations in 1992, the bond between South Korea and Vietnam has strengthened economic ties with the former emerging as a key investor in the latter's rapidly growing economy. The scale of investment is nothing short of substantial. By 2023, South Korean companies had poured over $74 billion into more than 9,000 projects. This makes them one of Vietnam's largest foreign investor, a title held for several years. The investments cover a broad range of industries, from electronics and textiles to automotive and consumer goods - all of which have played a crucial role in the transition from low tech to high tech manufacturing.

The Impact of Korean FDI in Vietnam

Major South Korean corporations have set up shop in Vietnam, driving the country’s rise as a global manufacturing hub.

• Electronics Manufacturing: Companies like Samsung and LG are leading the charge. Samsung, in particular, has invested about $17 billion, with its massive industrial parks in Bắc Ninh province producing nearly half of the company’s smartphones globally. These operations not only contribute significantly to the GDP but also provide jobs for over 100,000 local workers.

  
  

• Textiles and Garments: South Korean companies have been instrumental in developing Vietnam’s textile industry, which has become one of the country’s largest export sectors. Between 2010 and 2023, South Korean investments helped increase Vietnam's textile and garment exports by over 250%, with the sector now generating more than $39 billion annually. South Korean firms, such as Hyosung and Taekwang, have invested heavily in expanding production capacities and adopting advanced technologies, making Vietnam one of the top textile producers globally.

  
  

• Automotive Industry: The automotive sector is another area where Korean investment has made a mark. Brands like Hyundai and Kia have expanded their production in Vietnam, helping the country become an emerging player in the automotive market. From 2015 to 2023, vehicle production in Vietnam grew by an average of 12% per year, largely driven by South Korean investments. Hyundai, for instance, sold over 81,000 vehicles in Vietnam in 2023, up from 55,000 in 2018, reflecting the rapid growth and increasing consumer demand in the country.

Shinhan Securities, 1Long, and the Future of AI

Building on the strong foundation of economic cooperation, 1Long has recently been accepted into Shinhan Securities' prestigious Innoboost accelerator program. Shinhan Securities is one of South Korea’s top brokerage firms, and our participation in this program marks a significant step forward in the cross-border partnership, particularly in the realm of artificial intelligence (AI).

AI is rapidly becoming a game-changer in every industry in every country. In 2023, South Korea invested $2.5 billion in AI research and development, aiming to become one of the top five AI leaders globally by 2030. Vietnam is as well, with the government setting ambitious goals to integrate AI across various sectors such as digital identity. The country’s AI market is expected to reach $1.2 billion by 2025, driven by the booming tech ecosystem in cities like Ho Chi Minh City and Hanoi.

At 1Long, we are focusing on deploying AI to revolutionize stock trading and sales management. Our goal is to leverage AI to enhance decision-making processes, improve trading accuracy, and streamline sales operations for both individual investors and institutional clients.

A Bright Future Ahead

Looking to the future, the Korea-Vietnam relationship is poised for even greater things. Both governments are committed to deepening their ties, with plans to expand trade, increase FDI, and collaborate in high-tech industries like semiconductors, renewable energy, and of course AI.

As Vietnam continues to integrate into the global economy, South Korea will undoubtedly play a key role in this process. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which Vietnam is a part of, opens up new opportunities for South Korean investors in Vietnam’s burgeoning market. Moreover, the upcoming Regional Comprehensive Economic Partnership (RCEP), which includes both Korea and Vietnam, is expected to further enhance trade and investment between the two nations.

In conclusion, the partnership between Korea and Vietnam is a testament to what can be achieved when two countries work together towards shared economic goals. With continued collaboration and a focus on the future, there’s no doubt that this relationship will continue to thrive, bringing new opportunities and benefits to both nations for years to come.