VIETNAM AND FOREIGN DIRECT INVESTMENT: POTENTIALS AND CHALLENGES ON THE LABOR MARKET

For several years Vietnam has been receiving attention as an attractive business location for foreign companies. But in spite of overall positive economic developments, foreign companies in Vietnam also experience challenges, e.g. connected to bureaucracy and corruption. Another issue that is of crucial importance for foreign companies in foreign markets are the conditions on the labor market. This paper investigates questions about the potentials and challenges for foreign companies on the Vietnamese labor market, and of how attractive Vietnam’s labor market is compared to India and China. Education levels, productivity, wage levels, and number of strikes are among the indicators that are used to compare the attractiveness of Vietnam’s labor market to the labor markets of China and India. Furthermore the results of almost 30 interviews conducted with companies from Austria, Germany and Switzerland on their experiences with doing business in Vietnam are used to shed light on the strengths and weaknesses of the labor market in Vietnam.