South Korea has for years ranked among the largest investors in Vietnam, and Taiwan has been the main engine of the electronics supply-chain shift since 2018. Neither group chose Vietnam for a single incentive: Samsung turned Bac Ninh and Thai Nguyen into global production bases, while Taiwanese suppliers followed their American customers in moving part of production out of China. Understanding the logic of the East Asian FDI wave — especially the “anchor investor” mechanism that pulls an entire ecosystem along — is the most practical lesson for investors who arrive later, from any country.
Short answer
Taiwanese and Korean companies chose Vietnam for a combination of four factors: a location next to China but outside China, serving “China plus one” strategies; competitive labour and land costs at the time of entry; a wide free trade network including the VKFTA with Korea, the EVFTA and the CPTPP; and, most importantly, the cluster effect — when an anchor investor such as Samsung enters, hundreds of suppliers follow, creating an ecosystem that sharply reduces supplier, labour and support-service risk for later arrivals. Underneath all of this sits Vietnam’s political stability and a consistently FDI-welcoming policy across successive governments.
The Korean wave: from garments to an electronics stronghold
In the early 1990s Korean companies entered Vietnam through garments and footwear, the classic labour-intensive industries. The turning point came in 2008 when Samsung built its complex in Bac Ninh and later expanded to Thai Nguyen, turning Vietnam into one of the group’s largest global phone-production bases; LG placed its complex in Hai Phong and many other Korean groups followed. The Vietnam — Korea Free Trade Agreement (VKFTA), effective from 2015, together with regular bilateral dialogue channels, reinforced long-term confidence. The Korean pattern is cluster investment: they bring tier-1 and tier-2 suppliers from home, demand fast procedure handling and synchronised infrastructure, and create areas where support services — expert housing, schools, restaurants — develop alongside.
The Taiwanese wave: following the customer’s supply chain
Taiwanese companies move to a different rhythm: US — China trade tensions from 2018 and direct requirements from American technology brands to diversify production locations. Large Taiwanese contract manufacturers such as Foxconn (Hon Hai), Pegatron, Compal and Wistron expanded or built plants in Bac Giang, Bac Ninh, Hai Phong and Nghe An. They are strong in electronics assembly, components and computers, and chose the North for proximity to customer and anchor clusters, closeness to the Chinese border for continued component imports, and an abundant young workforce. The core difference from the Korean wave: a Taiwanese supplier’s location decision is tied tightly to its end customer’s decision rather than to its own national strategy — where the customer moves, orders force it to follow.
Cluster map and lessons for later arrivals
| Anchor investor / group | Main bases | Cluster pulled along |
|---|---|---|
| Samsung (Korea) | Bac Ninh, Thai Nguyen, Ho Chi Minh City | Electronic components, displays, batteries, tier 1–3 suppliers |
| LG (Korea) | Hai Phong | Electronics, auto parts, home appliances |
| Foxconn and suppliers to US technology brands (Taiwan) | Bac Giang, Bac Ninh, Nghe An | Electronics assembly, computer components, accessories |
| Early-wave Korean companies | Ho Chi Minh City, Dong Nai, Binh Duong | Garments, footwear, diversified manufacturing in the South |
Three lessons follow. First, following an anchor investor reduces ecosystem risk — suppliers, logistics services and trained labour already exist — but the price is fierce labour competition around the cluster: actual wages around the large northern industrial parks are often well above the regional minimum wages under Decree 293/2025/ND-CP. Second, provinces experienced in serving East Asian FDI handle procedures more consistently and faster than average; that experience is an intangible asset to price into province selection. Third, entering early in a wave usually secures better land and terms — but choosing a location only because “a big investor is there” is a mistake if your industry does not share that cluster’s supply chain.
Risks and practical notes
The biggest risk of the follow-the-cluster model is dependence on the anchor investor’s decisions: when the anchor cuts output or moves a product line, lower-tier suppliers take the first and hardest hit. A second risk is wage escalation around clusters where dozens of factories compete for the same local labour pool, with high turnover in peak seasons. A third is compliance pressure transmitted from end customers — labour, environmental and traceability audits — that suppliers must carry on thin margins. Finally, geographic concentration risk: a natural disaster or disruption in one province can strike your entire chain at once.
Action checklist
- Identify the anchor investors in your industry and map the suppliers and support services around their clusters.
- Survey actual wages and turnover rates around the cluster instead of relying on regional minimum wages.
- Choose the province by your own project’s supply chain, not by the fame of the largest cluster.
- Prefer locations whose industrial park management boards have deep experience serving East Asian investors.
- Negotiate land early but tie progress conditions to your main customer’s order commitments.
- Build a second customer outside the anchor investor’s ecosystem to reduce dependence risk.
- Audit local supplier capability before committing to a localisation roadmap with your customer.
Frequently asked questions
Why did Taiwanese and Korean companies invest in Vietnam in such large numbers?
Because of the combination of “China plus one” strategy, competitive costs, a free trade network including the VKFTA, EVFTA and CPTPP, and the anchor investor effect: Samsung and US technology brands created an ecosystem that made entering Vietnam far less risky than entering alone. Political stability and consistent FDI policy underpin all of these factors.
What lessons can I learn from the East Asian FDI wave?
The biggest lesson is that location decisions must follow supply chains and customers, not single incentives. Following a cluster reduces ecosystem risk but costs more in labour competition and escalating expenses; and you always need a second customer and a second location option to avoid being locked into one anchor investor.
Which provinces and industries do they usually choose?
The North is the electronics heartland: Bac Ninh, Thai Nguyen, Hai Phong and Bac Giang are tied to Samsung, LG and Taiwanese suppliers. The South — Ho Chi Minh City, Dong Nai, Binh Duong — is the long-standing base of Korean companies in garments, footwear and diversified manufacturing. The dominant industries are electronics and components, followed by auto parts and consumer goods.
FLAT Law Firm accompanies investors
FLAT Law Firm helps later-arriving investors analyse industry cluster maps, appraise locations against their real supply chain and negotiate land and incentive terms with local authorities on a solid legal basis under the Investment Law 143/2025/QH15. If your project follows an anchor investor or a major customer, contact FLAT for a dependence-risk review before signing land commitments.
This article has been quality-reviewed by the FLAW AI Legal Council
