Opportunities and Growth Potential for Japan SMEs in Vietnam

Khôi Nguyễn Duy
Oct 4
3 min read

Updated: 7 days ago

Over the past decade, economic ties between Vietnam and Japan have deepened significantly. Japan is not only one of the largest FDI contributors but also among the top in terms of SME projects in Vietnam. Japan SMEs often carry the reputation of “quality and reliability,” well aligned with the expectations of Vietnam’s growing middle and upper-middle class. However, entering the Vietnamese market is far from easy. Cultural differences, complex distribution structures, and high upfront costs pose serious challenges for Japan SMEs in Vietnam.

Illustration of Vietnam and Japan flags side by side, symbolizing Japan SMEs in Vietnam and their market entry opportunities. — Vietnam and Japan partnership reflects the growing role of Japan SMEs in Vietnam’s market entry journey.

Investment Scale & Key Sectors of Japan SMEs in Vietnam

Recent FDI statistics show that Japan consistently ranks among the top three countries in terms of projects in Vietnam, with SMEs making up a significant share.

Key sectors where Japan SMEs are most active include:

F&B: instant noodles, processed food, beverages such as sake, beer, and green tea.
FMCG & personal care: cosmetics, healthcare products, household goods.
Services & supporting industries: logistics, education, software, and manufacturing-related technology.

The major advantage of Japan SMEs in Vietnam lies in their reputation for “safety and quality,” a factor highly appreciated by Vietnamese consumers.

Display of Japanese confectionery and beverages on supermarket shelves in Vietnam, showing Japan SMEs in Vietnam active in the F&B sector. — Japanese F&B products such as snacks and beverages are among the key sectors for Japan SMEs in Vietnam.

Key Challenges for Japan SMEs in Vietnam

Despite their strengths, Japan SMEs face several barriers:

Conservative business culture: Japanese SMEs tend to be cautious and process-heavy, which may slow decision-making compared to Vietnam, Korean or Singaporean SMEs.
High entry costs: compliance, MT listing fees, trade discounts, and marketing budgets.
Complex distribution: fragmented GT, capital-intensive MT, and the need for heavy investment in e-commerce promotion.
Workforce & language gaps: communication and management styles may create friction with local partners.

Shelf with instant noodles and canned products from multiple countries, illustrating challenges faced by Japan SMEs in Vietnam’s FMCG market. — FMCG competition in Vietnam challenges Japan SMEs, slowing decision-making compared to Vietnam, Korean or Singaporean SMEs.

Opportunities & Market Potential

On the other hand, Vietnam offers attractive opportunities for Japan SMEs:

Consumer trust: Japanese products are perceived as high-quality and safe, resonating with the expanding middle and affluent segments.
FTAs (EPA, EVFTA, CPTPP, VJEPA): reduce import tariffs, giving Japan SMEs a competitive advantage.
Strong demand in F&B and FMCG: rising appetite for safe, premium, and differentiated products.
MT & Horeca potential: supermarkets, convenience stores, hotels, and restaurants present strong entry points for Japanese food and beverage products.

Illustration of Vietnam–Japan trade with two-way arrows, cargo ship and airplane, symbolizing VJEPA and FTAs that support Japan SMEs in Vietnam. — Trade agreements like VJEPA, EVFTA, and CPTPP create tariff advantages for Japan SMEs in Vietnam.

Entry Strategy for Japan SMEs by Distribution Channel

One of the most crucial decisions for Japan SMEs in Vietnam is selecting the right distribution channel.

General Trade (GT): Not the most suitable path for Japanese SMEs, as their products are usually mid-to-premium priced. However, niche markets like Japanese specialty stores or premium minimarts can be viable.
Modern Trade (MT): The most relevant channel for Japanese goods, as consumers welcome them in supermarkets, hypermarkets, and convenience stores. SMEs must, however, prepare budgets for listing fees, trade discounts, and in-store activations, while accepting long payment cycles of 30–60 days.
E-commerce: The fastest route to test the market. Official stores on Shopee Mall, LazMall, or Tiki Trading are effective, but require significant investment in digital marketing and KOL campaigns to build consumer trust.
Horeca: Highly promising for Japanese F&B such as sake, beer, and premium food. Horeca not only drives direct sales but also builds brand recognition before expanding into MT.

Interior view of a Japanese-style supermarket in Vietnam, illustrating Modern Trade (MT) as a key distribution channel for Japan SMEs in Vietnam. — Modern Trade (MT) channels such as supermarkets and convenience stores are the most relevant entry point for Japan SMEs in Vietnam.

Risks & How to Mitigate Them

Working capital pressure: MT demands high discounts and long credit terms. → Mitigation: combine Horeca and e-commerce to improve cash flow.
Channel mismatch: Over-investing in GT may dilute the premium image of Japanese products.
Compliance delays: labeling and product registration may take longer than expected. → Mitigation: work with experienced local partners.
Insufficient marketing localization: relying solely on “Japanese quality” without local promotion may not break through competition.

Vietnam is undoubtedly a fertile ground for Japan SMEs, but success requires a clear entry strategy by channel instead of applying a one-size-fits-all approach. With practical experience and strong local networks, Go2Market (G2M) Vietnam supports Japan SMEs in Vietnam with compliance, GT/MT/e-commerce distribution, and Horeca activations — helping businesses optimize costs, reduce financial risks, and accelerate sales from the early stage.