Commentary: Why Vietnam’s electric carmaker VinFast is launching in the US and bypassing China

SINGAPORE: VinFast, Vietnam’s new automotive brand by the conglomerate Vingroup, introduced two new electric vehicle (EV) models, the VF e35 and e36, at the Los Angeles auto show in November.

The investment in the American market demonstrates the company’s commitment to succeed by growing a global presence.

Rather than focusing on access to next door China, the world’s largest auto market, Vingroup has turned to the second largest, yet “original”, global auto market – the United States, to establish international brand recognition.

This comes despite the rolling out of the Regional Comprehensive Economic Partnership (RCEP) that will facilitate greater flows of goods and supply chain linkages across the Asia Pacific.

There are likely a number of intersecting strategic reasons for by-passing China.

These include ongoing Vietnam-China political tensions, the historical complications for foreign automotive companies depending on Chinese joint venture partners, and the Chinese government’s sensitivity to green vehicle competition, a key industrial development sector that has received strategic support from Beijing.

Although the Chinese market is seemingly saturated with competing global and local brands, making market entry more challenging, the same could be said of the United States.