By Francesco Guarascio
HANOI, Dec 10 (Reuters) - Chinese firms are expanding in Vietnam, leading investment inflows and sending record shipments to Hanoi in defiance of U.S. calls for decoupling, as the Communist neighbours beef up ties.
Recent steps that Hanoi had long resisted on security grounds include sensitive tech contracts for Chinese telecoms firms Huawei and ZTE; approval of Chinese loans for high-speed rail links; and Chinese-made COMAC planes cleared by regulators for a leading airline.
Hanoi's overtures to Beijing may reflect its long-standing policy of balancing foreign ties after pledges made to Washington in trade talks, said Alexander Vuving of the Asia Pacific Center for Security Studies.
But if the trend continues, Vietnam "may become a 'torn country' rather than a 'swing state'," he added, citing risks to Western relations.
While the Southeast Asian nation opened its economy to U.S. multinationals and technology after Washington lifted its embargo in the 1990s, it stayed cautious over China, after their 1979 war and disputes over South China Sea boundaries.
Now Beijing's influence is rising and U.S. ties are strained by tariffs.
Chinese firms make pledges to transfer technology, rare until now, and increasingly view Vietnam as a consumer market rather than just an assembly base, a Reuters review of data and industry interviews showed.
The shift has been turbocharged by tariffs of 20% imposed by Washington, said Phan Xuan Dung, a researcher at the ISEAS-Yusof Ishak Institute in Singapore.
"Vietnamese officials were displeased by what they saw as punitive U.S. measures, and this pushed them to hedge by leaning economically further into China," he added.
Vietnam's foreign ministry and the White House did not respond to requests for comment.
China's foreign ministry said economic cooperation benefits both countries.
RECORD IMPORTS FROM CHINA
Despite U.S. pressure to curb reliance on Chinese technology and components, imports from China stood at about $168 billion through November, up nearly 30% on the year and already well above all of 2024, itself a record year, Vietnamese data shows.
Nearly one-third are electronic parts, often re-exported in goods bound for the United States. Consumer imports, including vegetables and cars, are also climbing.
Fading anti-China sentiment among younger Vietnamese is helping drive the surge, dovetailing with Beijing's push to find new markets amid U.S. tariffs, and emboldening Chinese companies to take on domestic champions.
E-scooter maker Yadea sold more than 36,000 units in Vietnam in the year's first 10 months, ranking fourth nationwide, according to non-public registration data obtained by Reuters.
Though far behind domestic EV leader VinFast, Yadea is its main rival in the fast-growing electric market, while internal combustion engine leaders Honda and Yamaha lose ground as Vietnam phases out petrol vehicles.
EV giant BYD, which is expanding dealerships and charging stations nationwide, also keeps sales figures confidential.
Yadea and BYD did not respond to requests for comment.
Chinese retailers and tech giants are also advancing.
"One notable highlight of the HCMC retail market since late 2024 has been the entry and expansion of Chinese brands," real estate agency CBRE said in August, citing the spread of chains such as KKV in Ho Chi Minh City, with a similar trend in Hanoi.
TikTok, owned by ByteDance, is Vietnam's top social platform for shopping, an October survey by market research firm Q&Me showed.
Lazada, part of Alibaba, ranks among leading e-commerce sites, while Tencent is an indirect investor in Shopee and Tiki, Vietnam's other two top online retailers.
A NEW BREED OF INVESTORS
Chinese investment in Vietnam has been growing for years, as suppliers relocated to avoid U.S. tariffs.
Now joint ventures with Vietnamese partners are becoming more common, at times involving transfers of technology, said Steve Bui, chairman of the Vietnam China Business Council.
Apart from confidential deals, 12 Chinese members of the council have transferred, or plan to transfer, technology to Vietnamese partners this year, versus none in 2024, he said, in a sign of long-term commitments.
Among them is CNTE, backed by battery maker CATL, which produces battery energy storage systems (BESS).
CNTE has partnered with Delta E&C, a firm headed by Bui, to build a factory in northern Vietnam aiming to export 250 containers a year from October 2026, Bui said.
CNTE said it was providing "technical support".
From January through November, Chinese and Hong Kong firms pledged more than $6.7 billion, making them Vietnam's largest investors, official data shows.
At the DEEP C industrial park, one of Northern Vietnam’s largest clusters, Chinese manufacturers make up a quarter of tenants, up from 10% in 2019, said sales director Koen Soenens.
What began as tariff hedging is now "as much about insurance as growth," said Dan Martin of consultancy Dezan Shira.
The scale and diversity of Chinese projects "is reshaping Vietnam's industrial landscape", he added.
(Reporting by Francesco Guarascio; Additional reporting by Phuong Nguyen and Khanh Vu in Hanoi, Ethan Wang in Beijing, Trevor Hunnicutt in Washington; Editing by Clarence Fernanzed)
