Two Chinese manufacturers of energy storage systems and batteries are eyeing collective investments worth more than a billion dollars in Vietnam, sources said, amid a growing push by firms from the mainland to expand their presence in their Southeast Asian neighbour.
Vietnam, a global export hub, has been attracting global investments thanks to its array of free-trade deals and cheap labour.
For Chinese companies, the country offers the added allure of an alternative to the increasing cost of labour in China and protection from increasing Sino-US trade friction.
One of the two companies eyeing fresh Vietnam investments is Xiamen Hithium Energy Storage Technology, a startup that is expanding in Europe and the US.
Hithium has approached officials and industry managers in Vietnam to potentially invest up to $900 million to build a plant on more than 30 hectares of industrial land, one person with direct knowledge of the discussions said.
If the investment is finalised at that figure, the company would become one of the largest foreign investors in Vietnam.
A second source familiar with the discussions said the investment under consideration would be worth at least $500 million.
Hithium, which is based in the southeastern port city of Xiamen, said in a statement that it had no new deals near closing. It also said it plans to expand its production capacity to 70 Gigawatts (GW) by the end of this year from just 15 GW now.
Vietnam’s growing renewable market
The second Chinese company eyeing investments is Growatt New Energy, which already leases a pre-fabricated plant in Vietnam.
Growatt, a producer of battery systems and energy storage inverters for residential and commercial use, is planning to spend about $300 million to acquire about 15 hectares of industrial land to build a new factory, the first source said.
A separate source familiar with the discussions also said Growatt plans to expand in Vietnam.
Both companies are in talks with multiple authorities and industrial parks about potential locations for their plants, the sources said.
Vietnam is a growing market for renewable energy as its booming economy grapples with frequent power cuts due to increasing demand, climate change and a weak power grid. It has yet to pass legislation, however, that would permit the use of energy storage facilities to strengthen its power network.
Hithium, which currently does not have a presence in Vietnam, specialises in manufacturing stationary energy storage products, including cells and larger containers that help manage the intermittent supply of energy from solar or wind farms.
The global stationary energy storage market is estimated to jump in value to roughly $224 billion by the end of the decade from just over $31 billion in 2021, according to Precedence Research. Major companies in the market include Tesla, Panasonic and Philips.
- Reuters, with additional editing by Vishakha Saxena