In an era defined by geopolitical fragmentation, regulatory volatility, and shifting supply chains, mastering a cross-border investment strategy in Asia is existential.
In this Industry Insights Q&A, we speak with Mickaël Driol, CEO of Mekong Partners, to explore how global firms can de-risk their market entry, localize ESG, and scale sustainably across Vietnam, China, and the broader Asia-Pacific.
From IP structuring to stakeholder alignment, Mickaël Driol breaks down the practical tools firms need to thrive in Asia’s increasingly complex investment landscape.
Highlights
Strategic Vision for Cross-Border Growth
Q: How has Mekong Partners adjusted to changing rules and trade issues in Vietnam and China?
A: At Mekong Partners, we built our operating model around geopolitical asymmetry. As U.S.–China trade tensions escalated, we re-engineered our advisory framework to treat regulatory volatility as a competitive advantage.
We identified early that Vietnam wasn’t just a “China+1” alternative—it was becoming a central node in global supply chain recalibration. Our first move was to build dynamic decision matrices for clients—factors like tariff sensitivity, bilateral trade alignment, labor market depth, and infrastructure reliability replaced static cost comparisons. This created a scenario-based structure that could adapt to sudden policy shifts.
In 2024, for example, we helped a European tech company move its PCB assembly line from Jiangsu to Bình Dương. But it wasn’t just about shifting the work.
We developed a layered compliance model aligned with licensing, permitting, and audit protocols, including IP risk mitigation and alignment with EU rules of origin under the EVFTA. Within 18 months, they cut regulatory disruptions by 40% and gained inspection-ready status across all local authorities.
China remains vital, but the strategy has evolved. It’s now viewed as a market, not just a factory. We help clients restructure toward domestic integration—using WFOEs for local R&D or joint ventures for tech transfer control. For U.S. clients, we’ve designed multi-entity models separating IP-holding structures from local execution to insulate against political risk.
In a region defined by regulatory fragmentation, our edge lies in ground-level intelligence, from customs irregularities to enforcement gaps. We don’t react to headlines. We build continuity where others scramble.
Q: What risks do global firms often overlook when entering Vietnam or China’s markets?
A: The biggest risks aren’t legal—they’re about systems, relationships, and how things are set up.
In Vietnam, the law is just half the reality. Firms often assume that getting an investment license ensures operational certainty. But delays frequently stem from unspoken land disputes, legacy issues, or shifting political optics.
For instance, a U.S. industrial client acquired a factory outside Hanoi via a clean SPV—yet soon faced retroactive environmental penalties. The root issue? Local resistance amid heightened activism. We solved it not in court, but by realigning district-level stakeholders.
In China, the risk has turned political. Firms misjudge exposure to strategically sensitive sectors. We categorize ventures as “welcomed,” “tolerated,” or “scrutinized.” Data, semiconductors, energy, and logistics fall under national security lenses. One Swiss EV components firm had to restructure into a minority JV to retain procurement rights.
Another overlooked area is contract enforceability. Technically, courts are open—but in practice, disputes are resolved via negotiation, third-party mediation, or influence. We coach clients to focus on stakeholder mapping, policy alignment, and relational trust, not just legal compliance.
Q: What’s the biggest wrong idea Western companies have about doing business in Southeast Asia?
A: The idea that contractual clarity equals control. Western firms often assume that legal enforceability ensures outcomes. But in Southeast Asia, outcomes are shaped by alignment, trust, and informal power.
In Vietnam, ecosystem politics matter. If your partner has political clout or strong supplier ties, a “clean contract” won’t shield you from regulatory reinterpretation. We’ve seen firms with solid contracts become isolated and non-operational.
The second misconception is seeing due diligence as binary—clean or not. We dig deeper. Are permits tied to expiring relationships? Is there silent equity? Is the partner in a sensitive sector? We’ve walked clients away from “perfect” deals because the stakeholder risk was too high.
Our approach emphasizes adaptive governance structures, such as profit-sharing, phased capital deployment, and observer roles, to align risk and influence in Southeast Asia’s informal power environments.
The key isn’t the paper—it’s the alignment of interests with how power actually works.
Q: How do you see Vietnam’s role changing as U.S.–China tensions continue?
A: Vietnam is no longer just a tactical hedge—it’s a strategic hinge. It connects global supply chains, investment flows, and regulatory alignments. Three trends stand out:
- Supply Chain Diversification: More than $80 billion in foreign investment has moved to Vietnam—not just for lower costs, but because of better trade deals. We helped a U.S. tech company move its Southeast Asia base to Vietnam, cutting tariffs by 10% and reducing regulatory risks.
- Tech Manufacturing Rise: Companies like Samsung and Apple are expanding in Vietnam to grow safely while protecting their intellectual property. The government supports this with tax breaks and funding for chips, transport, and research.
- Sustainable FDI Magnet: Vietnam is ahead in meeting ESG goals, matching global standards to attract responsible investors. We’re seeing faster reforms in key sectors like energy and digital infrastructure.
Vietnam’s real strength is giving companies more strategic options—not just replacing other countries.
Q: What capabilities should Asia-based CEOs build now to stay competitive through 2030?
A: By 2030, scale alone won’t suffice. CEOs must develop capabilities across four domains:
- Geopolitical Fluency: CEOs—not just legal heads—need to understand how trade rules overlap, who controls data, and eco-related taxes. We’ve done practice sessions with the board to see how changes in Japanese investment or EU climate policies impact pricing.
- ESG Integration: ESG is governance. CEOs must embed ESG metrics into ERPs, link KPIs to sustainability, and build internal veto power over capital deployment. We’ve helped install ESG committees that actually influence investment.
- Digital Operating Leverage: Digital tools like AI for logistics or tracking profits should help leaders make faster decisions, not just handle customer systems.
- Organizational Decentralization: Growth isn’t just happening in big cities anymore. CEOs need to give local managers control over profits, simplify regional operations, and cut out red tape.
Asia’s complexity is a filter, not a barrier. The CEOs who lead with speed, integrity, and regional fluency will scale and win.
Cross-Border Growth with ESG & Compliance Focus
Q: How is ESG influencing your investment and sourcing strategies at Mekong Partners?
A: ESG is no longer optional; it’s foundational. At Mekong Partners, ESG is central to value creation and geopolitical risk mitigation.
We operationalize ESG across the board. For sourcing, we go beyond audits—evaluating energy profiles, water usage, chemical inputs, and grievance mechanisms. For one European apparel client, we restructured 60% of their Vietnam supply chain, aligning it with the EU’s CSDDD and unlocking a €35M green-linked credit line.
In investment, ESG directly enhances valuation. We helped a Vietnamese agri-exporter embed traceability, biodiversity metrics, and regenerative farming practices, qualifying them for impact funds and boosting valuation by 45% within 14 months.
Our differentiation lies in granularity. We activate in-country ESG partners who uncover issues that third-party auditors often miss, from hidden emissions to shadow subcontracting. We’ve flagged ESG risks in 28% of initial supplier screenings, helping clients proactively avoid reputational fallout and supplier shutdowns.
More importantly, ESG is now a geopolitical currency. Countries like Vietnam are using ESG alignment to attract sustainable FDI. Meeting these standards can accelerate licensing and unlock government incentives. ESG isn’t a cost—it’s a strategic wedge.
Q: What are the key challenges and opportunities for Vietnamese SMEs looking to scale internationally, particularly within ASEAN and broader APAC markets?
A: Vietnamese SMEs are at a pivotal point. FTAs, regional nearshoring, and digital trade offer unprecedented growth potential, but institutional readiness remains low.
The biggest challenge is the compliance infrastructure. Most SMEs lack systems for HACCP, CE marking, or ESG disclosures. We’ve helped clients with ASEAN rules of origin, only to find labeling or traceability gaps that blocked exports.
Financing is another hurdle. Many SMEs are family-run, underbanked, and lack audit trails. We’ve worked with banks to design order-book-based credit scoring, unlocking new capital flows.
Yet the opportunity is real. Vietnam has FTAs with Japan, Korea, and the EU, and is integrating into regional e-commerce platforms. We helped a home goods brand launch in five ASEAN markets through consolidated cross-border e-commerce.
Success for SMEs rests on three pillars:
- Institutionalization (reporting, governance).
- Digital Export Enablement (ERP, CRM, logistics).
- Regulatory Literacy (FTAs, standards).
Vietnamese SMEs have the product. Now they need the platform.
Beyond Borders: The Future of Cross-Border Investment Strategy in Asia
As Asian economies grow in more places and global politics shift, companies can’t treat expanding across borders as a side task.
Whether it’s handling license issues, building ESG efforts locally, or setting up ventures sensitive areas, businesses now need a new way to think about investing across Asia.
The most successful ones will understand the region and stay flexible, turning challenges into a smart advantage.
Highlights
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