Japanese electronics giant Panasonic plans to set up a research centre in Vietnam, a country which is following in the footsteps of China in its ambition to attract investment from technology multinationals.

The country is starting from zero, and no-one is saying that Vietnam is yet close to challenging China in terms of the size of FDI it attracts from foreign tech firms.

But it is revealing that Panasonic has spurned the well-known attractions and geographic proximity of China to locate its new centre further afield in Vietnam, although Panasonic, like other Japanese electronics firms, already has a well-established presence in China, specifically in Dalian and Guangdong.

"Vietnam has the potential to become the second China, where the open socialist economy could create a larger market rather than just serving as a producing centre, " said a company spokesman.

Panasonic recently set up two manufacturing plants in Vietnam, one making hi-tech products like cordless phones and PBXs, the other churning out components.

The Japanese firm will invest $500,000 to create the R&D facility in Hanoi, which will focus on R&D for digital home appliances as well as the design and development of software.

The company will send Japanese technicians to train workers and start a software development course at the Hanoi University of Technology. The initial workforce of 19 is predicted to reach 50 by 2009.

IBM also recently opened a facility in Vietnam -- see this EngagingChina story for more.