Wednesday, July 5, 2023

"Vietnam becomes vital link in supply chain as business pivots from China"

Vietnam has been rising for a while, one of our 2019 posts after the jump hits the high notes but, in markets as in other areas of endeavor, if you are too early you're not early, you're wrong.

A deep dive from the Financial Times, July 3:

Rising investment amid geopolitical tensions puts infrastructure under strain 

Space at the Deep C Two industrial estate in northern Vietnam is in such demand that its developer is already thinking about how to create more — by pushing back the South China Sea.

Some of the biggest suppliers to global tech companies such as Apple are clustered at Deep C Two, close to northern Vietnam’s biggest port, Haiphong. Now geopolitical tensions between Beijing and Washington and the risks to business exposed by the Covid-19 pandemic are spurring more manufacturers to shift out of China — and Deep C, a Belgian developer which runs five zones in Vietnam, is getting ready.

If there is enough demand, “we will reclaim the land from the sea”, said Dung Bui Thi Thuy, a marketing executive.

The accelerating shift to countries such as Vietnam is part of a growing “China plus one” strategy to redraw global supply chains. As rivalries grow between China and the US over technology and security, more companies fear curbs on what and where they can manufacture. As a result, many are supplementing production in China, still the world’s biggest manufacturing hub, with expansion to other countries.

“Koreans, Taiwanese, Chinese — there seems to be an unstoppable transfer or at least relocation from mainland China into other countries,” said Koen Soenens, Deep C’s sales and marketing director. “Foreign companies currently in China, ask them what’s next. [They say] ‘For the Chinese market, we stay in China; to serve our overseas clients, we are looking for a new location’.”...


June 2019 
Vietnam Rising: "US-China trade war pushing Vietnam’s manufacturing industry to capacity"

A major piece on the country The Diplomat says will be the testing ground for China's military, prior to an invasion of Taiwan. See last month's "China Will Attack Vietnam".

Throw in Vietnam's undeveloped rare earth resource base, tied with Brazil for #2 in the world (combined they match China) and the risk it poses to China's lock on prices and Vietnam has suddenly gotten very interesting.
Oh, and China is still smarting from being unable to achieve their goals during the 1979 invasion of Vietnam....


From April 11 2019's "Philippines President Duterte Threatened Beijing with Military Action":

When the Chinese stopped laughing they reflected and gave thanks it wasn't Vietnam making the threat....
...The Vietnam line is in reference to the fact that General Võ Nguyên Giáp, possibly the greatest general of the 20th century, defeated in turn, the French empire, the U.S.A. Cambodia and China in 1954, 1975, 1978 and 1979 respectively.

That last conflict was the result of China's invasion of Vietnam in an attempt to force Vietnam out of Cambodia which Vietnam had invaded in 1978, putting Pol Pot and the Kmer Rouge génocidaires out of business. It didn't work, Vietnam stayed in Cambodia until 1989.
The General died in 2013 age 102.

He outlived all his adversaries.

One point to keep in mind that we first saw at Asia Times in April is that as American imports from Vietnam rose, so to did Vietnam's imports from China.

"The Great Re-Shoring Charade"
Reiterated in:
Untangling the Supply Webs

Very much like Europe buying Russian oil but routing it through India and paying a middleman's markup to do so..