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 the South China Morning Post:
As trade war rages, Chinese firms in ‘malignant’ battle for talent and territory in Vietnam
- As firms seek alternatives to China to avoid increased tariffs imposed by US President Donald Trump, Southeast Asian nation is feeling the pressure
- One Chinese businessman says: ‘You fill a job with three people in China, [in Vietnam] you probably have to recruit five’
In the small province of Binh Duong in southern Vietnam, trucks crowd a small road leading to the port from sunrise to sunset, with a few cars and motorbikes honking their horns impatiently among them.During the morning and evening rush hours, traffic jams can last for more than an hour, as bottlenecks of trucks carry cargo to and from Cat Lai Port, the biggest and busiest container terminal in Vietnam.The difficulty navigating this sole access road reflects an increasingly challenging environment for manufacturers in Vietnam across the board, as the country’s production hubs become ever more crowded and expensive.
On one hand, booming investment in Binh Duong has boosted the revenue of Chinese businessman Weng Caibing’s construction company by 50 per cent over recent years. But now he has a new headache: it is becoming increasingly tougher to find workers, especially skilled Chinese-Vietnamese translators.Four years ago, all available jobs would be filled within two days of Weng posting the recruitment notice on the company gate. Now, it is hard for Weng to find talent, even if he pays more than 2,000 yuan (US$290) per month for job advertisements.
“The large amount of Chinese investment has caused malignant competition for labour. Five million Vietnamese dong (US$213) [per month] could get me a good translator before, but now I have to pay 15 million dong (US$638). And I’m still struggling to find the right person,” Weng told the South China Morning Post in a recent interview at his factory.Weng’s construction company is 60 minutes drive from Ho Chi Minh City, Vietnam’s financial centre and largest city. There are now 30 new industrial parks in the region, catering to foreign firms moving south from China to escape higher prices for land and labour. In recent months, the movement has accelerated, as firms look to dodge trade war tariffs imposed by the United States.
In the first five months of this year, Vietnam’s foreign investment capital reached US$16.74 billion, up 69.1 per cent year on year. The largest share came from Hong Kong companies, with a total investment of US$5.08 billion. Given the fact that most of Hong Kong’s traditional manufacturing base migrated north to Guangdong over recent decades, it is fair to assume that much of that investment represents manufacturers moving to Vietnam from China.Despite being home to just 2.1 million of Vietnam’s 95 million population, Binh Duong ranks third, after the big cities of Hanoi and Ho Chi Minh City, in terms of attracting foreign investment this year, with total registered capital inflow of about US$1.25 billion, according to data from Vietnam’s Foreign Investment Agency.Vietnam’s stable government, relatively low salaries and proximity to China has made it a preferred destination for Chinese manufacturers in recent years. Its membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade bloc of 11 countries including Japan, Mexico, Singapore, Canada and Australia, has also helped lure Chinese manufacturers to Vietnam, from which they can also gain low-tariff access to other CPTPP member countries.
In an example of how the trade war is pushing manufacturing out of China and into Vietnam, Man Wah Holdings, the leading Hong Kong-based furniture maker, bought one of Vietnam’s largest furniture factories last year and expanded it. Man Li Wong, the company’s founder, said in May that the expanded facility would open in August at the earliest.
“We believe that [production of] all products exported to the United States will be transferred to Vietnam by 2020, with the capacity of our expanded base increasing to 800,000 units per year,” he said....
....MUCH MORE
