While China will remain the biggest manufacturing powerhouse in the world, Vietnam is certainly benefiting from the trade war between the U.S. and China. A growing number of Chinese companies are evading current tariffs by shifting production overseas to countries like Vietnam.
Additionally, with the influx of $19 billion USD of direct foreign investment, Vietnam is becoming the hot spot for manufacturing companies to relocate to. With that effort, we have seen an increase of assignees relocating to Vietnam since last year and are expecting this trend to continue. However, Vietnam is nearing its capacity and other Southeast Asian countries are now being considered.
Vietnam is considered to be a business-friendly environment due to stable politics and little, to no terrorism. As per the article, Vietnam's infrastructure networks, labour pools and local suppliers are getting 'pushed to their limits' due to high demand. Corporates may need to find other alternative Southeast Asian countries to move their manufacturing base to as well as their assignees.
Is your company shifting gears and looking for alternative APAC countries to send assignees to? If so, which countries?
Foreign investors have continued to flock to Vietnam’s factory districts as the trade war between the United States and China approaches its second year. US President Donald Trump’s threats to deepen the US-China trade war with further tariffs could accelerate the inflow of manufacturing investment, but those who have chosen to “wait and see” so far my face a more competitive environment as factory districts fill up, analysts have said. Many manufacturers in China considered shifting more production to Southeast Asia after the two sides started their tariff tit-for-tat, fearing the impact of higher levies on Chinese-manufactured goods on sales to the US market. Vietnam has become a favoured site for investors fleeing rising labour costs in China, and the threat of tariffs.