Merits of transferring business to Vietnam and moving from China to Vietnam [US-China trade war]

Merits of transferring business to Vietnam and moving from China to Vietnam [US-China trade war]

The US-China trade war between the United States and China is rapidly moving business sites to Vietnam.

In July 2018, US President Donald Trump insisted on China's unfair trade practices and began imposing shocking tariffs on Chinese imports.

Many trade experts said the US-China trade war was not showing immediate signs of improvement, affecting the world's economies.

But for Vietnam, the US-China War has actually had a positive impact on the country's economy.

Vietnam is currently considered to be the most beneficiary of the US-China trade war.

Vietnam's GDP surged 6.79% in the first quarter of 2019.

Because China cannot export its products to the United States, many foreign investors have come to Vietnam to take measures to export their products to the United States.

In this article, we will explain in detail why many Chinese companies have relocated their factories to Vietnam and how they can benefit from relocating to Vietnam.

Transferring business to Vietnam, benefits for Chinese companies

Due to the threat of tariffs from the United States and the continued rise in labor costs, Chinese companies continue to move their business bases from China to other countries.

In the apparel industry, this business transfer has been remarkable, and it is expected that the transfer of Chinese companies to Vietnam will continue to increase.

Good relationship between Vietnam and USA

Vietnam's exports to the US increased to an additional $69 billion in 2019, according to Bloomberg.

This is a significant breakthrough compared to $62 billion in 2018.

Vietnam and the United States maintain a positive economic relationship.

Vietnam's trade surplus with the United States exceeded US$39.5 billion in 2018.

As the trade war accelerates, more and more Chinese companies (especially light industry and manufacturing) see it as the best time to exit a high-cost China.

Passing market share to Vietnam

According to a survey conducted by the American Chamber of Commerce, China has several industries that are handing market share to Vietnam.

Car tires, furniture, refrigerators, textiles, etc.

Most recently, American companies Cooper Tire and Rubber Co Ltd and Sailun Vietnam Co Ltd have established a joint venture to build a tire plant around Ho Chi Minh City.

Another American company, Key Tronic Corporations, is starting to use manufacturing facilities around Da Nang.

Infrastructure development in Vietnam

The Vietnamese government has made national infrastructure development a top priority for economic growth.

Currently, real estate, harbors, bridges and highways are under construction, including the construction of power plants.

Vietnamese government stability and low wages

Compared with many neighboring countries in the Asian region, Vietnam's merit is recognized as a relatively stable government and cheap labor force.

This is especially important for labor-intensive manufacturing, which is why many Chinese companies have relocated production to Vietnam.

In 2010, Vietnam became the main manufacturer of Nike, surpassing China for the first time.