Owing to greater opportunities with cheaper prices over land purchasing rights, labour wages, and operational expenses for factories and warehouses, Vietnam may replace China as the factory of the world in near future.
As Omicron flare-ups in China’s manufacturing hubs, like Guangdong Province and Shanghai, disrupted supply chains, Vietnams Q1 economic figures appear to show promising outlook amid the pandemic, reported Global Times.
According to Vietnams General Statistics Office, Vietnams economy expanded by 5.03 per cent in Q1 of 2022, compared with the same period of last year, surpassing China which grew 4.8 per cent. Whats more, Vietnams foreign trade rose to USD 176.35 billion in Q1, a year-on-year rise of 14.4 per cent. In comparison, China’s Q1 foreign trade rose 10.7 per cent in yuan terms.
Moreover, foreign investors and other foreign-owned businesses are pouring money into the Vietnamese market. Recently, Vietnamese media reports that business mogul Li Ka-shing invested billions in Vietnam’s infrastructure after retreating from the UK, reported Global Times.
As Southeast Asia eases its epidemic restrictions and China continues to battle Omicron flare-ups in its major cities, a new wave of headlines emerged over whether factory orders will continue to flow out of China, and if China should have a sense of crisis as global manufacturing may be weaning off dependence on the worlds second largest economy and turning to countries like Vietnam.
China began its reform and opening-up in 1978. Vietnam followed China’s footsteps and started its own market reform known as “Doi moi” in 1986. For the past decades, economic growth on both countries has been remarkable.
But the eruption of a trade war between the US and China in 2018 has accelerated a fourth wave of industrial chain transfer, with countries like Vietnam and Mexico emerging as the biggest winners of the trade disputes.
Vietnams trade with the US has grown significantly since 2018. The latest data showed Vietnams trade surplus with the US rose to USD 81 billion in 2021 from USD 63 billion in 2020, hitting an all-time high, UK-media reported.
For the foreseeable future, Vietnam will continue to remain an attractive market for foreign investment and a destination for supply chain diversification.
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