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Vietnam first needs to beat two adjacent Chinaese provinces Guangxi and Yunnan, both have just less than half of Vietnam's population with much bigger GDP than Vietnam, and both are among the poor provinces in China.Can Vietnam beat China to become the "manufactory of the world"?
12-10-2021 - 08:38 AM
Vietnam is considered as one of the fastest growing economies, the most impressive among emerging economies in Asia. So what is the opportunity for Vietnam to replace China to become a "new global factory"?
What makes Vietnam an export powerhouse in the region?
A team of economists from AXA Investment Managers Asia based in Singapore has analyzed and explained the reasons why Vietnam can become an export power in the region, and assessed the prospect of becoming a "factory for export". second world" after China of this Southeast Asian economy.
According to two economists Aidan Yao and Shirley Shen, Vietnam is considered one of the fastest growing economies, the most impressive among emerging economies in Asia (excluding China). deeply integrated into global trade in recent decades.
Macroeconomic experts from AXA Investment Managers Asia affirmed: "Vietnam is increasingly competitive in trade and has become an attractive manufacturing center in the world".
According to the assessment of AXA Investment Managers Asia, Vietnam's successful integration into the Association of Southeast Asian Nations (ASEAN) is the "key" to the strong growth of trade activities.
In the region, Vietnam ranks highly in terms of economic performance, fueled by strong returns from manufacturing development and export potential.
In addition, Vietnam has also signed many free trade agreements (FTAs) with different major regions and economies around the world such as Japan (VJEPA), the European Union (EVFTA), the UK (VJA), and the EU (EU). UKVFTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Regional Comprehensive Economic Partnership Agreement (RCEP), etc., this has created a favorable environment for trade relations to develop. even stronger.
Previous studies by AXA Investment Managers Asia have all shared that Vietnam has been a prominent winner in terms of global export market share in recent years.
Especially as China has successfully risen to assert value in the global trade supply chain, bypassing the gaps in lower value growth, using low-cost labor, and making the country lose its competitiveness. compared to neighboring countries that are making strong breakthroughs like Vietnam.
The research team of AXA Investment Managers Asia said: "Vietnam has achieved a 5-fold increase in export value over the past decade, significantly outperforming the rest of Asia".
In addition, in the past time, Vietnam is considered one of the countries that benefit the most from the trade conflict between the US and China, along with the rapidly increasing competitiveness in the manufacturing sector also contributes to the growth of the economy. Vietnam has risen to become an export power in the ASEAN region in particular and Asia in general.
Figures show that Vietnam's exports to the US increased by 29% in 2019. At the end of last year, Vietnam became the 6th largest importer to the US market, up from 12th place in 2017.
In terms of attracting foreign direct investment (FDI), Vietnam has been particularly successful thanks to the government's preferential policies during the past time. In particular, Vietnam's FDI inflows have grown the fastest in the region.
By 2020, Vietnam has 369 industrial parks, an increase of 180% compared to 2005. Vietnam has also ranked up in the ranking of the "ease of doing business" index of the World Bank (WB), up 23 places up. rank 70 compared to 10 years ago.
Besides, in terms of competitiveness assessment scores based on business facilitation, logistics quality, wage costs, Gross Domestic Product (GDP) growth as well as changes in the In terms of exports and FDI, Vietnam is considered as the most competitive country in the region. This has helped increase export market share impressively in recent years.
Regarding Vietnam's manufacturing industry in the past decade, a series of statistics show that the value of the industry has increased the most, twice the rate of India.
According to AXA Investment Managers Asia, one of the important reasons for Vietnam to emerge as a powerhouse of commercial production and assembly is its ability to attract businesses to relocate and re-establish production bases.
Two economists Shirley Shen and Aidan Yao said that, in addition to the wave of supply chain shift from developed countries to the community of developing countries, previous AXA research also showed that manufacturing profits The low level caused the world's leading multinational corporations to start migrating out of China in recent years.
The reasons indicated are that China has a rapidly growing economy, increasing labor costs, rapidly increasing production operating costs or recently trade tensions with the US, along with With the impact of the COVID-19 pandemic, the wave of production shift is accelerating faster and faster.
At the end of 2018 and 2019, Samsung also closed two large phone assembly plants in China, moving to Vietnam, so that half of the leading handsets of this Korean electronics group were assembled. in Bac Ninh and Thai Nguyen.
Leading fashion, apparel and footwear supply chains, such as Nike and Adidas, which recently decided to move their production bases out of China, have also chosen Vietnam as a safe haven.
In addition, many of the world's leading technology giants such as Google, Microsoft, and Intel, have also moved or are in the process of converting parts of their production lines to Vietnam.
Can Vietnam become a "world factory" to replace China?
According to Mr. Aidan Yao and Ms. Shirley Shen, although Vietnam is a popular destination for global supply chain relocation, there is nevertheless the potential for this Southeast Asian country to become "the world's new factory" " or "new global factory" is unlikely.
The research team pointed out: “The size of the economy is an important issue when it comes to forecasting whether Vietnam is able to replace China's position in the global supply chain or not. Compared to the world's second largest economy, Vietnam's economy is actually much smaller - only 1/5 of China's GDP and 1/5 of China's population as well as the total existing productive workforce.
In addition, Vietnam's manufacturing output accounts for only 0.3% of the total global output, while China's accounts for 28%.
Other comparisons, including research and development (R&D) spending, infrastructure construction, rail lines, stock values, and power generation capacity, are all significantly different, creating a gap. large gap in size between Vietnam and its giant neighbour.
Việt Nam được đánh giá là một trong những nền kinh tế tăng trưởng mạnh mẽ, ấn tượng nhất trong số các nền kinh tế mới nổi ở châu Á. Vậy cơ hội nào cho Việt Nam thay thế Trung Quốc để trở thành "công xưởng sản xuất mới toàn cầu"?cafef.vn