Trade war pushing companies from China to Vietnam, but experts warn they may have missed the boat

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Trade war pushing companies from China to Vietnam, but experts warn they may have missed the boat.

When Ernie Koh first opened a production plant in Vietnam in 1993 to manufacture furniture, the Southeast Asian nation was not on the radar of many manufacturers, but a quarter of a century on, and companies are moving there in their droves.

“Everywhere, there are buildings going up. The roads are more crowded, the traffic jams are getting worse,” Koh said. “There has been a big difference in port congestion in the last two years. Nowadays, we have to book space on a ship two weeks in advance. We did not have to do this before.” “The Vietnamese workers were really not trained up to the level that the Chinese are, and that starts with the construction of your factory, or the road to get there. China has got so good at infrastructure, some people just take it for granted that everywhere there's these eight lane roads with high-speed rail and everything. But in Vietnam, they're just starting to build all that stuff.

“The land price back then was around US$60 per square metre . Those companies decided not to relocate to Vietnam because they thought the trade war risk had eased. They must be regretting their decision now because the land price has drastically gone up to over US$100 this year. Previously, it only went up by US$5 to US$10 per square metre each year.”

It means that companies that have already set up in Vietnam have already picked up the skilled staff, with high turnover rates and poaching of talent a cause of anxiety for many in the country, limiting the possibility that Vietnam can be “the new China”, or even “the new Guangdong”.

 

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