Many people are noticing the growing number of products such as shoes and clothing that bear the tag “Made in Vietnam”. But what many may not know, is that Vietnam is quickly becoming an electronics components and finished goods powerhouse in world trade.
There are several factors as to why Vietnam is benefiting tremendously in these groundbreaking opportunities. The first step traces to 1994 when the United States lifted its trade embargo. Then in 2019, Vietnam ranked as the fourth largest exporter of electrical goods and components to the U.S. With exports doubling over the last four years and now exceeding $19 billion, surpassing Taiwan, Japan, and Korea (based on goods exported under chapter 85 of the Harmonized Tariff Schedule). (S.S.)
The US-China trade fighting has also benefitted Vietnam greatly. According to the Asia Development Bank (ADB), the riff between the U.S. and China has caused a redirection in trade, as U.S. imports from the PRC fell by 12% in the first six months of 2019 while U.S. imports from Vietnam increased by 33%, with electronics and machinery accounting for the bulk of this jump. Vietnam’s global electronics industry now accounts for about 40% of its exports, and the country seems to be just getting started. (S.S.)
For companies investing in Vietnam, the firm with the most impact has been Samsung. Starting in 2008 in Bac Ninh in the north. Beginning with a $670 million investment in a mobile phone plant, Samsung a decade later reached a nationwide investment of $17.3 billion. Around the same time, Intel opened its $1 billion semiconductor assembly and testing facility in Ho Chi Minh City, putting Vietnam firmly on the global technology map. More investors, like LG, Panasonic and Foxconn soon followed. (S.S.)
This has all resulted in Vietnam’s main combined export commodities being mobile phones, TVs, and cameras (41 percent), electrical apparatuses (18.2 percent), and electronic integrated circuits and micro assemblies (11.9 percent). (T.N.)
The Vietnam government recently signed onto the Regional Comprehensive Economic Partnership trade agreement, which will help in lowering tariffs, boosting Vietnam’s economy and its appeal to foreign investment.
Furthermore, in June 2019, Vietnam and the European Union also signed a Free Trade Agreement, which over time, will reduce most tariffs and regulatory barriers, and therefore, should generate new opportunities for both sides to do business.
The whole world has felt the drag of the coronavirus pandemic; however Vietnam has responded with a policy intended to protect future business and growth. Vietnam was successful in containing the outbreak through aggressive quarantine and contact tracing measures, and as a result its economy has the brightest outlook in the region. The ADB forecasts the country will be one of the fastest-growing economies in SEA in 2021, with GDP estimated at 6.8%. (S.S.)
This successful response, together with its ideal location, lower wage rates and new foreign trade agreements, will boost the Vietnamese economy ever further along with shifting supply chains. Vietnam is poised to be the best destination country for electronics manufacturing and supply to the world.
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