Vietnam evokes a sense of China's past, approximately two decades ago, and this shared experience seems to be fostering closer bonds among neighbours.
Finding Mao Gao in Vietnam:
In the heart of Bac Ninh, a city resembling a factory town, I came across Mao Gao. Unlike the hurried crowds, Mao was casually enjoying a Vietnamese coffee and a ciggie. His relaxed demeanor stood in stark contrast to the anxious investors fretting over the US-China trade war.
You see, Mao was focused on Vietnam, ignoring the chaos brewing between the two economic superpowers. His investments weren't aimed at the US market but rather at his motherland and Vietnam. Mao's sentiments echoed a popular belief among investors: Vietnam shares striking similarities with China two decades ago.
Just like China back then, Vietnam is an emerging low-wage manufacturing hub. It grapples with petty corruption, challenges for foreigners without local connections, and the need to develop more factory-friendly infrastructure. However, Vietnam is not simply a carbon copy of China's past. It offers a blend of modern advantages that set it apart.
Dan Martin, an international business adviser with Dezan Shira & Associates in Hanoi, puts it perfectly, "Vietnam shares some of the same fundamentals that powered China's rise as a manufacturing powerhouse 20 years ago."
In the early 2000s, China attracted foreign investments by offering cheap labor and low-cost production. Today, Vietnam is attracting high-tech manufacturing Foreign Direct Investment (FDI), even securing $25 billion in 2024 alone. Companies like Samsung and Lego are setting up shop, focusing on higher value-added sectors like semiconductors and electronics, contrasting China's early focus on labor-intensive industries. Export growth in Vietnam today is fueled by free trade agreements, while China's surge was driven by World Trade Organization (WTO) accession in 2001.
Vietnam is also investing heavily in multi-decade infrastructure expansion, targeting logistics, transportation, and energy. This mirrors China's early 2000s infrastructure push but incorporates modern priorities like renewable energy integration and smart city development.
Vietnam's middle class is projected to reach 46% of the population by 2030. This growth, along with rapid digital adoption and a thriving startup ecosystem, sets Vietnam apart from China's demographic shift in the 2000s. While China commercialized tech at a slower pace, Vietnam's consumer base is evolving in the digital age.
Vietnam offers a strategic alternative for US companies looking to diversify their supply chain away from China. It's also benefiting from updated land auction laws and FDI incentives aimed at avoiding China's early bureaucratic pitfalls. Unlike China, which focused on heavy industry, Vietnam prioritizes green tech and innovation.
So, while Vietnam may appear to be China 20 years ago, it boasts modern advantages, from trade policy agility to a tech-driven consumer market. Investors can delve into a $1.1 trillion economy-in-the-making, all while navigating evolving US-Vietnam trade dynamics.
- Mao Gao, seemingly unfazed by the US-China trade war, is instead focusing his business investments on his motherland, Vietnam.
- Though Vietnam shares some similarities with China two decades ago, such as low labor costs and challenges for foreigners, it offers a unique blend of modern advantages.
- Dan Martin, an international business adviser, suggests that Vietnam shares the same fundamental characteristics that powered China's rise in manufacturing.
- Vietnam is attracting foreign investments, particularly high-tech manufacturing Foreign Direct Investment (FDI), with Samsung and Lego setting up shop in the country.
- Unlike China's early focus on labor-intensive industries, Vietnam's focus is on higher value-added sectors like semiconductors and electronics.
- Vietnam's export growth is fueled by free trade agreements, contrasting China's surge, which was driven by World Trade Organization (WTO) accession in 2001.
- Vietnam's middle class is projected to reach 46% of the population by 2030, while rapid digital adoption and a thriving startup ecosystem set it apart from China's demographic shift in the 2000s.
- For US companies seeking to diversify their supply chain away from China, Vietnam offers a strategic alternative, benefiting from updated land auction laws and FDI incentives aimed at avoiding bureaucratic pitfalls.
