Vietnam becoming world production base as firms leave China
10:01 06/10/2014
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Multi-national groups are eyeing Vietnam as the new production base, deciding to relocate their factories to the country where they can outsource products at reasonable prices.

Vietnam becoming world production base as firms leave China

The reports related to Nike's performance show that the sportswear manufacturer has been increasing outsourcing orders in Vietnam.

Last year, 42 percent of Nike's footwear was made in VIetnam, a slight increase of one percent from the year before.

Only 30 percent of Nike's products were made in China last year, compared to 32 percent in 2012.

Yue Yuen, a subsidiary of the Taiwanese PouChen Group specializing in making footwear for Nike, Adidas, Reebok and Puma, has also been scaling down production in China while expanding in Vietnam.

Yue Yuen's total assets in Vietnam increased from $360 million in 2010 to $463 million in 2013, which turned Vietnam into its second biggest production base.

Its total assets in China fell to $1.21 billion in 2013 from $1.27 billion in 2010, according to VnExpress.

The Vietnam Leather and Shoe Association (Vinafaso) has confirmed a growing trend of orders shifting from China and Bangladesh to Vietnam.

Not only are Nike and Adidas in Vietnam, but Lancaster, Sequoia Paris and other high-end brands once in China are shifting towards Vietnam.

“This is not because Chinese enterprises cannot satisfy the orders. This is because the multinational groups have realized that outsourcing in China is no more the optimal solution,” said Phan Thanh Xuan, Lefaso's general secretary.

Production costs in Vietnam are obviously lower than in China. According to Jetro (Japan External Trade Organization), a Vietnamese worker earns $3,000 a year, half of Chinese workers' average income of $7,500.

The Vietnam News Agency has quoted Costa Rican newspapers as reporting that Hanes Brands Inc will close Cartex Manufactura, a branch which has been operating in Costa Rica for the last four decades, to relocate to Vietnam in November.

The US-based garment company now has two factories in Hung Yen and Thua Thien-Hue provinces where it employs over 8,000 workers.

A report from Jetro showed that the percentage of Japanese enterprises in China planning to scale up production in China dropped from 73 percent in 2010 to 57 percent in 2013. Meanwhile, the figure increased from 27 percent to 30 percent in Vietnam.

In November 2013, Fuji Xerox, a Japanese printing machine and photocopier manufacturer, opened its $120 million factory in Hai Phong City in Vietnam.

The largest technology groups of the world such as Intel, Nokia and Samsung have also poured billions of dollars into their production bases in Vietnam, though they also have large-scale factories in China.

In late July, Intel announced a plan to make Haswell chips for desktop computers, stating that the factory in Vietnam would be able to satisfy 80 percent of global demand for the products within six months.

Kim Chi

Source Vietnamnet

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