Affected by the deregulation of the epidemic, Southeast Asian countries have seen a recovery in manufacturing, exports, and consumption. Vietnam has become a beneficiary of China’s zero-to-zero policy, with export data reaching new highs, surpassing Shenzhen in March.
Most people reported that the foreign trade manufacturing industry where they work has been cutting orders continuously, many factories have stopped working, and there is no work to do. A large number of manufacturing factories and industrial chains have moved to Southeast Asia. The Gulf of Mexico has also become a beneficiary country, and orders have fully recovered.
Tell a joke:
The entire Vietnam factory tested nucleic acid and found that 80% of employees were positive and 20% were negative. The result is that 80% of those who tested positive continued to work, and the 20% who tested negative stopped working and went home to isolate to avoid infection. If you are not afraid of getting infected, you can come back to work at any time.
Do you think this Vietnamese is wise?
Vietnam’s export data in March surpassed Shenzhen and hit a new high
According to data released by the General Administration of Customs of Vietnam, Vietnam’s total import and export volume in March this year was US$67.37 billion, a month-on-month increase of 38.1%. The export volume was US$34.71 billion, a month-on-month increase of 48.2% and a year-on-year increase of 14.8%.
In March alone, China’s total exports of goods were US$276.08 billion, a year-on-year increase of 14.7%; Vietnam’s exports of goods were US$34.06 billion, an increase of 45.5% (a net increase of US$10.64 billion), already surpassing Shenzhen (Shenzhen’s exports in March were US$24 billion). It is very close to Guangdong province’s export volume of US$57.75 billion.
Vietnam’s replacement for China’s manufacturing industry is mainly the textile industry, agricultural products, etc. Judging from the product production locations of world-renowned apparel companies such as Uniqlo, Nike, and Adidas, most of them have shifted to countries such as Vietnam and Myanmar.
In addition, a large number of electronics and home appliance manufacturing industries have also moved their industrial chains to Vietnam. Compal, Dell, Samsung, LG, etc. have all built factories in Vietnam, and their supply chains have also moved to Vietnam. This has a great impact on China’s Pearl River Delta manufacturing industry. It’s a huge challenge.
It is predicted that if China’s epidemic prevention policy does not adjust, it will only take two years for Vietnam to surpass Guangdong based on its current growth rate.
Affected by the epidemic, the number of canceled orders in China has increased sharply
According to the website of the National Bureau of Statistics, in the first quarter, the national industrial capacity utilization rate was 75.8%, a decrease of 1.4 percentage points from the same period last year; the manufacturing capacity utilization rate was 75.9%, a decrease of 1.7 percentage points.
As industrial and manufacturing capacity utilization rates decline and energy and raw material prices soar, in addition to the “increased outflow” of foreign trade orders in my country, there is also another new pressure that cannot be underestimated – a sharp increase in canceled orders.
Guan Tao, global chief economist of BOC Securities, said that the current economic operation is facing greater uncertainty and challenges. From an external perspective, geopolitical conflicts have intensified and the momentum of global economic recovery has been weakened, which may accelerate the narrowing of my country’s trade surplus.
At the same time, although China’s economy has taken the lead in resuming work and production, our export pricing capabilities are limited. For example, some foreign businessmen are worried that logistics is not guaranteed, so they will place many orders at the same time. Whoever delivers the goods first will pay the balance to whomever, and he will lose the most deposit. But this will create competition among domestic exporters.
The number of ships waiting to unload cargo increased sharply in March
Vietnam’s manufacturing industry has recovered strongly, and orders have been scheduled until the end of the year
Among Southeast Asian countries, Vietnam performs particularly well. The General Administration of Vietnam Customs announced that Vietnam’s total import and export of goods trade in the first quarter reached US$176.35 billion, a year-on-year increase of 14.4% (a net increase of US$22.17 billion). In particular, the export growth rate of agricultural products is quite high, about 18-19%.
The chairman of the Ho Chi Minh City Garment, Textile, Embroidery and Knitting Association said that many textile and garment enterprises have received enough orders to produce until the middle of this year or even September. For example, Thanh Cong Textile and Apparel Investment and Trading Co. has enough orders until the end of the third quarter, and Garment Corporation 10 has orders until the end of June.
Following the positive performance in the last few months of 2021, the production and operation activities of Vietnamese garment enterprises continued to maintain strong growth in the first two months of this year. The chairman of the Vietnam Textile and Apparel Association said that during the two months, Vietnam exported nearly 8.2 billion US dollars worth of textile and apparel products, a year-on-year increase of 59%. In the first quarter of this year, the industry is expected to earn $12.7 billion-12.8 billion in export revenue.
Thanks to the tariff preferences brought by the EU-Vietnam Free Trade Agreement and the UK-Vietnam Free Trade Agreement, Vietnamese textile and apparel companies will increase their efforts to enter the European market this year. However, local textile and apparel companies in Vietnam are also facing high transportation costs, while companies in the south are facing labor shortages.
In addition, due to the rapid resumption of production, many enterprises in Vietnam’s timber industry have received a large number of orders, enough to keep workers busy throughout the third quarter and even into the end of this year.
“Made in Vietnam” seizes the global market
Last year, when Vietnam encountered the Delta coronavirus epidemic, the southern region of Ho Chi Minh City, which was part of the epidemic area, required companies to adopt “factory quarantine” that allowed employees to stay in the factory, and many orders left Vietnam. After the Spring Festival this year, Vietnamese companies began to accelerate the resumption of work and production, and opened entry restrictions in mid-March. Some orders that had previously returned to my country began to flow out to Vietnam, and Vietnam’s position in the global industrial chain was once again strengthened.
The production and operation activities of Vietnamese garment enterprises have continued to maintain strong growth this year. Data shows that textiles and clothing are the products that contributed the most to Vietnam’s export growth in the first quarter of 2022.”The transfer of Samsung Electronics is the biggest driving force, and many companies in its industry chain have followed suit, which is the main reason for the surge in Vietnam’s exports.”
According to statistics from the General Administration of Customs of Vietnam, Vietnam’s exports of mobile phones and spare parts reached US$57.54 billion in 2021, a year-on-year increase of 12.4%, setting a historical record. Among them, Samsung Electronics is the largest contributor. Samsung (Vietnam) contributes about 20% to Vietnam’s GDP.
So, will Vietnam become the next world factory? Fierce competition with China?
China and Vietnam are more complementary in the industrial chain.
Chen Jing, vice president of the Science, Technology and Strategy Society of the University of Science and Technology of China, said that China and Vietnam are not competitive in the industrial chain, but more complementary.
He said that the restructuring of the international industrial chain began to occur more than ten years ago. Due to its low labor costs and relatively “reliable” manufacturing system, Vietnam has taken over the output of some industries, most notably the textile industry and electronic assembly industry.
He said that in the past ten years, Vietnam’s development has not affected China’s employment, and China’s exports and foreign trade have still grown rapidly. On the contrary, the restructuring of the industrial chain has promoted the development of trade relations between China and Vietnam. Vietnam imports large quantities of raw materials or parts from China for assembly and export.
According to China Customs statistics, China-Vietnam bilateral trade volume exceeded US$200 billion for the first time in 2021, reaching US$230.2 billion, a year-on-year increase of 19.7% in US dollars and 12% in RMB. China’s surplus with Vietnam is around US$45 billion. China remains Vietnam’s largest trading partner and second largest export market, and Vietnam also maintains China’s largest trading partner in ASEAN.
Chen Jing said that Vietnam’s foreign trade is still in the assembly and export mode, with very low added value. The value is still in the hands of foreign manufacturers. Local companies are weak and it remains to be seen whether they can upgrade in the future. He pointed out that industrial upgrading requires long-term planning and is not as simple as a matter of course.
The “spillover” of China’s supply chain
Shi Zhan, director of the World Politics Research Center at the China Foreign Affairs University, pointed out in his 2020 book “Spillover” that the so-called “transfer” of manufacturing to Vietnam is actually a “spillover” from China’s supply chain. In the foreseeable future, this The facts will not materially change.
“Research in Vietnam and the Pearl River Delta tells us that what is moving from China to Vietnam is not the entire industry in certain industries, but certain specific links in the production process of the industry, mainly due to low supply chain demand, Links with a high proportion of labor costs are usually the final assembly link. Other links are difficult to transfer and remain in China’s supply chain network,” Shi Zhan wrote in the book.
A factory owner who has been engaged in processing and manufacturing in the Pearl River Delta for more than 30 years said: “In the past few years, some factories were transferred to Vietnam, but some of them were transferred back later because the supply chain in the Pearl River Delta is mature. complete.”
Vietnam’s advantages and disadvantages are obvious. With a population of nearly 100 million, there is a large supply of young labor force. Moreover, they also belong to the Confucian cultural circle, can endure hardships and stand hard work, and are willing to work overtime to support their families. However, the overall education level of Vietnam’s labor force is not comparable to that of China, and the economic support provided by scientific research institutions is far less than that of China. This means that it will take time for Vietnam’s industrial chain to move up the middle and upper reaches.
</p
