Vietnam was known as an “top student” in epidemic prevention in 2020. After experiencing a major setback in the Delta epidemic in 2021, it seems to have “resurrected” with full strength.
Since the end of last year, Vietnam’s economy has gradually emerged from the haze of the epidemic and begun to recover, with export trade being particularly impressive.
According to the latest data released by the General Administration of Customs of Vietnam, Vietnam’s total import and export volume in March reached a record high of 67.37 billion U.S. dollars, a month-on-month increase of 38.1%; the export volume was 34.71 billion U.S. dollars, a month-on-month increase of 48.2%. Of course, this is influenced by the Vietnamese Spring Festival in February. Looking at the entire first quarter, Vietnam’s total import and export of goods in the first quarter was US$176.35 billion, a year-on-year increase of 14.4%.
In addition, the categories of “Made in Vietnam” are also constantly being upgraded. In the first quarter of this year, Vietnam’s export volume of mobile phones and parts has reached nearly 15 billion US dollars. The rapid growth of Vietnam’s electronic product exports can’t help but cause some anxiety and crisis among people in related domestic industries.
However, Chen Jing, vice president of the Science, Technology and Strategy Society of the University of Science and Technology of China, told China Business News that in terms of electronic products, Vietnam is to a large extent only an assembly base, not a production base. This is reflected in trade data. Although the trade volume is large, the industrial added value is very low, and the main profits are still in the hands of foreign manufacturers.
01There are so many orders that I can’t keep busy.
With the increase in vaccination rates and the normalization of the epidemic, Vietnam’s economy has stabilized and recovered since the fourth quarter of last year. This year, the export industry will continue to be the main engine of Vietnam’s economic growth.
In the electronics industry, in addition to international brands such as Samsung, Intel, and LG that have already established a presence in Vietnam, more and more electronic product manufacturers have established their presence in Vietnam after the epidemic, such as Luxshare Precision, Winston, and Shuo, Goertek, etc. have made Vietnam their production base.
In the first quarter of this year, Vietnam’s exports of mobile phones and parts, electronic products, computers and parts exceeded US$27.3 billion, which was close to the export level in the first half of last year (US$57.54 billion for the whole year).
Andrew Jeffries, chief representative of the Asian Development Bank (ADB) Representative Office in Vietnam, said that amid the epidemic and global geopolitical fluctuations, global investment flows have decreased, but foreign investment funds flowing into Vietnam are likely to Growth against the trend.
According to Vietnamese media reports, in early April, Li Ka-shing’s Cheung Kong Group and Japan’s Orix Group met with Pan Van Mai, the mayor of Ho Chi Minh City, Vietnam, through their local Vietnamese partner Van Seng Huat Group to discuss investment matters in Ho Chi Minh City.
The textile industry, which is also labor-intensive, also performed well. The production and operation activities of Vietnamese garment enterprises have continued to maintain strong growth this year. The chairman of the Vietnam Textile and Apparel Association said that in the first two months of this year, Vietnam exported nearly US$8.2 billion 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 achieve exports of around US$12.7 billion.
The chairman of the Ho Chi Minh City Garment, Textile, Embroidery and Knitting Association said that many textile and clothing companies have received enough orders to produce until the middle of this year or even September. For example, Vietnam’s Chenggong Textile and Garment Company said that orders are sufficient until the end of the third quarter.
Enterprises in Vietnam’s timber industry have also received a large number of orders, and they said they may not be able to complete their orders until the third quarter or even the end of this year. Vietnam is one of the world’s largest exporters of wood products.
Tim Leelahaphan, an economist at Standard Chartered Bank, said that in recent years, many large international technology companies have or plan to transfer production activities to Vietnam to diversify their supply chains. Vietnam continues to become a regional production hub in areas such as electronics, textiles and footwear.
02Why did Shenzhen’s exports slow down in the first quarter?
Wang Zhen, deputy director of the Regional Development Planning Institute of the China (Shenzhen) Comprehensive Development Research Institute, told a reporter from the Interface News Greater Bay Area Channel that Shenzhen’s exports declined in the first quarter of this year, mainly affected by the disruption of the epidemic and shrinking demand.
Wang Zhen analyzed that the rapid spread of the epidemic in Hong Kong in February and the obstruction of Shenzhen-Hong Kong cross-border logistics transportation put Shenzhen’s foreign trade under significant pressure. The import and export trade volume between Shenzhen and Hong Kong accounts for more than 20% of Shenzhen’s foreign trade, and a large number of goods are exported to Hong Kong and then transported to various parts of the world.
In March, affected by the spread of the local epidemic in Shenzhen, the production and operations of foreign trade companies were affected, and the supply chain was blocked, resulting in a significant decline in foreign trade growth.
In the first quarter of 2021, Shenzhen’s import and export trade grew by more than 30%. However, since the beginning of this year, with the high inflationary pressure and declining effective demand of Shenzhen’s major trading partners such as Europe and the United States, coupled with the impact of new uncertainties such as the Russia-Ukraine conflict and the epidemic, “the phased factors that drove the high growth of Shenzhen’s foreign trade this year have obviously faded. This will bring greater pressure to the steady growth of Shenzhen’s foreign trade in the first quarter.”
At present, high-tech products are produced in ShenzhenThe main commodities for trade exports. In 2021, Shenzhen’s exports of mechanical and electrical products reached 1.54 trillion yuan, an increase of 18.8%, accounting for 80.2% of Shenzhen’s total export value during the same period, and the proportion further increased. Among them, exports of computers and other automatic data processing equipment and their parts, mobile phones, audio and video equipment and their parts, household appliances and other consumer electronic and electrical products maintained a growth momentum, totaling 510.49 billion yuan, an increase of 21.9%, driving overall exports by 5.4 percentage points. .
From January to February this year, Shenzhen exported 226.68 billion yuan of mechanical and electrical products, an increase of 2%, accounting for 78.8% of Shenzhen’s total export value during the same period.
The proportion of high-tech exports represented by mechanical and electrical products continues to remain at a high level. On the one hand, it shows that the structure of Shenzhen’s export products is constantly optimizing. On the other hand, it shows that Shenzhen enterprises have certain advantages in international competition.
“Vietnam’s foreign trade is still dominated by processing trade, and its exports are dominated by labor-intensive goods and foreign-invested enterprises, which is similar to the development characteristics of Shenzhen’s foreign trade in the early days.” Wang Zhen said.
Since the reform and opening up, Shenzhen has grown from a “three-in-one-supplement” contract processing to a global manufacturing center, known as the “world’s factory.” At present, the total output value of manufacturing industry still accounts for more than 35% of Shenzhen’s GDP.
In April this year, Shenzhen Mayor Qin Weizhong emphasized in his government work report that Shenzhen should adhere to the manufacturing foundation of the city, enhance the competitiveness of the modern industrial system, and stabilize the fundamentals of the manufacturing industry.
On the premise of stabilizing the fundamentals of the manufacturing industry, Wang Zhen gave three suggestions on how Shenzhen, as my country’s largest foreign trade export city, can further promote the high-quality development of foreign trade:
1. Seize the opportunity, fully seize the opportunity of the RCEP agreement taking effect, make full use of market opening commitments and rules, deeply participate in the reshaping of regional industrial and supply chains, and expand the export of advantageous products and the import of high-quality goods;
2. Tap the potential, accelerate the cultivation of new foreign trade formats and models such as cross-border e-commerce, market procurement trade, and offshore trade, establish and improve institutional mechanisms and policy systems that adapt to the development of new foreign trade formats and models, and fully tap the import and export potential;
3. Improve services, focus on ensuring the stability and smoothness of the foreign trade industrial chain and supply chain, further formulate and introduce more trade liberalization and facilitation measures, and improve international logistics efficiency and cross-border transportation service capabilities.
However, Wang Zhen believes that the trade system arrangements enjoyed by Vietnam as an independent customs territory are different from those of Shenzhen, and there are also large differences in industrial space and population size, making comparisons unsuitable.
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