The Hanoitimes - The question would be how Vietnam can take advantage of this opportunity.
One third of US companies operating in China are considering relocating their production facilities abroad, and Vietnam is one of their top destinations, according to Michael Kelly, chairman of the American Chamber of Commerce (AmCham) Hanoi.
China, however, remains a key player in the global supply chain, but there is a growing trend of companies and suppliers relocating facilities out of China, Kelly said at the Vietnam Business Forum 2018 on December 4.
Overview of the VBF 2018. Source: VGP.
But the question would be how Vietnam can take advantage of this opportunity to maintain high economic growth rate, Kelly added.
Kelly pointed to the fact that Vietnam has been one of the world’s main destinations of FDI, but some National Assembly deputies expressed concern whether the presence of a large number of FDI enterprises would be good for Vietnamese economy.
The FDI sector currently contributes 70% to Vietnam’s export turnover, so the national economy would be dealt with severe impacts if those foreign companies move out of the country.
According to Kelly, the government should secure long term commitments of foreign investors for doing business in Vietnam, which requires the removal of cumbersome administrative procedures and any uncertainties regarding the legal framework and tax policy.
He added that a fair playground would be key to attract more foreign investors while keeping the current ones staying in long-term. However, a frequent modifications of regulations and law, including the tax rate and policies, are major threats to them.
Last month, GoerTek, the Shandong-based manufacturer of Apple’s Airpods, announced it would move production of the wireless headphones to Vietnam. Its chief executive Jiang Bin citing the trade war as a factor behind the decision.
And Warren Buffett’s Brooks Running shoes brand looks set for a similar, permanent move. “We don’t do musical chairs in our supply chain,” CEO Jim Weber told CNBC.
Previously, according to a survey of companies from both US and China, published by the Guangzhou-based American Chamber of Commerce (Amcham) in South China, as a result of the trade conflict, they have been losing market share, especially to companies from Vietnam.