Jul 09, 2019 / 17:16
Production shift from China boosts industrial park leasing in north Vietnam
Manufacturing shift from China will continue for the time being regardless of the situation concerning the trade war, given China’s current low fertility rate, higher labor costs and overly concentrated risks of production.


According to VDSC, Kinh Bac City Development (KBC) and Viglacera have been the top two beneficiaries from such trend.
During the January – June period, KBC leased around 60 hectares, up 15% year-on-year, while Viglacera is on track to lease 105 hectares, up 362%. Notable investment was 15 hectares leased by Foxconn in KBC’s Quang Chau Industrial Park. The tech corporation also plans to set up another factory in an area of 10 ha in Viglacera’s Dong Mai Industrial Park in Quang Ninh province.
Most new comers are tech firms, confirming the ongoing manufacturing shift that lift up rental demand, especially in the north, stated VDSC.
VDSC’s calculation showed there is an 11% increase in rental price in industrial zones owned by KBC and Viglacera.
For KBC, most of its zones are located in more favorable locations, thus having a relatively higher rental price at US$78 per square meter on average at end-2018. Meanwhile, Quang Chau experienced the most significant surge in rental rate by 16%.
Viglacera, on the other hand, has seen the increase in leasing in more remote zones, such as Phu Ha, Tien Hai and Dong Van IV, given their previous lower base price levels, ranging from US$40 - 60 per square meter. This suggests rental demand is growing in far-off regions with adequate infrastructure and workforce.
VDSC expected KBC and Viglacera to continue experiencing favorable leases given immediate supply remained for the second half of 2019.
Nevertheless, supplies in prime locations in the South, including Ho Chi Minh City, Binh Duong and Long An, temporarily dried out due to standstill in procedure or compensation issues, stated VDSC.
VDSC forecast as trade tension will go on for a while; or even in case any reconciliation is achieved, manufacturing shift will still keep on, given China’s current low fertility rate (1.62 versus ASEAN’s average of 2.17), higher labor costs (1.61x of ASEAN’s average) and overly concentrated risks of production.
Additionally, most enterprises that plan to move out of China have been keeping low profile amid the tension due to issues related to layoffs, compensation for workers, the relationship with suppliers or even the stock price. Recent reports said that Apple has been encouraging its major suppliers, including Foxconn, Pegatron, Wistron, to look for other options.
Uncertainties of Trump’s action are expected hasten the exodus. Firms see the move as a must regardless of whatever tariffs imposed. The relocation however takes time, of at least 18 months for such some huge enterprises.
Other News
- Vietnam attracts South Korean tech investment at SEMICON Korea 2025
- Swedish group plans US$1 billion investment in Binh Dinh recycling plant
- Samsung plans to invest in AI, semiconductors in Vietnam
- Vietnam's data center construction costs among the lowest in Asia Pacific
- Bright prospects for FDI inflows into Vietnam in 2025
- Foreign companies confirm investment expansion in Vietnam in 2025
- PM invites Skoda to manufacture electric vehicles in Vietnam
- US Berggruen Holdings to help Vietnam set up investment funds
- Vietnam releases Esports White Book 2022-2023
- Aircraft manufacturer Embraer seeks comprehensive aviation partnership with Vietnam
Trending
-
Changes in Vietnam’s government apparatus seen through legislative efforts
-
Vietam news in brief - February 22
-
AI in education: teachers must be key
-
Vietnam heritage painting contest launched
-
Vietnam scales back plan to boost offshore wind
-
Indochina fine arts heritage in the heart of Hanoi
-
Keeping the spirit of Vietnamese folk paintings alive
-
Hanoi's traditional craft villages join the world stage
-
Hanoi tackles traffic violations with 600 cameras