Japanese trading group Sumitomo will spend over $177 million to expand its two industrial parks in Hanoi, Vietnam, looking to serve businesses shifting production away from China to avoid the trade war, Nikkei Asian Review reported.
Illustrative photo.
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The tit-for-tat tariffs imposed by the U.S. and China have forced companies to revise production strategies to avoid the duties. Many Japanese companies interested in moving into Sumitomo's industrial parks are seeking to diversify manufacturing risks.
Sumitomo will spend over US$130 million adding about 181 hectares to the southeast portion of Thang Long Industrial Park II. The site already spans 346 hectares. Groundbreaking is scheduled for 2021, with lots going on sale in 2022. The expanded location will be one of the biggest Japanese industrial parks in Vietnam.
A 109-hectare expansion at Thang Long Industrial Park III will cost about US$46.42 million. Though the work was already planned, it has been accelerated by a year to the first half of 2020 at the earliest.
Sumitomo originally planned to sell out Thang Long III's first phase lots by 2022. But due to the unanticipated demand, the lots covering the initial 104 hectares -- completed just last November -- likely will be sold out by 2021.
Investments by Japanese companies in Vietnam rose 7% last year to 643 targets, according to the Japan External Trade Organization, or JETRO. Spending has increased for three consecutive years to a new record. Vietnam's proximity to China and its cheap labor costs have made it a draw for relocating production capacity.
