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Nov 19, 2018 / 13:53

Chinese firms move to Vietnam as US-China trade war drags on

Chinese relocation of the low-value production such as garments would be less beneficial to Vietnam, as the country’s industry still imports lots of materials from China.

As the US-China trade war drags on, a growing number of Chinese firms decided to move their businesses to Vietnam, according to the South China Morning Post.
 
Illustrative photo.
Illustrative photo.
​Last month, GoerTek, the Shandong-based manufacturer of Apple’s Airpods, announced it would move production of the wireless headphones to Vietnam, with 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. 

The view is shared by Bill Stoops, CIO of Dragon Capital, who said that Vietnam could potentially benefit from the escalating China-US trade war even as Washington continues to threaten Beijing with more tariffs.

Under the current circumstance, even China might start to shift a lot more of its production to Vietnam, so long as the move is not "zapped" by the US, Stoops said in an interview with CNBC on August 12.

"This is the sort of trend we could see," Stoops was quoted by CNBC. 

Vietnam is unlikely to be a target in the trade war, despite having a US$40 billion trade surplus with the US, Stoops said. For Washington, it is "all about bashing China" for geostrategic and commercial reasons, he added.

However, economist Pham Chi Lan expressed concern that Chinese relocation of low-value production such as garments would be less beneficial. According to Lan, this industry still imports lots of material from China and as the material supplier, the neighboring country would benefits most when its firms relocate their factories in Vietnam. 

Economist Le Dang Doanh said while workers in the tech and textile sectors could certainly stand to benefit, the influx of Chinese firms could put all of Vietnam at risk if the US decided to impose tariffs on Vietnamese exports suspected of having Chinese origins.

In May, the US slapped steep import duties on steel products from Vietnam that originated in China after finding they evaded US anti-dumping and anti-subsidy orders.

Specifically, US customs authorities will collect anti-dumping duties of 199.76% and countervailing duties of 256.44% on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate, the Commerce Department said in a statement.

Corrosion-resistant steel from Vietnam faces anti-dumping duties of 199.43% and anti-subsidy duties of 39.05%, it said.