Are Hong Kong businesses leaving Vietnam to avoid US-China trade war?

  • by VNBUSINESS
  • September 25, 2018

Many Hong Kong businesses want to relocate their production bases to other countries, especially Southeast Asia, in the context of the US-China trade war.

Jonathan K.S. Choi, chair of Sunwah Group and VinaCapital Vietnam said at In Style Hong Kong – 2018 organized by the Hong Kong Trade Development Council several days ago that Vietnam is a large market where Hong Kong businesses can invest and sell products.

He said Vietnam has great advantages in farm produce, which China now buys in great quantities. Sunwah in Vietnam has been exporting Vietnam’s seafood and coffee.

Foreign enterprises in China are now looking for places to set up their new factories. Political certainty is one of the most important factor for investors, but they don’t care about the political regime.

Vietnam, with its political certainties, is believed to enjoy benefits from the US-China trade war thanks to the young population and low-cost labor force. Regarding knowledge about IT, Vietnam ranks second in the region, just after Singapore. 

Vietnam, with its political certainties, is believed to enjoy benefits from the US-China trade war thanks to the young population and low-cost labor force. Regarding knowledge about IT, Vietnam ranks second in the region, just after Singapore. 

John Cheh, vice president of Esquel Group, a big garment producer which has been present in Vietnam since 2001, said that Vietnam is a market with full potential.

Vietnam’s garment market share in the US has increased from 4 percent in 2003 to 14 percent in 2018, ranking second just to China. 

HSBC Hong Kong’s CEO Wallace Lam said by 2017, Hong Kong’s FDI to Vietnam had reached $18 billion, with over 1,000 projects registered. It is now among the top 10 biggest foreign direct investors in Vietnam.

HSBC, which surveyed some businesses, has found that businesses do not intend to leave China, but will diversify their investments, considering pouring money into ASEAN countries, including Thailand, Malaysia and Vietnam.

Deputy Minister of Foreign Affairs Le Hoai Trung said some days ago, a workshop was held in Nanjing, China, where businesses discussed how to invest in Vietnam instead of concentrating on the US and Europe. 

South Korean and Japanese businesses are also heading for Vietnam which can be used as a portal through which they can reach other markets. 

Vietnam’s Mekong Delta is expected to be a new destination with very high growth thanks to trade liberalization. 

Vietnam promises great opportunities for investors to start and scale up their business, though there are disadvantages which investors need to be patient about.

Samsung from South Korea, for example, has invested $5-6 billion in Vietnam. To settle the problems in the labor force, the group cooperated with universities and colleges in Vietnam to train skillful technical workers who can satisfy Samsung’s requirements.

Source: Vietnamnet

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