As we all know, China has always been known as the “world’s factory”. Due to its huge population and outstanding manufacturing industry, it has attracted a lot of foreign investment to build projects. factory. However, this situation has changed in the past two years. As labor costs in China have risen, some foreign-funded enterprises have begun to look for markets with cheaper labor. At this time, Southeast Asian countries such as Vietnam and India have naturally become the first choice.
It is precisely because of this that the market has heard that Vietnam will replace China and become the “world’s factory”. Because Vietnam’s economic growth has been very rapid in recent years, Vietnam’s “ambition” has been fully demonstrated, and it seems to have the intention of becoming the next “world factory”. Many people are curious, is it really possible for Vietnam to “replace” China’s position?
According to Vietnam’s land area, it reaches 330,000 square kilometers. In fact, this area is not small when looking at the world, but compared with China, the gap is still obvious. In addition to the land area, let’s look at Vietnam’s population. After all, if you want to become a big country, a huge population is essential. Vietnam does have certain advantages in this regard. As early as 2016, Vietnam’s population reached 92.7 million, and it is still no problem to reach hundreds of millions of people.
Coupled with Vietnam’s large young population, the young labor force naturally brings favorable conditions to Vietnam’s economy . On February 12 this year, the European Conference voted to formally adopt the free trade agreement reached by the two parties in 2019. In other words, Vietnam has become the second country to reach a free trade agreement with the EU. According to regulations, Vietnam and the EU will eliminate 99% of tariffs within ten years. This is naturally great news for Vietnam.
But can these favorable conditions really help Vietnam become the next “world factory”? The answer is obviously no, because Vietnam cannot catch up with China on these three points.
Vietnam is mainly OEM
In fact, compared with the Chinese labor force, the technical level of Vietnamese workers still needs to be improved. For the same pair of shoes, there are obvious differences between those made in China and those made in Vietnam, such as glue spillage and scratches on the shoes. In other words, the quality of products produced in Vietnam is not as good as that of China.
Weak manufacturing foundation
Vietnam lacks the supply of many raw materials in terms of manufacturing, and many materials even rely on imports from China. For enterprises, this is equivalent to an invisible increase in costs. China’s infrastructure, including raw materials, is very complete. Its manufacturing industry is well-developed and recognized around the world. Products made in China can also be seen around the world.
Unable to build a complete industrial chain
At present, The industries that Vietnam undertakes are basically downstream industries, which is what we mentioned above, mainly OEM. Even if it is OEM, there is still a lot of room for improvement in quality. Judging from Vietnam’s strength, it is impossible to build a complete industrial chain.
In addition, infrastructure and other aspects are relatively backward. How to build a more powerful infrastructure system is the next “big deal” for Vietnam. In addition to the above three points of “backwardness”, Vietnamese workers are also a big problem. Although it has always been said that the labor force in Southeast Asia is cheap, in fact, the wages of Vietnamese workers have risen very rapidly in recent years. The labor costs of factories are constantly increasing, and Vietnamese workers do not like to work overtime, which is also worrying in terms of production efficiency.
Chinese workers are famous for being able to endure hardship, and it is common for them to work overtime in factories. If a series of costs are calculated together, the costs in Vietnam are not necessarily lower than in China. Therefore, some companies began to “regret” after relocating their production lines to Vietnam. Looking at it this way, whether Vietnam can replace China’s status as the “world’s factory”, the answer is very obvious. Vietnam has just followed the path that China was taking ten years ago. If it wants to replace or even surpass China, there is still a lot that needs to be improved.
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