With the advent of the era of economic globalization, trade exchanges between various countries have become more frequent. In order to expand their own country’s business and pursue maximization of profits, factories in some countries have opened to other countries. The purpose of setting up factories overseas is for two reasons. One is to enter foreign markets, and the other is to reduce production costs for enterprises. As we all know, labor costs in manufacturing are the main expenditure, so when some countries build factories overseas, they usually choose countries with low labor costs.
In the past, China has become a favorite of foreign companies. First, it has a large population and a large consumer market. Second, China has low labor costs. , so foreign companies have come to China to invest and build factories, which has also made products made in China famous around the world. As China’s economy continues to grow, people’s income levels are also increasing. At the same time, labor costs are also rising. At this time, factories are beginning to withdraw from China and choose to invest in Southeast Asia where labor costs are lower. To build factories, the country of Vietnam became their destination. After a Harvard professor predicted that Vietnam would replace China and become the “world’s factory,” talk of Vietnam catching up with China has been spreading.
Although Vietnam’s economy has benefited from global economic and trade in recent years, with the decline in the consumption power of many European and American countries, the decline in Western markets has Economic uncertainty has intensified and Vietnam’s economy is facing increasing risks, which means that Vietnam’s “World Factory” plan to vigorously develop manufacturing may come to nothing.
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Take textile manufacturing as an example. The two important markets for Vietnamese textiles are the United States and the European Union. However, new developments However, since March, partners in these markets have announced a suspension of goods receipts. Correspondingly, nearly two-thirds of Vietnam’s textile and clothing market has shrunk, and Vietnam’s manufacturing revenue has also been greatly reduced. Data show that in 2019, Vietnam’s textile exports to the United States reached nearly 15 billion US dollars, accounting for approximately 45% of Vietnam’s total clothing and textile export turnover. Analysts believe that once U.S. customers suspend or reduce imports of Vietnamese currency for a long time, the losses made in Vietnam will be obvious.
Judging from the recent fragile economic data performance of the United States, the chance of importing large quantities of Vietnamese goods will also be further reduced. Data shows that since the epidemic hit the United States, the cumulative number of unemployed people in the United States has reached 36.5 million. On any night in the United States, a total of 652,930 people are homeless. An economics professor at Columbia University predicts that by the end of 2020, the number of homeless people in the United States will increase. The population could grow by up to 45%. These phenomena all mean that the consumption power of the U.S. consumer market will be significantly weakened, and its demand for textiles produced by Vietnamese companies will also continue to decrease.
It is not difficult to understand that in this globalized industrial chain, the low-end manufacturing industry represented by Vietnam’s textile industry has been severely impacted. Recently, this field in Vietnam has The main reason why the number of unemployed people is increasing. Since March this year, clothing and related products made in Vietnam shipped from Vietnam to many places in Europe and the United States have been intercepted by many customers in the United States and Europe.
Analyses believe that for Vietnam’s manufacturing industry, which is trying to rise, this is equivalent to being strangled in the cradle before success.
Not only that, Vietnam is far from China in terms of external transportation capabilities. Take Shanghai as an example. Shanghai is the busiest container port in the world and can handle 40 million containers per year, while Ho Chi Minh City, Vietnam’s largest port, can only handle 6.15 million containers. At the same time, energy issues, including electricity used to increase productivity, are still not widely available in Vietnam.
The once booming Vietnamese economy may be becoming a victim. If Vietnam does not catch up with the Industry 4.0 train, the real gap between Vietnam and other countries will become wider and wider. At this time, Vietnam’s manufacturing, which is still at the low-end and even the OEM stage, seems to have fallen into a development bottleneck. This is very similar to India, which has also been vigorously developing its manufacturing industry in recent years and trying to become the world’s factory. At present, the Make in India plan may have failed in advance.
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In the past few years, China has been transferring production capacity to Vietnam.
In 2010, Vietnam replaced China as the largest production base for Nike shoes, ending China’s ten-year run as the number one producer of Nike shoes.
In 2019, Samsung closed its last mobile phone factory in China and moved to Vietnam for production. Samsung Vietnam can generate more than US$60 billion in exports a year, accounting for a quarter of Vietnam’s total exports.
Currently, 1 in every 10 smartphones in the world is produced in Vietnam. Vietnam is the world’s third largest textile exporter, after China and India.
Some people worryIf this continues, more and more companies will “disappear” in China, and Vietnam will rise to become the next world factory.
In my opinion, there is really no need to make a fuss. Currently, the fourth industry is emerging around the world. In addition to Vietnam, late-developing countries such as India, Thailand, and Malaysia are also developing labor-intensive industries through cheap labor.
For China, sticking to low-end industries is a very disadvantageous thing.
For the same job, if it is 10 yuan per hour in other countries, workers in the same industry in China have no reason to ask for 50 yuan in wages. If they want to compete with their products, the vast number of workers engaged in low-end manufacturing in China are facing downward pressure on wages.
Not only is it difficult to increase remuneration, income may also underperform economic growth for a long time to come. This has a considerable impact on cultivating China’s domestic demand market.
Moreover, Vietnam simply does not have the ability to hollow out China’s manufacturing industry.
I take the textile industry as an example. This is one of Vietnam’s most important pillar industries, with 1.7 million employees, accounting for a quarter of manufacturing workers.
The textile industry can be said to be the lifeline of Vietnam, but Vietnam is highly dependent on imported textile raw materials and cannot be self-sufficient at all. 55%-60% of raw and auxiliary materials are supplied by China.
When the COVID-19 epidemic broke out in China a while ago, the 10th textile factory in Vietnam, which is a supplier to the American fashion brand GAP, almost failed because half of its raw materials could not be imported from China. Came to a standstill.
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From the moment Vietnam was born, it was destined not to be like China has industrial clusters with deep division of labor.
This is also one of the reasons why Vietnam has been engaged in the automobile industry for so long, but its progress is still slow.
As early as 1991, Vietnam approved the establishment of two joint venture automobile assembly plants, MEKONG and VMC, which kicked off its entry into the automobile manufacturing industry.
Nearly 30 years have passed, and Vietnam’s auto parts production is mainly limited to mirrors, seat cushions, battery wires, etc., with an independent rate of only 10%. The speed of this ant cannot be compared to that of Mexico, let alone China.
Automobile manufacturing is an industry among industries, involving machinery, materials, chemicals, automation, electronics and many other categories. It comprehensively tests a country’s comprehensive industrial strength.
The lack of a complete supporting industry chain means that in the future, Vietnam’s entire industrial system must be laid out with China as the center and become the world’s processing plant instead of the world’s factory.
When you cut into the heart of Vietnam’s industrial system, you will find that imported components account for about 70% to 80% of the total finished value of plastic products produced in Vietnam, and about electronic products. 77%, drugs about 80% to 90%.
Vietnam, which seems to be getting stronger day by day, will still be an economy working for China, Japan, South Korea and other countries in the near future, handing over the bulk of profits to upstream and downstream and foreign investment. By.
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In the context of the current Sino-US trade friction , it is indeed possible that more and more Chinese companies will move their factories to Vietnam in the future and use the principle of origin to circumvent US trade barriers.
However, we don’t have to worry too much about technology spillover.
Industrial transfer does not necessarily bring technology transfer. All joint ventures have very strict technical restrictions, let alone wholly-owned companies. Technology spillover is much more difficult than we think.
Think about it, China has spent more than 30 years trying to develop the automobile industry by exchanging market technology for technology. Has it ever produced a powerful independent brand in the end?
No. China’s FAW, SAIC, Dongfeng and other subsidiaries only received production drawings weighing a few tons. We can copy the gourd and learn from it. What we have is a kind of manufacturing ability, but we basically cannot learn the design ability.
China can’t do it, and Vietnam is also very difficult.
The rise of great powers in the last round relied on steam engines, internal combustion engines, and electric motors. Several industrial revolutions gave birth to different industrial powers. Today’s science and technology are becoming more and more complex, making it increasingly difficult to absorb and digest.
Once a country fails to keep up with the times, it is easy for it to suffer from intergenerational industrial lock-in, and it will always be left further and further behind by developed countries. Therefore, class solidification is also likely to occur in international society.
In my opinion, Vietnam’s only chance to turn around is through industrialization.
It is impossible for it to overtake others by developing financial, cultural and other tertiary industries like Hong Kong and Japan, because this is a longer road and the only way out that can be seen. We can only work honestly in industry.
As long as Vietnam is locked on the track of industrial nation-building, China can move the assembly process that has no comparative advantage to Vietnam, making it a “province” of China’s economy. .
What China needs to do now is to deploy Vietnam with a strategic vision, occupy a position with more say before Japanese, European and American capital, and achieve mutual benefit and win-win with Vietnam.
Vietnam wants to achieve industrialization and urbanization, while China wants to make room for mid-to-high-end industries, realize transformation and upgrading, and follow the path that Japan and South Korea took.
Currently, Vietnam’s GDP is US$255 billion, which is weaker than Guangxi and higher than Shanxi. Within mainland China, it probably ranks around 20th.
What will Vietnam look like twenty years from now?
What will Vietnam look like twenty years from now? </p
