Multinationals have begun doing what they have threatened: relocating their factories from China to Vietnam.
GoerTek, which specializes in assembling AirPods for Apple, has sent a notice to all suppliers, asking them to carry materials to its facility in Vietnam. The company wants to use the cheap labor force in Vietnam and avoid risks brought by the US-China trade war.
Two other technology firms, Pegatron and Cheng Uei Precision Industry, are considering possible destinations, including Vietnam.
Sharp Electronics, which has been taken over by Foxconn, has announced a plan to invest $2 billion in Binh Duong province as the first step in its expansion strategy in Southeast Asia.
The US-China trade conflict is bringing great opportunities to Vietnam to turn into the ‘world’s new production base’.
Foreign investors registered at least $35.88 billion in Vietnam in 2017. In the first 10 months of 2018, the figure was $27.9 billion. Vietnam, with its advantages, has become even more attractive in the eyes of foreign investors in the context of the US-China trade war.
Analysts believe that Vietnam is receiving another FDI wave like the one in 2015 with expectations fueled by the CPTPP trade agreement.
However, unlike previously when the investments focused on processing industries, they are now flowing into many fields, including agriculture, manufacturing, services, retail, finance & banking, tourism and high technology.
South Koreans have proven to be the most swift-footed investors. Encouraged by Samsung’s success story, South Koreans have made large investment deals through M&As.
Most recently, SK Group acquired 9.5 percent of Masan Group shares in a deal worth $470 million. Prior to that, CJ Group took over Cau Tre Food and subsidiaries of Gemadept.
In the finance and banking sector, KEB Hana Bank is completing procedures to become the strategic shareholder in BIDV. As BIDV share price is high, analysts believe that the South Korean bank will have to pay no less than $700 million to acquire 15 percent of BIDV shares.
By October 2018, Japan had become the biggest foreign investor in Vietnam with $5.8 billion worth of registered capital. Japanese are pouring money into mega projects, including the $4.2 billion smart city in Hanoi (Sumitomo & BRG Group).
The current investment wave may remind people of 2007 when Vietnam joined WTO.
However, analysts believe that Vietnam, more powerful and experienced than 10 years ago, is now capable of receiving and using foreign capital more effectively.
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