Vietnam needs to boost reform to reduce reliance on China

vietnam-Garment-Textile

Despite the limited short term impact of growing tensions with China, Vietnam should accelerate economic reform to improve its competitiveness and reduce its dependence on its northern neighbor, according to the Hong Kong and Shanghai Banking Corporation Limited (HSBC).

Tourist arrivals from China will likely slow in June, and normalize in July, HSBC said in a report issued last week on Vietnam’s macroeconomic situation.
Year-to-date, total tourist arrivals to Vietnam grew 26.1 percent.
Regarding FDI, worries remain over whether new investment will continue to flow in.
HSBC said that while Vietnam’s FDI stock remains large (compared to its GDP) the percentage of foreign investment as a share of total investment is about 20 percent–most of which belongs to Japanese, Korean, American and Taiwanese investors.

While registered FDI from China into Vietnam has risen in recent years, its total stock is small and Vietnam’s dependence on China is primarily a supply chain issue.

Core investors in Vietnam will stay put, HSBC predicted.

Few countries advance economically on foreign investment alone and domestic investment will have to become more efficient.

There are some signs that the Vietnamese government is making efforts to curb inefficient public investment and plans to begin focusing on economically vibrant areas of the country , HSBC said

Vietnam’s exports to China made up 11 percent of its total exports in 2012. Raw commodities such as rubber, crude, coal and fruit remain key export items. While an important export partner, Vietnam’s trade relationship with China is stronger on the import side, as much of Vietnam’s raw industrial materials come from China.

This is due to the fact that Vietnam primarily relies on cheap labor and fertile land to compete on the international market.

As a result, HSBC urged Vietnamese manufacturers to invest in localized inputs as well as improve their supply chain management to lessen dependence on China in order to meet the “yarn forward” tariff exemptions offered by the Trans-Pacific Partnership Agreement (TPP).

Specifically, the domestic garment and textile industry aims to reach a localization rate of 60 percent  by 2015.

Vietnam’s exports to China in 2013 topped $10 billion, while imports from the country reached some $30 billion, according to the Ministry of Industry and Trade.

 

 

 

 

 

 

Source : Thanh Nien News | June 10, 2014

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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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