September 10, 2020

EuroCham Webinar Manufacturing shift from China: Will Vietnam be the best destination?

On September 09, EuroCham hosted a special webinar on “Manufacturing shift from China – Will Vietnam be the best destination?” with our guest speaker Mr. Bruno Jaspaert – General Director, DEEP C Industrial Zones and Mr. Trent Davies, Manager, International Business Advisory, Dezan Shira & Associates.
 
The webinar was also supported by NS Bluescope Vietnam with a Colorbond steel brand.
  
Since 2018, a number of multinationals have already taken steps to expand supply chains in other countries in order to avoid new tariffs on goods exported from China to the United States (US). And this year, more are set to follow suit in the hunt for alternative markets for production due to the serious impacts of the COVID-19 pandemic.
 
Among many Southeast Asian Countries, Vietnam has attracted the majority of those who wanted to diversify their manufacturing portfolio outside China, thanks to its relatively developed infrastructure and proximity to China.
 
Understanding the importance of the topic towards EuroCham members, EuroCham decided to organize a webinar on this topic. The webinar was moderated by Mr. Ywert Visser – Vice Chairman of EuroCham, and was attended by more than 100 members from businesses, NGOs, and representatives of Business Associations.
   
       
Mr. Trent Davies, Manager, International Business Advisory, Dezan Shira & Associates opened the session with a discussion about the overview of the key drivers for the manufacturing shift. According to Mr. Trent Davies, companies moving out of China is nothing new. It has been taking place for some time, but it has accelerated rapidly in recent years due to the increasing costs, political drivers, and the supply chain disruptions due to COVID-19. 
  
    
Mr. Davies also gave an overview of the electronic industry with details about supply chain shift beyond China and move towards India and ASEAN. In his opinion, Vietnam is the biggest beneficiary for now with its increasing GDP growth, political stability, and good legal environment.
For Vietnam, there are two key areas for improvement: infrastructure and labour. Vietnam’s role in the global electronics value chain is currently limited to be an integrator of components. Especially, to remain an attractive manufacturing destination in the medium-term, Vietnam needs to continue to build capacity.
  
  
Mr. Bruno Jaspaert – General Director of DEEP C Industrial Zone – continued the presentation by giving an introduction of DEEP C Industrial Zones and driving northern Vietnam’s economic growth. During the presentation, he also stressed the economic powerhouses of the North with the economic growth analysis of Hai Phong and Quang Ninh compared to the national average.
Another factor that Mr. Bruno Jaspaert mentioned was the power supply in Vietnam. Vietnam will face severe power shortages from 2021 according to the Ministry of Industry and Trade. Vietnam’s demand for electricity will exceed its supply by 6.6 billion kWh in 2021, increasing to 15 billion kWh by 2023. Therefore, it is now time for Vietnam to carefully think of renewable energy and grid supply.
    
   
Later, in the Q&A session, participants discussed issues including which production sectors will move to Vietnam most, technical barriers for foreign technology, the view of Quang Ninh compared to Bac Ninh in the field of development, and by how much might apparel exports might decline in quarters 3-4.
In the end of the webinar, EuroCham Vice-Chair Ywert Visser thanked our speakers and all participants for joining the webinar today.

He also thanked NS Bluescope Vietnam for supporting EuroCham in organizing the webinar.  

EuroCham will continue to keep our members updated on new developments in the business environment of Vietnam, so remember to follow us on social media and sign-up for our newsletter.

 

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