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Made in Vietnam, Is China's pain, Vietnam's gain? Many international companies, i.e. Nike, Adidas, Air Jordan, ... are starting to shift production out of China due to the ongoing trade war between USA and China. Vietnam is the one of major beneficiaries of tensions between the world's two largest economics. President Trump is set to meet with Chinese chairman, Xi Jin-ping at the G-20 summit in Japan on Friday, June 28, 2019, where the two leaders are expected to restart stalled trade talks. However, if talks were to prove unsuccessful the White House has threatened to place 25% tariffs on an additional $300 billion worth of Chinese goods, essentially all remaining imports into the U.S. from China. Some companies, such as Brooks Running — which is part of Warren Buffett’s Berkshire Hathaway — are not waiting to see if the additional China tariffs will go into effect. CEO Jim Weber said back in May that Brooks would be “predominantly in Vietnam by the end of the year.” He also said about 8,000 jobs will move there from China. Such relocation plans raise the question of whether Vietnam can become the new China. Vietnam’s manufacturing boom and whether it can be sustained. Vietnamese firms are starting to grow to try to accommodate the influx of companies, mostly apparel and shoe makers. Textile firm TNG Investment & Trading told Quintanilla that it’s never seen an expansion like this before. Last year, the firm hired 3,000 employees, bringing its total to 15,000. TNG’s Linh Nguyen said it had to build an apartment complex just to accommodate the additional employees. “In order to grow the business, it’s more important for us to build a home for the people than actually building a factory.” The demand for technical skills is growing in Vietnam, and the Vietnamese government has a goal of training 2 million people in vocational schools. More than 90% of students trained in technical skills, such as welding or making electronics, can get hired, said professor Nguyen Quang Huy. He told CNBC that it’s “very easy to get a job, and a lot of companies need more people.” However, Vietnam still lacks much of the infrastructure that has enabled China to become a manufacturing epicenter. Ramping up the ability to transfer goods from Vietnamese factories to ports will be key. Across the country, railroad lines are sparse compared with China’s, highways are smaller, and it’s still an agrarian economy largely focused on rice. Vietnam is building a deep-water port that can make transfers easier, but that won’t open for another 3 years. -------------------------------------------------------------------------------------------------------------------------- The maker of Apple electronic products (iPhone, iPad, iTV, ...), Foxconn (Headquarter in Taipei, Taiwan) promised President Trump to build factory in Wisconsin state in USA and manufacture electronics in USA. --------------------------------------------------------------------------------------------------------------------------- Google has suspended Huawei’s access to updates of its Android operating system and chipmakers have reportedly cut off supplies to the Chinese telecoms company, after the US government added it to a trade blacklist last week. Photo 1: Clothing factory in Vietnam to make apparel for Nike, Adidas, Air Jordan, ... Photo 2: Footwear factory in Vietnam to make shoes for Nike, Adidas, ....   Honesty is the best policy. |
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The U.S. farmers and fishermen are the first hit by Trump's tariff hikes because China retaliate that they won't buy soybeans, ..., lobster, from USA. Those agriculture products need to be fresh. As U.S. apparel and shoe companies, i.e. Nike, Adidas, Air Jordan, ... they can shift to Vietnam for cheaper labor wage which they won't get hit by Trump's tariff hikes much. Trump wants U.S. import/ export to be in balance. In another words, China needs to buy more U.S. products. However, tariff is NOT a "panacea" for trade. China retaliation can be very server, if China doesn't buy Boeing planes (of course, Boeing 737 MAX 8 had two planes crashed came the wrong time), commercial and agriculture use machines and vehicles, our soybeans, lobsters, .... or boycott Apple's iPhones, iPads, ... Trump planed to use tariff hike to punish China, but on the opposite, he punished U.S. economy. It is dangerous. Apparel and shoes businesses are easily can shift countries and take care of, but I am worry about big items such airplanes, bulldozers, iPhones, soybeans, lobsters, ... are much more problems. Currently, U.S. economy is very good, but Trump tariff hikes can make things reverse. Tariff hike is NOT good for USA or China, or Canada, or Mexico or any other countries. Trump is a businessman, real estate mogul, but is he good for a country leader??? I wonder, I wonder. Honesty is the best policy.
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One U.S. bicycle maker union said the bicycles in USA are almost 100% made in China. They are thinking to switch manufactures out of China and seeking new alternative Asian country to make bicycle. That bike CEO said on C-NBC it is impossible to make bicycles in USA (imply the cost will be too high). Trump's tariff hike on China make U.S. importers to change manufacturers. China retaliation is to stop buying U.S. agriculture and seafood products (soybeans, ....lobsters). I read from CNN news, some U.S. farmers commited suicide because their yearly work wasted, if China won't buy the agriculture products will go bad. According to Wall Street, tariff hike is NOT good for either USA or China or any other countries. Current U.S. unemployment rate is only 3.6% which is lowest since 1969, there is no necessary to "Made in USA". I hope Trump will ponder more carefully before he punish other countries for tariff hikes. Honesty is the best policy.
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If you watched C-NBC on Tuesday, June 25, 2019, you would saw the report about "Made in Vietnam", "Is China's pain, Vietnam's gain?" whole day long. That's how I knew the news. Trump's tariff hike will in turn to charge on U.S. importer companies, i.e. Nike, Adidas,.... that ship from China to USA. U.S. labor cost is high (minimum wage, labor union, worker's benefit,...) eventually those importers will charge higher prices to U.S. consumers. So, those apparel and shoe companies have to shift their manufactures to Vietnam. I heard Vietnam charge even lower labor wages. The big companies think very fast how to shift manufactures in order to reduce the cost from Trump's tariff hikes. Honesty is the best policy.
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