Vietnam has become one of the leading and safest destinations for foreign firms to reconstruct their manufacturing, according to some economists as the country has received a series of applauds from international media thanks to its successful efforts in COVID-fight, a new factor to assess the business risk.
The Straitstimes cited some economists as saying that how countries respond to and tackle the COVID-19 pandemic is a significant factor to assess possible risks in business as big foreign companies are increasingly shifting their businesses to Southeast Asia countries including Vietnam. The Singapore’s outlet cited Ms Kellie Meiman Hock, managing partner at global consultancy McLarty Associates, said: “Companies definitely evaluate how countries are managing Covid-19 risk as they make investment decisions in the current environment. In particular, transparency in government response is critical.”
The expert also said that it is the reliance on China as a sole source that proves an expensive lesson for many enterprises, noting that China’s economy was alleged to nearly turn to stagnant due to the Covid-19 outbreak. While big corporations never want their business to be disrupted anymore, therefore, she affirmed that “countries that can show evidence of good governance in tough times like this will be considered more favorably.”
According to some experts, the shifting from China to other dynamic areas that experience fewer impacts from the pandemic like Southeast Asia is predicted to gain in the coming time. The Covid-19 pandemic has introduced a new variable, or a new catalyst, to an evolutionary process already underway. Before the pandemic, Vietnam, in particular, had been the beneficiary of some companies relocating operations from China there, partly due to the US-China trade war.
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Foreign companies have begun assessing and evaluating how governments are responding to the shock and Vietnam appears to be one of the most favorable nominees. While SCMP reported that the Covid-19 outbreak causes serious loss in the demand-supply chain of series of Chinese-based Japanese firms.
Before the outbreak, the demands to establish some other new manufacturing establishments in Southeast Asia had been on an upward trend. “There will be something of a shift,” said Shinichi Seki, an economist at the Japan Research Institute, adding that some Japanese companies manufacturing goods in China for export were already considering moving out. “Having this in the budget will definitely provide an impetus,” SCMP cited.
When Wuhan had become an epi-center with worsening developments of the coronavirus on February, Google and Microsoft seemed to accelerating efforts to shift production of their new phones, personal computers and other devices from China to Southeast Asia with factories in Vietnam and Thailand expected to be the beneficiaries, the Nikkei Asian Review reported. Google sets to begin production of its latest low-cost smartphone — expected to be dubbed the Pixel 4A — with its partners in northern Vietnam as soon as April as a source telling Nikkei, while Microsoft was scheduled to start producing its Surface line, including notebook and desktop computers, in northern Vietnam in the second quarter of this year at the earliest, another two sources familiar with the matter told the outlet.
In February, Nikkei Asian Reviews also reported Apple is hesitant over moving the production of 45 million AirPods to Vietnam due to the risks and barriers raised by the coronavirus, even as its main producers are struggling with labor and material shortages while some reports saying that the US’ tech giant has continuously been announcing vacancies for senior position recruited personnel in the two major cities Hanoi and Ho Chi Minh City.
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VNA cited Vo Tri Thanh, a senior economist at the Central Institute for Economic Management (CIEM) and a member of the National Financial and Monetary Policy Advisory Council noted that the difficulties and challenges after COVID-19 are huge. However, Việt Nam has a strong capacity to recover when the pandemic is over. According to the World Bank, Việt Nam’s growth will reach 7.5 percent in 2021 and about 6.5 percent from 2022 thanks to improved external demand, a strengthened service sector and increased agricultural production.
By Lyan Vu @ Vietnam Times