A hyperactive government supported by the low costs is enabling Vietnam to build up for the race of economy. The time has arrived when China the Asian superpower and one of the developed countries of the globe is facing stiff competition from Vietnam in the field of manufacturing and industrialization. Foreign investments are witnessing a steep hike every year and thus in the past few years, the nation is experiencing an extra ordinary positive flip in the past few years in Vietnamese economy.
China’s loss is Vietnam’s Growth-
There are countless limitations such as pollution restrictions, overdependence on foreign currencies and high labor expenses which are tying down the Chinese economy; resulting in slowing it down in recent years. On the other side; Vietnam is presently an open arm invitation to global corporate communities and businesses of all kinds and sizes. Moreover, formalities like licensing and operating permits are comparative easy to acquire in Vietnam than in China. In the past few years, there is a significant rise in sectors like manufacturing and technology; since 2010 the PC processor giant Intel has been running a $1 billion test and assembly plant in the city of Ho Chi Minh. Following the trend, Apple Inc has its contractor Hon Hai Precision put up in the country making parts of smartphones. Above all, Samsung Electronics is the largest investing company in the region with a massive input of $11 billion for production processes.
According to recent reports from the World Bank sources, growth rates in China have taken a beating as they have fallen down to a 24 year low to 7.4% in 2014. The industrial production too has witnessed a slip of 1.4%. It is just at 8.3% for the year whereas it was at 9.7% in the year before. The sources project a 7.1% growth for 2015 which is also a big reason for worry as it is falling down on a year-on year basis.
Vietnam’s brownie points-
The foreign direct investment (FDI)in Vietnam for the 4th quarter of 2014 has resulted at a 60% gain. It has reached a landmark of $8 billion in the shortest span for last 3 months. The main reason for this is the difference between the labor costs which is about 20 to 23% lower than what it is in China. It just taken 114 days in order to construct a new warehouse wherein the same activity consumes 244 days in China.
Vietnam picks up goods outsourcing that once used to go to China. Thus, the manufacturing units are strengthening in the Southeast Asian country and it is in the initial stages of taking up with the current superpower of Asia.