Houlang Vietnam is becoming the new "world factory".
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Exports exceeded Shenzhen, Li Ka-shing turned here after withdrawing from the UK, Nike Adi Samsung factory also moved in... While people marvel at how rapidly Vietnam is developing, there are also fears that it will replace China as the new "factory of the world."
In the decades of "crossing the river by touching China", how fast has Vietnam run?
A glimpse of this can be seen in the dispute over the fruit chain that has entered the white-hot heat.
Recently, the competition between Foxconn and Vietnamese foundries has entered a scorching stage with the increase of Apple's orders in Vietnam.
Foxconn Chairman Liu Yangwei publicly said on June 11 that competitors had established operations near Foxconn's vietnamese campus to poach the company's employees.
"These factories saw where Foxconn built a factory, so they specially went to buy a piece of land next to the factory area, and wanted to use this way to carry it to the 'hitchhiker', and rely on high salaries to recruit Foxconn's talents to quickly enter the market."
On the 12th, Foxconn confirmed that the above remarks were true. Mr. Liu declined to name specific companies, but insisted the practice could not be forgiven.
Foxconn currently has about 60,000 employees in Vietnam, and Liu Yangwei said it plans to significantly increase that number in the next year or two. Vietnam is also Apple's largest manufacturing base outside of Chinese mainland.
Chinese companies "grab food" in Vietnam
Since the beginning of this year, after several months of forced supply chain disruption in Shanghai and its surrounding areas due to "lockdown", Apple has begun its own supply chain "migration".
The Nikkei Shimbun reported on June 1 that apple recently decided to move the production line of various iPad components to Vietnam on the grounds of "supply chain disruption" and "unreliable production plans", which is the first time in Apple's history that production infrastructure has been withdrawn from China.
Vietnam, on the other hand, may be the "biggest winner" in this supply chain withdrawal movement.
Combing apple's 2021 release of the world's top 200 suppliers found that among the 610 factories in the world, the number of Chinese mainland factories is a total of 259, accounting for 42.46%, and there are 37 factories in Taiwan, accounting for 6.07%. The Vietnam factory is the largest among Southeast Asian countries.
From the trend point of view, the number of suppliers setting up factories in Vietnam has gradually increased in the past four years.
Recently, Apple CEO Cook said in response to the question of including more Vietnamese companies in the Apple industry chain that Apple is interested in cooperating with Vietnamese manufacturers that meet the company's standards.
Comparing the list of Apple Vietnam industrial chain enterprises, it can be found that in the 2018 fiscal year of Apple, there were 14 suppliers with factories in Vietnam, and by fiscal year 2020, this number will increase to 21, and in 2021, it will reach 23.
As Apple's main foundry partners transfer some of their production capacity from China to Southeast Asia, the talent war for foundries in Vietnam has intensified, and the contradictions between them have gradually emerged.
Foxconn Chairman Liu Yangwei recently said that competitors have begun to build factories near Foxconn's Vietnam park to poach their own employees.
In the face of such "digging the wall" behavior, Liu Yangwei, who has always been at the helm of Foxconn, can't help but openly "shout" to competitors, "Don't follow Foxconn, to win Foxconn, rely on your own methods." ”
According to information disclosed by Foxconn, its main competitors in Vietnam are from Luxshare Precision, which produces AirPods, Goertek shares, and BYD, which is preparing to produce iPads.
According to the financial report and public information, Luxshare Precision cooperates with Apple to produce wireless headphone AirPods, which has four supply bases, three of which are in China and one in Vietnam, and has increased investment in Vietnam year by year in recent years. Goertek established Goertek Electronics (Vietnam) Company in 2012 with a registered capital of 4 million US dollars, and in 2019, it established Goertek (Vietnam). In 2021, Goertek (Vietnam) achieved revenue of 20.651 billion yuan and net profit of 1.28 billion yuan.
In addition, Apple China Supply Chain Company, which has set up a factory in Vietnam, also includes YUTO Technology, Lens Technology, Ling Yizhi Manufacturing, Meiyingsen, Bourne Optics and so on. From the perspective of the business types of these manufacturers, the type of manufacturing plants in Vietnam has expanded from simple assembly manufacturing to upstream parts, covering display panels, passive components, chips, glass, etc.
In the manufacturing sector, the trend of shifting production lines from China to Vietnam continues.
After the wave of Vietnam, why did it rise up?
Part of the reason Why Vietnam has been able to benefit from the shift in manufacturing stems from some of the other decisions it has made during the COVID-19 pandemic.
Vietnam has now largely contained the COVID-19 pandemic and is one of the few countries in the world to have grown economically during the COVID-19 pandemic in 2020.
Vietnam has now lifted almost all anti-epidemic restrictions, and the head of Vietnam's National Institute of Health and Epidemiology said that another lockdown in Vietnam is unlikely. The Asian Open Bank predicts that Vietnam's economic growth rate will be 6.5% in 2022 and 6.7% in 2023.
Not only that, Vietnam has also signed an implementation of the EU-Vietnam Free Trade Agreement with the EU, which came into force in August 2020, under which Vietnam promised to allow the establishment of independent trade unions to protect the rights and interests of Vietnamese workers.
In the first quarter of 2022, Vietnam's GDP reached US$92.175 billion, an increase of 5.03% year-on-year, higher than the economic growth rates of China (4.8%) and Singapore (3.4%) in the same period.
In recent years, Vietnam's electronic industry chain has become more and more mature, and it has also assumed more processing and transshipment hub roles in the global electronic industry chain.
Vietnam's electronics industry mainly revolves around Samsung, Foxconn, Canon, LG, a limited number of large factories, of which Samsung has invested the most in Vietnam. After Samsung's mobile phone lost the Chinese market, in 2019, Samsung shut down the last Chinese factory in Huizhou, Guangdong Province, fully transferred production capacity to Vietnam, India and Indonesia, and led about 200 supply chain manufacturers to migrate to Southeast Asia. At one point, 60% of Vietnam's supply chain manufacturers only served Samsung and LG.
By the end of last year, Samsung's total investment in Vietnam reached $17.74 billion. In February this year, Samsung Motor, a subsidiary of Samsung, also announced that it would invest $850 million in Vietnam to build an FC-BGA packaging substrate production line. FC-BGA packaging substrate is a high-end semiconductor packaging substrate, mainly used for cpu, GPU and other large computing chips packaging. This means that Samsung is introducing more advanced processes and technologies to Vietnam.
In Vietnam, which is moving fast on the road of "copying the next China", not only the manufacturing industry, but also the movement of housing enterprises to make a fortune is also re-staged in Vietnam.
In recent years, as the most critical indicator of asset value, Vietnam's housing prices have continued to rise. Ho Chi Minh City, the largest city, has seen house prices rise by more than 20% every year since 2015. According to the survey, Ho Chi Minh City ranks fifth in the Asia-Pacific region on the list of preferred destinations for cross-border property investment, behind Tokyo, Singapore, Seoul and Shanghai.
In this way, the data from all sides prove that the outside world is very optimistic about Vietnam, and Li Ka-shing also regards Vietnam as a new asset depression. So, is Vietnam's sudden rise worth vigilance?
Michael Kokalari, chief scientist at VinaCapital in Ho Chi Minh City, said the phenomenon of companies migrating from China to Vietnam has only just begun, and there will be more next year. Take Apple, for example, which began mass production of some AirPods wireless headphones in Vietnam in the second quarter of this year. But Vietnam still has a huge gap compared to China in terms of labor, infrastructure and spare parts supply. From microchips to smartphones, many of the components of vietnam's manufactured high-value products still come from places like China and South Korea. Vietnam's local supply chain base is no match for China's.
In the short term, the advantages of Made in China are unshakable, but there is also an urgent need to deal with it.