With cheap labor and a favorable investment climate, Vietnam has become an emerging base for global manufacturing.
At present, Vietnam's manufacturing industry is facing unprecedented challenges, and various unfavorable factors are eating into its competitive advantage. This challenge is not only related to the future of Vietnam's economy, but will also affect the pattern of regional and even global industrial chains.
As an important pillar of the development of the manufacturing industry, Vietnam has been attracting foreign companies to invest with its low labor costs for many years. However, in recent years, Vietnam's labor costs have continued to rise, and the labor costs of manufacturing have continued to rise.
In 2021, Vietnam's minimum wage increased by 3.7% over the previous year, and the actual wage level in some regions and industries was much higher than the statutory standard. Faced with the growing burden of labor, many foreign-funded enterprises have begun to consider relocating production lines to other low-wage countries.
In pursuit of economic growth, Vietnam has not paid enough attention to environmental protection for many years, resulting in an increasingly prominent local environmental pollution problem. Exhaust gases, wastewater, and solid waste emitted from factories have severely polluted Vietnam's rivers, land, and air.
This not only affects the quality of life of local people, but also brings new pressure to foreign-funded enterprises. Some developed countries have imposed environmental barriers on Vietnam, requiring products imported from Vietnam to meet strict environmental standards.
Affected by the global economic slowdown and geopolitical tensions, Vietnam's manufacturing orders have fallen sharply. At the same time, the prices of energy and raw materials continue to rise, which has brought a heavy burden to the production and operation of manufacturing enterprises. Some well-known companies have begun to lay off employees or even close factories.
Due to multiple factors such as geopolitics, the withdrawal of a large amount of American capital from Vietnam has accelerated. This has dealt a heavy blow to Vietnam's economic development. In the face of this grim situation, the Vietnamese government and people need to keep a clear head, reflect on their own development path, learn from China's successful experience, deepen reform and opening up, and achieve economic diversification.
As we all know, Vietnam has long been highly dependent on foreign-owned enterprises as the engine of economic growth. Foreign-owned enterprises not only create a large number of jobs in Vietnam, but also serve as a major source of tax revenue. However, once foreign capital is withdrawn, it will inevitably lead to a large number of workers losing their jobs, fiscal revenues plummeting, industrial and supply chains being disrupted, and the economy slumping.
Take the garment and textile industry, for example, which is one of Vietnam's pillar industries, with 3 million workers. According to statistics, in the first three quarters of 2022, Vietnam's clothing and textile exports fell by nearly 18% year-on-year, mainly due to the cancellation of tariff exemptions for Vietnamese products by the United States. At the same time, the sneaker manufacturing industry has also made matters worse.
It is reported that there are about 1 million workers in the sports shoes manufacturing industry, and 60% of their products are exported to the United States. The United States imposed punitive tariffs of up to 37% on Vietnamese sneakers, which almost wiped out the sneaker companies.
In addition to U.S.-funded companies, investors from other countries are also leaving. For example, Samsung Electronics, the South Korean tech giant that has invested more than $18 billion in Vietnam and is the country's largest foreign-owned company, is also gradually relocating production capacity.
The massive loss of jobs means that a large number of workers are homeless and devastation. Ho Chi Minh City, for example, was once home to foreign companies, but now it is in disarray. The streets are full of unemployed workers, unable to pay their rent, and living in modest shacks. Some even sleep on the streets, living a more miserable life than that of African refugees.
Social contradictions are intensifying day by day, and the stability of the regime is being greatly challenged. As a country with a large population, if unemployment continues to worsen, it will inevitably lead to large-scale unrest. In fact, protests have erupted in several cities, with demonstrators chanting "no jobs, no lives" and demanding that the government take concrete measures to address the employment crisis.
Vietnam's current predicament reaffirms the fragility of its development model that relies on foreign investment. Over-reliance on foreign capital is destined to be controlled by others, and it is easy to fall victim to the geopolitical struggle of international powers. Viet Nam must learn from this experience, move away from a single development model, and truly embark on an independent and controllable development path.
It was precisely after encountering similar economic difficulties in the 80s and 90s of the last century that China gradually got rid of its dependence on foreign countries and achieved independent economic development by continuously deepening reform and opening up, implementing a socialist market economy, and paying attention to the development of independent innovation capabilities. This has set a model for developing countries such as Vietnam to learn from.
Vietnam should learn from China's successful experience, vigorously develop the scientific and technological innovation industry, and cultivate independent intellectual property rights and innovation capabilities. At the same time, it is necessary to greatly improve the overall quality of workers and enhance the advantages of industrial human resources. At the same time, it is necessary to strengthen economic and trade cooperation with China and other friendly countries, integrate into the general trend of regional integration, and avoid being isolated and contained by international powers.
In the face of containment and suppression by the United States and other Western countries, Vietnam needs to deepen reforms, strengthen its capacity for independent development, and achieve fundamental changes in its industrial structure and development momentum.
Only in this way can Vietnam truly develop independently and steadily, embark on its own development path, and achieve prosperity for its people and a strong country. China's path of reform and opening up is worth learning from Vietnam. It is believed that with the joint efforts of the Chinese and Vietnamese peoples, the prospects for regional peace, stability, and common development will certainly continue to be created.
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