Business Dynamic (4) — Will Vietnam be able to boost China off to takeover as the Alpha Dog ?

The U.S.-China trade war, has prompted a new OZ in the form of Vietnam. This in turn has decreased any additional tariffs required by Vietnam. For this reason, many first tier companies within this rank have relocated their factories to either Vietnam or similar south asian countries as opposed to setting up factories within China. On the upside though, China has played a vital role in boosting Vietnamese manufacturing through their industrial upgrading and transformation measures. China, however, has expedited its steps in moving from medium and high-tech manufacturing as a result of rising labor costs as well as low-cost manufacturing.

Currently, the business dynamic has grown, by following and unsteady and stressful scale. This potential risk has undoubtedly been caused by the Covid19 pandemic. Anti-China Protests occurring in the past by such enterprises with an ethically fading ESR, was due to the rebuilding of bygone era sweatshops in Vietnam. However, companies in Vietnam need to take a moment to stop and think not just about the profit they gain by increasing their production rate but also about the condition of their workforce. An attitude that denotes a lack of care and consideration for the basic rights of human beings will undoubtedly trigger further protests similar to that of the Anti-China Protest experienced in the past. In reality though, no one can rightly predict the outcome of Covid-19 or when this outbreak will end. If just one tiny aspect goes sideways, an entire county will have to face either a lockdown or heavily measured quarantines.

Regarding, the factory in Vietnam owned by my current company, this factory has in fact received additional purchase orders which takes away from factories in China. This does however have a silver lining for sales personal members who may in turn feel as if they hit the jackpot. However, the hot potato we face at present is whether we will run out of materials required or experience a dry shift in certain resources. In effect, if we fail to crank up the production rate to meet our respective deadlines on time then this will put us in breach of contract situation. As a result, the consumption rate will become higher than the profit margin. So we will find ourselves in a catch-22 situation whereby either we can receive the order or we refuse to honor it.

For decades, multiple presidential administrations sat by idly while China blatantly flouted the rules and gained an unfair advantage in the international trade market. However, the sudden appearance of Covid-19 has drastically changed our outlook. It could perhaps be viewed as an opportunity for Vietnam to take control of the situation by dominating the business world as we know it and prove that they have what it takes to replace China in the factory producing industry. When that time span does arrive, it will in a sense re-write the rule of the manufacturing industry. However, this also serves as a vice versa situation. Ultimately because if Vietnam is unable to turn this into a walk in the park kind of event, then it should come as no surprise that China will continue to command authority as the Genghis Khan of the Asian manufacturing industry as we know it today.

It is also noteworthy to mention that the foreign policy regulated by the government has in effect helped Vietnam to curb the spread of Covid-19 while still allowing the manufacturing industry to keep running which is in direct contrast to China. China still suffering the after effects of Covid-19 in that their production rate has plummeted to the bottom of the manufacturing scale. A recent topic of comment though has been the question of whether Vietnam is able to replace China as the world’s newest hub for low-cost manufacturing. It may see as if we are living in a dream world if we expect Vietnamese manufacturing to completely replace Chinese manufacturing. But still look on the bright side by anticipating the benchmark event of the century. The question that remains is ‘‘ Will Vietnam be able to boost China off the top tier to takeover as the Alpha Dog in the world’s latest factory competition? ’’

I reckon that only time will tell.