Will You Go Home Before You Go to Vietnam?

Thursday, June 19, 2008 8:32
Posted in category The Big Picture

A few months back I posted Why Vietnam is Not the Next China. Logistics and there were a few who begged to differ. at the time, I was focused on the logistics capability of Vietnam as a primary hurdle that would need to be overcome before mass could be gained.

I was also highly suspect of Vietnam’s ability to hold off inflation resulting from a mass of inbound investment and I was also unsure about how deep the labor pool would prove itself to be … and in essence my arguement was that Vietnam was not the next China, but would be apart of a larger picture of firms moving away from China, firms moving home, and firms developing a larger regional network.

A theory I was challendged on

Over the last few months, I have continued to follow up on this post through discussions and reading, and I recently found a few resources that are think readers would be interested.

There is of course still some who don’t think that Vietnam is experiencing any larger economic problems and see Vietnam as the “next China”, but over the last 6 months there have also been a number of articles/ podcasts to suggest that Vietnam will at best be apart of a larger number of countries to receive overflow investments.. but at worst it could already be suffering from high inflation, high raw material costs, and murky policies/ laws may be providing bigger hurdles than some originally thought.

Perhaps the most interesting article that may support my arguement for firms regionalizing their production, or returning home, comes from the article As costs rise, factories bring production home

I believe a decent amount of production could come back into the States within five years, not everything,” he says. “But it won’t be because of transport costs – it’ll be because other production costs have gone up and companies have realized they can have better control over their production when it’s closer to home.”

I wonder if EU firms would say the same?

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One Response to “Will You Go Home Before You Go to Vietnam?”

  1. Juergen says:

    June 19th, 2008 at 10:00 am

    Hi Richard – the answer is NO !

    Then the US need a salary range close to China – then a part of production will come home …sure.

    Especially the US buyers (at least in my business) are the ones pressing the manufacturing prices in China down to a level even the most cheapiest factory almost cannot achieve anymore – and somebody is thinking / hoping a decent (yes will be very decent – maybe for base-ball caps) amount of production will come back to USA ……CHEERS