Vietnam becomes leader in global production shift trend
VOV.VN - Riotimesonline.com of Brazil recently published an article about the rapidly changing global manufacturing situation, citing recent data from the world's leading financial information service provider S&P Global Market Intelligence of the United States, which said that Vietnam has become the top destination for companies to shift production to protect the supply chain from disruption.
According to data compiled by S&P Global Market Intelligence, the country has surpassed Mexico to become the leader in the “nearshoring” trend of companies moving production, services and logistics activities from a distant country to neighbouring countries.
Evidence for this is that Samsung Group has invested heavily in electronics factories in the nation. Nike and Adidas Group have also shifted production activities to the country, while Intel has also established a large-scale presence with a chip factory in Ho Chi Minh City.
More than 35% of Vietnamese companies noted increased demand from multinational manufacturers over the past year. This is in contrast to Mexico, where only 15% of firms reported a similar increase. The survey, conducted in May shows that Vietnam is becoming increasingly attractive to international businesses.
The article also points out that the nation boasts some advantages such as geographical location, easy access to large markets in Asia, and highly competitive labour costs which attract companies that are keen to optimise costs. In addition, the Vietnamese Government has also implemented many policies aimed at supporting foreign investment.
According to the article, the Vietnamese workforce plays a key role in this success story, representing an important factor for companies to consider relocating their production sites. Indeed, the nation ranks ninth out of 60 countries in the US’ ManpowerGroup's Total Workforce Index, highlighting that Vietnam possesses a reliable and highly skilled workforce.
Mexico has also benefited from the “nearshoring” trend, although it has seen slower growth. Some companies have seen sales increase due to the “nearshoring” trend, although the overall impact has not been as pronounced as in Vietnam. Despite, this, Mexican manufacturers remain optimistic about future growth opportunities.
However, window of opportunity for countries to capitalize on this trend is limited. Indeed, experts estimate the investment transition period to be only 10 to 12 years. This time frame increases competition among emerging manufacturing hubs as countries must act quickly to attract and retain this investment, the article added.
