Manufacturers want to quit China for Vietnam, but find it impossible • Hacker News Board

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#11

Post by zhdc1 » Wed, Aug 21, 2019, 9:09 PM UTC

duxup wrote: post #6

jbob2000 wrote: post #3

Earlier quoted context omitted.

It could backfire if China sees these smaller countries as a threat and moves to block them. Vietnam borders with China, no doubt they are as dependent on China as, say, Canada is with the US. I could see China saying "hey if you trade with the US, we're putting 20% on your exports to China"

China and Vietnam historically haven't gotten along well anyway. And I'm not so sure how many Asian nations would go along with that whole situation. Would be a lot of doubling down there by China... and when / if THEY want to offshore some things, where do they go?

Africa like the poster above mentioned.

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#12

Post by seanmcdirmid » Wed, Aug 21, 2019, 9:10 PM UTC

jbob2000 wrote: post #10

zhdc1 wrote: post #4

Earlier quoted context omitted.

Wouldn't happen. The Vietnamese hate the Chinese more than the Chinese hate the US. It's more likely that the US eventually extends tariffs to other SE Asian countries. That said, I think the real story is companies preemptively shifting manufacturing out of SE Asia entirely in order to get ahead of the next wave of offshoring.

The fact that they hate each other lends even more credence to my theory - it’s that much easier to put tariffs on them. 25% of their imports and 14% of their exports are with China [1], China could definitely hurt Vietnam if they become too close with the US. [1] https://en.wikipedia.org/wiki/Economy_of_Vietnam

China would rather not play with fire here, the Vietnamese night invite the USA to establish a naval base or something if pushed too far, especially considering the current South China Sea contests.

(Ironically a reversal of USA support for China during the sino Vietnam war)

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#13

Post by LeanderK » Wed, Aug 21, 2019, 9:23 PM UTC

whatshisface wrote: post #2

This tariff situation is quickly becoming an amazing opportunity for developing countries. The labor shortages being talked about can only be resolved through higher wages, which means that the people at the bottom will get a cut of the new money. In the end the world will be a lot richer and the money will be in the hands of relatively livable countries like Vietnam. (The Vietnamese government is actually pretty goo…

> The Vietnamese government is actually pretty good in terms of freedoms.

Wait, what? They recently kidnapped an ex-party member in germany. It was 2017 or so. I can't believe that a country which honors you freedom would do something like this.

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#14

Post by whatshisface » Wed, Aug 21, 2019, 9:32 PM UTC

LeanderK wrote: post #13

whatshisface wrote: post #2

This tariff situation is quickly becoming an amazing opportunity for developing countries. The labor shortages being talked about can only be resolved through higher wages, which means that the people at the bottom will get a cut of the new money. In the end the world will be a lot richer and the money will be in the hands of relatively livable countries like Vietnam. (The Vietnamese government is actually pretty goo…

> The Vietnamese government is actually pretty good in terms of freedoms. Wait, what? They recently kidnapped an ex-party member in germany. It was 2017 or so. I can't believe that a country which honors you freedom would do something like this.

They are a one-party communist state and so are not nearly as good as America, but on the economic freedom index they are close to Hong Kong. Not the greatest country but better than some others where every industry is national (not just China).

https://www.globalpropertyguide.com/Asia/Vietnam/economic-fr...

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#15

Post by [deleted] » Wed, Aug 21, 2019, 9:33 PM UTC

LeanderK wrote: post #13

whatshisface wrote: post #2

This tariff situation is quickly becoming an amazing opportunity for developing countries. The labor shortages being talked about can only be resolved through higher wages, which means that the people at the bottom will get a cut of the new money. In the end the world will be a lot richer and the money will be in the hands of relatively livable countries like Vietnam. (The Vietnamese government is actually pretty goo…

> The Vietnamese government is actually pretty good in terms of freedoms. Wait, what? They recently kidnapped an ex-party member in germany. It was 2017 or so. I can't believe that a country which honors you freedom would do something like this.

[deleted]

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#16

Post by Steve44 » Wed, Aug 21, 2019, 9:40 PM UTC

whatshisface wrote: post #2

This tariff situation is quickly becoming an amazing opportunity for developing countries. The labor shortages being talked about can only be resolved through higher wages, which means that the people at the bottom will get a cut of the new money. In the end the world will be a lot richer and the money will be in the hands of relatively livable countries like Vietnam. (The Vietnamese government is actually pretty goo…

I'm currently in the food packaging industry and over the past few years we have been seeing manufacturing move from China to Vietnam and India. Likewise in Europe it’s moving from Poland out to Romania, Greece, and also Turkey. These decisions are largely based on manufacturing costs.

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#17

Post by josephpmay » Wed, Aug 21, 2019, 9:45 PM UTC

1) For anyone wondering, yes, many of these companies would have the same (or worse) problems if they tried to manufacture in the US. Our domestic supply chains for a lot of industries have dried up (or never developed). US factories also usually have higher minimum quantities and take much longer to tool up.

2) I'm surprised the article didn't mention Africa at all. A lot of Chinese industrialists are investing in Africa, and I suspect that Chinese-style supply chains have a good chance of developing there. If I was looking for a country to for long-term manufacturing strategies right now, I'd be taking a hard look at African countries.

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#18

Post by shshehe » Wed, Aug 21, 2019, 9:55 PM UTC

whatshisface wrote: post #2

This tariff situation is quickly becoming an amazing opportunity for developing countries. The labor shortages being talked about can only be resolved through higher wages, which means that the people at the bottom will get a cut of the new money. In the end the world will be a lot richer and the money will be in the hands of relatively livable countries like Vietnam. (The Vietnamese government is actually pretty goo…

You have no idea what vietnam is like. Someone capable of spewing such garbage with confidence has no credibility about anything

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#19

Post by Gustomaximus » Wed, Aug 21, 2019, 10:07 PM UTC

A big problem no-one seems to talk about is 'consistency'. This is undervalued variable to capital intensive business.

All these supply and other issues are readily solvable with time/money but why would you when you don't know if these tariffs will double tomorrow, go away or stay as is for the next 6 years. Who will invest huge capital when a political whim seems likely to change the landscape at any point.

Re: Manufacturers want to quit China for Vietnam, but find it impossible

#20

Post by bduerst » Wed, Aug 21, 2019, 10:11 PM UTC

whatshisface wrote: post #2

This tariff situation is quickly becoming an amazing opportunity for developing countries. The labor shortages being talked about can only be resolved through higher wages, which means that the people at the bottom will get a cut of the new money. In the end the world will be a lot richer and the money will be in the hands of relatively livable countries like Vietnam. (The Vietnamese government is actually pretty goo…

Which would be the case if the tariffs were China-only, but the current presidential administration is enacting tariffs on many other countries, like Mexico, Brazil, and S Korea.

Also, the upcoming Regional Comprehensive Economic Partnership (RCEP) meeting in November could be used by China to unify most of APAC against the U.S. The U.S. TPP was a blocking move to prevent the RCEP, which in it's current form covers half the world's economy (India, China, and others).

Negotiations for RCEP have been slow but with the U.S. now burning trade bridges with it's partners, we're probably going to see something interesting happen in November.