Vietnam Has Become The World'S Largest Producer Of Nike Shoes.

Foreign direct investment into ASEAN countries increased to $117 billion in 2011, an increase of 26% over the previous year.

Many brand enterprises pfer factories to ASEAN countries.

Recently, according to

Media reported that Vietnam has become the world's largest producer of Nike shoes. The country's Nike shoes have reached 41% of the world's total, far higher than 13% in 2001, and Adidas, a sports brand giant, has also recently shifted part of its business to Malaysia's factories.

These are just a microcosm of the trend of "southeast flight" of many brand enterprises.

This year's annual report of the United Nations Conference on Trade and development (hereinafter referred to as UNCTAD) shows that ASEAN countries have a bright future in the list of the most popular host countries selected by multinational corporations, especially Indonesia and Thailand.

The scale of foreign investment is expanding.

The 2011 world investment report released by UNCTAD in 2011 showed that foreign direct investment into ASEAN countries increased by more than 1 times in 2010, reaching US $79 billion, of which more than half invested in the low end manufacturing industry.

The 2012 world investment report released by UNCTAD in July 5th this year showed that FDI flows to ASEAN countries increased to $117 billion in 2011, an increase of 26% over the previous year.

In the past 5 years, the total amount of foreign direct investment contracts in Vietnam has increased 5.1 times, and the actual utilization of foreign capital has increased by 3.3 times.

In the first 7 months of this year, Vietnam received a total of 8 billion 30 million US dollars in newly registered foreign investment and additional investment. At the same time, foreign investment in Vietnam turned significantly and began to invest more in manufacturing industry.

Another entry into ASEAN

Foreign direct investment in Indonesia, a big country, has reached more than 3 times 5 years ago. Thailand's foreign investment in 2010 has reached US $11 billion 570 million. In 2010, Malaysia absorbed foreign capital as high as 9 billion 100 million US dollars, a 5.4 fold increase over the previous year's 1 billion 430 million US dollars, making foreign investment account for 62% of the total manufacturing investment in Malaysia.

Some industries are quite large.

The inflow of foreign capital has promoted the rapid development of low end manufacturing in ASEAN countries.

Vietnam customs statistics show that the country's textile exports amounted to US $15 billion 600 million in 2011, an increase of 38% over the previous year, the highest textile exports in 5 years.

By the end of 2011, the Ministry of industry and trade of Vietnam proposed that the footwear industry should become the pillar export industry of the national economy by 2020, and that the target of footwear export in 2015, 2020 and 2025 would be 9 billion 100 million US dollars, 14 billion 500 million US dollars and 21 billion US dollars respectively.

Other ASEAN countries also have competitive advantages, such as Malaysia's electronics industry and steel machinery industry, Indonesia's chemical industry, clothing industry, Singapore's chemical industry and refining industry.

Advantages of ASEAN manufacturing

ASEAN countries not only have lower labor force prices, but also have sufficient labour resources.

Price advantage of labor, land and raw materials

According to the International Labour Organization statistics, the monthly salary of manufacturing workers in Kampuchea and Burma in 2010 was between 70 and 90 dollars, while Vietnam and Indonesia were about 120 dollars.

Laos has raised the minimum monthly basic wage to 626 thousand Kip (78 US dollars) since the beginning of this year. The minimum wage standard in Vietnam is divided into 2 categories: domestic and foreign-funded enterprises. Since October 2011, the lowest monthly wage in Vietnam has been 2 million plus shield (about 97 US dollars), and the lowest wage standard for 1 million 400 thousand other regions in Vietnam.

{page_break}

ASEAN countries not only have lower labor force prices, but also have sufficient labour resources.

The total population of Vietnam is 86 million 930 thousand, the labor force over 18 years old is about 43 million 440 thousand, and the labor force population in Kampuchea is 7 million 500 thousand, and the average annual growth rate is 2.7%. The population under 35 in Malaysia accounts for 70% of the total population, the working age population accounts for 55% of the total population, and the labor force population in Thailand accounts for 57% of the total population in China.

In recent years, the price advantages of land and raw materials in ASEAN countries have gradually emerged.

Policies to attract foreign investment

ASEAN countries' policy of attracting foreign investment is also the promoter of the expansion of foreign direct investment.

In Indonesia, foreign capital enterprises are exempt from import tariffs and fees from their own capital equipment, such as machinery, spare parts and auxiliary equipment. Foreign enterprises are exempt from import tariffs and fees for their own production in 2 years; raw materials for producing export products can refund customs duties; foreign enterprises located in the eastern part of Indonesia are exporting 65% products and employ foreign nationals without restrictions.

Take Thailand as an example.

Since June 1, 2010, foreign capital has set up corporate headquarters in Thailand for 15 years.

Specifically, income from abroad does not need to pay income tax. The amount of tax before it is 10%; as for the income obtained in Thailand, the amount of corporate income tax is reduced from 30% to 10%.

All departments in Thailand attach great importance to improving work efficiency, providing convenient services and handling relevant formalities for foreign investment.

Relatively low exchange rate costs

2008 International

The outbreak has led to signs of slowing economic growth in ASEAN countries such as Malaysia, Thailand, Philippines, Indonesia and Vietnam.

By the end of 10 in 2008, the total depreciation of Malaysia's ringgit year was 7.3%, and the accumulated depreciation in the Thai baht year was 17.4%.

After the international financial crisis, many ASEAN countries adopted the depreciation policy of local currency to stimulate exports.

Since 2011, the Vietnamese shield has depreciated more than 9% against the US dollar, and the Thai baht has also depreciated more than 2.5%, which has greatly increased the profits and competitive advantages of export enterprises.

Short board of ASEAN manufacturing

The narrow domestic market means that the inherent market of these countries is not enough to digest the output caused by low cost. Once the supply chain breaks down, enterprises will face enormous risks.

The quality of labor needs to be improved.

In the profit and loss statement of enterprises, the share of labor cost is only 5%, and the ratio of labor cost and output rate is more important.

Although ASEAN countries have a large number of low-cost labor force, their quality of labor needs to be improved, which restricts the development and upgrading of enterprises in ASEAN countries.

At the end of last year, the Ministry of social work of Vietnamese labor wounded troops investigated the labor skills of 1000 foreign invested enterprises in 9 industries in 6 provinces and cities in Vietnam.

Most of the surveyed enterprises believe that about 23% of the local staff lack the skills needed by the enterprises, and about 35% of the employees are unable to meet the needs of the production, so it is difficult for the enterprises to recruit high-quality staff locally.

The lack of ability to accept and master new technologies directly affects the renewal of technology and equipment and the expansion of production scale.

Other ASEAN countries are also facing the same problem.

{page_break}

Frequent labour conflicts

Although Vietnam produces 41% of Nike sports shoes worldwide, and the prices of Nike shoes sold in Vietnam are basically the same as those in the international market, ordinary Vietnamese people can hardly afford to buy their own shoes.

Because ordinary workers are dissatisfied with low wages, labor conflicts are frequent.

A brand enterprise has been investigated for paying only 10 pounds a week to the workers of the Kampuchea garment factories that produce their products.

Subsequently, the Minister of labour of Kampuchea issued a circular saying that from September 1st, Kampuchea's textile, clothing and footwear factories should provide a monthly subsidy of $5, a full attendance award of $10, a pportation and accommodation fee of $7 per worker, and so on, so that the minimum monthly wage will reach US $83.

Social instability in China

Another factor that restricts the further development of "ASEAN manufacturing" is their domestic social conditions.

The social environment of Philippines, Kampuchea, Laos, Thailand, Indonesia and other countries is not very stable. Thailand was once recognized as the most stable country in ASEAN, but in the last 2 years there has also been an unstable situation.

Limited domestic market

It is undeniable that under the impetus of multiple factors, the attraction of ASEAN countries to foreign capital is bigger and bigger. However, the drawback of its narrow domestic market determines the limited attractiveness of these countries to capital.

The narrow domestic market means that the inherent market of these countries is not enough to digest the output caused by low cost. Once the supply chain breaks down, enterprises will face enormous risks.

At the same time, from a more macro perspective, the above factors also determine the limited ability of ASEAN countries to boost world economic growth.

To date, "ASEAN manufacturing" has become a new label for ASEAN countries. However, under the restriction of all these short boards, "ASEAN manufacturing" mostly stays in the low-end manufacturing industry, nor does it form a complete industrial chain.