Development Of Chinese Shoe Enterprises In Vietnam

Vietnam is located in the eastern part of the Indochina Peninsula.

North latitude 8 degrees 10 - 23 degrees 24; east longitude 102 degrees 09 - 109 degrees 30.

The total length of the boundary line is 3730 km, the north is bordering China (1150 km), the west is bordering Laos (1650 km), and the southwest is bordering on Kampuchea (930 km).

The total length of the coastline is 3200 km.

In recent years, a large number of foreign companies have poured into Vietnam, most of them are clothing and footwear manufacturers. The rise in the cost of labor and operation in mainland China has prompted them to go to Vietnam.

Last year, foreign-invested enterprises applied for $20 billion in Vietnam, which is 1/3 higher than that in neighboring Thailand.

China's shoe enterprises are fighting Vietnam 1.. Chinese enterprises in Taiwan first entered Vietnam. With the continuous rising of manufacturing costs in China, mainland Taiwanese businessmen who are willing to try low cost operations have long been engaged in environmental pfer.

Qiu Chuiqi, director of the Taipei Office of the Taiwan chamber of Commerce in Vietnam, said: "in the early Pearl River Delta of Taiwan enterprises, many enterprises began to migrate to Vietnam from 1998 onwards, especially the light industry such as shoemaking, furniture and garments. At present, it is estimated to be around 4000.

Now Vietnam has become an important stronghold for Taiwan businessmen to expand overseas, and Taiwan's investment in Vietnam is second only to the mainland.

Qiu Chuiqi emphasized that in addition to cheap wages, Vietnam has other advantages: abundant natural resources and absolute authority of the Vietnamese Communist Party have ensured the stability of the political situation and the growing domestic market. Besides, it has not been subject to anti-dumping and quota restrictions.

The huge appreciation of the US dollar has also created more profit margins for the export of products.

2. Chinese mainland enterprises are following closely. Meanwhile, Chinese shoe making enterprises are slowly turning their attention to Vietnam.

The traditional Chinese manufacturing model is difficult to continue, and industrial pformation has become the most popular slogan in recent years, which has made Vietnam a great success.

On the one hand, China's macro-control measures such as tight monetary policy and strict land supply have slowed down the growth of industrial investment; on the other hand, the acceleration of RMB appreciation, the formal implementation of the integration of the two taxes, and the effective implementation of the new labor contract law have weakened domestic cost advantages.

Professor Gao Ruxi, director of the Institute of urban and regional economics of Shanghai Jiao Tong University, said in an interview.

Yang Zhen, President of the Chinese Chamber of Commerce in Vietnam, revealed that the Chinese government has raised environmental standards and many enterprises have had to go to Vietnam.

According to media reports, last year, the environmental regulatory authorities rejected the new projects whose investment amounts to tens of billions of dollars.

3. Hongkong, China, has made Vietnam the target of the next industry pfer. Hongkong, China, is also taking Vietnam as the next industry pfer target at the same time.

In May 2008, 14, faced with rising cost pressures in the Pearl River Delta, some Hongkong producers are considering shifting their production base to inland or other regions, such as Vietnam and Kampuchea in Southeast Asia.

The Hongkong Trade Development Council (Hongkong Trade Development Council) held the "Hongkong garment and footwear industry Vietnam and Kampuchea inspection mission" from 5 to 9 May, so that the garment and footwear industry representatives who wish to move to the production base will inspect the possibility of relocation.

The delegation was led by Zhong Guobin, director of the manufacturing industry development of Hongkong TDC, and chairman of the Hongkong garment industry association, and the Hongkong footwear industry association Dong Qiu Li, together with 29 representatives from Hongkong garment industry and 14 representatives from Hongkong footwear industry.

Faced with the pressure of rapid increase in production costs in Guangdong, many Hong Kong businessmen are considering and looking for new production bases. Zhou Rui said: "the purpose of this trip is to let them have a deeper understanding of the investment environment in Vietnam and Kampuchea, and help them assess the possibility of relocation of the plant."

During the five day's inspection, industry representatives visited the local production base and factories of different sizes.

The delegation also arranged for local officials to introduce Vietnam's main production base of Longan Province, the industrial zone of Kampuchea, and the Phnom Penh special economic zone of Kampuchea.

The footwear industry representatives also visited two Vietnamese and two shoe manufacturing factories in Kampuchea, including different scale and business mode production lines, including Taiwan capital producers, Hong Kong manufacturers and Chinese manufacturers, so that the industry can understand different production modes.

Liu Jingxian, managing director of Lijun Shoes Co., Ltd. said: "this trip has given me a better understanding of the investment environment, hardware and software facilities and actual operation of the two locations, and also has the opportunity to establish a network with local officials and industry to facilitate further investigation and investment in the future."

However, the market is unpredictable. Choosing factories in a certain area not only depends on the low cost of the land and labor, but also whether the local economic conditions are stable, and whether the other costs, including strikes, are high.

Now it seems that many factors such as high inflation and so on make Vietnam likely to be on the edge of the economic crisis, and the manufacturing factories pferred from mainland China to Vietnam are also facing huge operational risks.

The financial crisis has made shoe enterprises difficult to establish in Vietnam, and the current economic situation in Vietnam is not optimistic.

In May, Vietnam's inflation reached 25% (excluding grain, oil and electricity prices); the trade gap in the first 5 months was 14 billion 400 million US dollars, up four times compared with the same period last year; and the stock market has accumulated 56% over the past year, which has hit the world's biggest drop. The Vietnamese shield has been dropping again and again.

This is not a reminiscent of the financial turmoil that began 10 years ago when the Thai baht began to depreciate.

History is coming from yesterday.

Today's Vietnam financial crisis is the result of the economic boom in the past few years.

Over the past few years, Vietnam has vigorously promoted economic development and implemented low interest rates, attracting a large number of overseas funds into the stock market and real estate. The good scene has increased GDP by about 7.5% a year.

The tiger of South Asia is coming out, and it also has great attraction to world capital.

In recent years, a large number of foreign investors have poured into Vietnam, and multinational giants such as Nike, Microsoft, Mercedes Benz, Intel, Foxconn and so on have flocked to Vietnam to invest in factories. Last year, foreign invested enterprises applied for 20 billion US dollars in Vietnam, which is 1/3 higher than that in neighboring Thailand.

At the beginning of this year, China's "two taxes combination", the implementation of the new labor law, the huge increase in raw material costs, the adjustment of the export tax rebate policy and the tight financing difficulties made many Hong Kong and Taiwan enterprises in the Pearl River Delta seem to be interested.

Part of the Pearl River Delta Electronics, clothing and footwear and other labor-intensive industries to Vietnam.

However, in the short period of six months, the enterprises pferred to Vietnam in the Pearl River Delta have yet to gain a firm foothold.

This is not only related to the untimely supply of Vietnam's macro policies, but also to the lack of industrial foundation.

A country with abundant reserves of crude oil, because of its lack of industrial foundation, exports crude oil one hand and relies heavily on imported refined oil on the other hand, so that the benefits of high oil prices can not only fail to enjoy, but rather pay for high oil prices, resulting in an increasingly large trade deficit.

According to the financial times, Vietnam's American Chamber of Commerce called on the Vietnamese government to act quickly to restore macroeconomic stability at the annual meeting of the Vietnamese government and foreign business in June 2nd.

That is to say, the choice of setting up factory production in a certain area depends on not only the low cost of local land and labor, but also the fact that the price of a female worker in some parts of Vietnam is only 1/6 of Guangdong's labor force, and equally important is whether the local economic situation is stable and whether the industrial and related infrastructures are perfect.

Many factors such as high inflation have brought Vietnam to the edge of the economic crisis. Enterprises pferred from eastern China to Vietnam are facing huge operational risks.

Some Hong Kong and Taiwan enterprises have to lay off workers and reduce business.

"These enterprises are less likely to divest completely."

Analysts believe that, because of the rapid development stage of Vietnam in the first two years, many eastern China enterprises have stepped in and bought factories and equipment.

Real estate prices in Hu Zhiming have fallen by 50%, while Hanoi is slightly better, down 20%.

It is difficult for enterprises to retreat under such circumstances.

However, the financial crisis in Vietnam still has an important impact on the eastern coastal industrial pfer.

Guotai Junan analyst Zhang Xiuqi pointed out that at present, Vietnam's stock market is insufficient to spread to China's stock market, and may even become a factor stimulating China's stock market. Hot money keeps flowing out from Vietnam to find new investment directions. China's stable development and effective macroeconomic regulation and control may become another investment point for Vietnam to withdraw funds.

In particular, the eastern industrial capital, including Taiwan capital, has the same cultural identity with the mainland, which can greatly reduce the investment cost.

In the past, Taiwanese capital pferred to Vietnam was mainly inland in the central part of the country, and the pportation cost of export products was large, and Vietnam had advantages both in straight line distance and in shipping cost.

But compared to Vietnam, the central part of China has obvious cost advantages in terms of industrial layout, pportation infrastructure, preferential policies, labor, land and hydropower prices. Only the export enterprises are far away from the harbour, but this can improve customs clearance procedures and improve the efficiency of import and export.

At present, the vast majority of Chinese enterprises are in the wait-and-see view of the economic trend. The strategy adopted is to control costs through various means, including layoffs and business reduction.

The journalist who interviewed the manager of the Hanoi company has laid off 70% of its employees, 30% of whom are Chinese employees, who have basically returned to the country, and the other 40% are Vietnamese employees.

However, Vietnamese workers did not react collectively to the layoffs, because they also knew that this was the general trend that forced them to compete.

Other disadvantages of Vietnam 1. Vietnamese exporters are facing REACH barriers to exports to the EU. If Vietnamese exporters want to continue to develop the EU market, they will register the chemical composition of their products with the European Chemical Bureau (ECHA).

Failure to comply with this new rule results in the loss of the EU market.

Under this regulation, Vietnamese exporters can obtain registration, assessment, authorization and chemical Restriction Act (REACH) from June 1st to December 1st, and all chemicals used in the products must be registered with the European Union.

The target set by REACH is the entire product range, including chemicals, dyed, ink imprints, textiles and clothing, footwear, toys, cosmetics and other products.

REACH will perform monitoring tasks for any chemicals that affect health and the environment within 10 years.

In addition, EU consumers will have the right to get information from producers about ingredients, safety and their impact on the environment.

In this case, the manufacturer will give feedback within 45 days.

It also implies that exporters must be fully aware of the sources of raw materials used for their products, especially new chemicals and chemicals that they have already used.

2. a pestilence strike in southern Vietnam often strikes several factories, or strikes at several industrial zones, or even strikes in several provinces.

Frequent strikes and low productivity problems are plaguing foreign-funded enterprises. They believe that these are enough to offset Vietnam's low land price and low labor cost.

As early as January 1, 2008, according to the new standard set by the government, "Huafeng" raised the basic wage of workers to 850 thousand "shield" (about 425 yuan), which used to be 560 thousand shield.

However, the workers reflected that 1.5 hours of overtime worked 1 times before, and now that the basic wage rises, overtime pay is the same as usual.

Therefore, the actual income of workers is different from that before adjusting wages.

Recently, about 1000 workers from four Vietnamese factories went on strike to raise wages to catch up with the price increase.

Over the past few months, Vietnam has seen a series of similar strikes against price rises.

This reflects the anger of tens of thousands of Vietnamese workers who have come from remote rural areas to new industrial areas such as Hanoi and Hu Zhiming, and find that the purchasing power of their incomes is declining under the erosion of soaring food and fuel prices.

Statistics from government departments showed that there were 300 strikes in Vietnam in the first quarter, up from 103 recorded in the same period last year.

This year's general strike took place in the Taiwan factory for shoes produced by Nike NikeInc..

In April, about 21000 workers in the factory went on strike for higher wages.

3. the Vietnamese government has different treatment policies for foreign and domestic enterprises within and outside the enterprise, which makes many foreign investors operate in the way of domestic joint ventures to avoid these unreasonable regulations and systems.

In March 14th, on the third day of the strike, "Huafeng" posted a notice requiring employees to resume work.

But on the second day, a few people do not allow most people to work.

In March 17th, there were other parts.