Rising labour cost in China and opportunity for Viet Nam
Chinese labour costs have risen substantially in recent years, pressuring labour-intensive industries such as garment, textile and even processing and manufacturing. China is facing an outbound wave of foreign companies seeking better factors of production, especially cost of labour.
As a “next-door” economy with convenient waterway and road connectivity to China, Viet Nam stands out as an ideal recipient of this wave. Primary supporting factors include ASEAN membership, signed FTAs with large export markets and labour costs less than half that of China.
Momentum from new trade agreements
There was a surge of FDI at the conclusion of TPP and EVFTA negotiations at the end of 2015.
In H1 2016, 1,145 new projects registered capital of US$7.5 billion, increasing 95% year-on-year (YoY).
The processing and manufacturing sector received the most attention with a 71% share of registered FDI.
Geographically, Hai Phong and Ha Noi were the best-performers with a cumulatively registered FDI of approximately 30%, followed by Binh Duong with 9% and Dong Nai with 8 percent.
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