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Saturday, April 11, 2009

Location - Vietnam Vs. China

Multinationals take a longer view of Vietnam - LA Times.

A key phrase from the article is "China plus one", when describing Vietnam. Many Taiwanese companies were leaving China due to higher cost, and setting shop in Vietnam.

Negatives in the article about locating in Vietnam:
  • Highly theoretical Education and lack of technical work force
  • High Inflation (28% last year)
  • Labor Strikes at Garment and Footwear companies
  • Poor infrastructure
  • Government does not get things done quickly (as China does).
  • China's improving business climate and low cost producer
I am surprised at the negatives of locating in Vietnam, from the article is seems the government is less authoritarian than China. Permitting labor strikes I did not expect. Nor, not quickly evicting people for infrastructure projects (major problem in China, especially with corruption issues). Labor strikes are big issues for companies that are very low cost producers, such as Tennis Shoes. The reason many companies have left Indonesia is because of labor stability, where China does not have this issue.

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