VietNamNet Bridge - Many foreign enterprises in China have visited Vietnam to learn about the investment opportunities here, but most have not made decisions to relocate. 

Vietnam attracts foreign investors

A senior executive of an IZ development company in Binh Duong province confirmed that the demand from foreign investors for land lease in the IZ has increased. But he was not sure if this was due to the redirection of FDI out of China to Vietnam.

Soon after the US-China trade war began, the number of foreign investors  asking about land and workshop leases increased sharply. They were mostly from Japan, South Korea and the US, and some from Europe.

“However, investors need more time to think about production relocation,” he said.

Tran Duy Vu, deputy CEO of Kizuna IZ Infrastructure Development in Long An province, said an enterprise mentioned the plan to expand production in Kizuna and scale down production in China. However, the expansion plan in Vietnam still has not been implemented.

Takimoto Koji from JETRO HCMC said Japanese investors, who are cautious in doing business, need a lot of time before making decisions.

Vietnam is attractive to Japanese investors, however, a trend of Japanese enterprises leaving China for Vietnam to avoid the US-China trade war has not occurred.

Vu from Kizuna said foreign invested enterprises in China will relocate their production bases or expand their investments in other countries only if they export products directly to the US and bear additional high taxes. At this time, foreign enterprises are still listening to the news and have not made decisions.

Vu said that China, with more than 1 billion consumers, is too attractive for manufacturers to give it up. China is also the world’s production base which provides products for supporting industries. If they leave China, foreign investors would have to seek other supply sources, which may lead to higher production costs.

CNBC, in an article about the US-China trade war, cited a survey by the US Chamber of Commerce in Beijing as reporting that nearly two-thirds of US companies will not consider relocation of their production bases out of China. Only 13 out of 430 surveyed companies were considering leaving China and heading for Southeast Asia. 

CNBC quoted Nick Marro, an analyst in Hong Kong, as saying that it takes three to five years to relocate production activities from China to another country.

Vietnamese government officials are optimistic about FDI, saying that even without the trade war, Vietnam would still be an attractive destination for foreign investors thanks to high GDP growth, political certainties, cheap labor force, and significant incentives offered by the government.

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