VietNamNet Bridge – A lot of Japanese investors in Thailand now tend to relocate their factories to Vietnam. However, only the labor intensive production workshops would be set up here.

Hirotaka Yasuzumi, Managing Director of the Japan External Trade Organization (JETRO) in HCM City, noted that there is a wave of Japanese enterprises in Thailand leaving for neighboring countries, including Vietnam, which should be the great opportunity for Vietnam to grab to lure more foreign investors.

He said that to Thoi bao Kinh te Saigon on the sideline of the 2014 meeting between the city’s leaders and Japanese businesses in mid February.

However, he made himself clear that Japanese would not move the production divisions that need high technologies and equipments. Only the production workshops hat need high numbers of workers would be set up in Vietnam.

Explaining the reason why Japanese are eyeing Vietnam, he said the average pay for workers in Thailand is double that in Vietnam. This has prompted Japanese to go to Laos, Cambodia and Vietnam to seek the cheap labor force.

Of the three destinations, Vietnam proves to be the best choice for Japanese investors because of the superior qualification of the labor force. JETRO usually advises Japanese to move to Vietnam, because it would be difficult to find high quality workers in Laos and Cambodia.

In general, Japanese enterprises maintain the production workshops that bring high added value in Thailand, while they organization the other phases of the production chains in other countries to cut down the labor costs.

It is because Japanese enterprises have had their market in Thailand already after many years of operation there. Especially, the supporting industries in Thailand have been developing well which can support their production and business.  

The biggest problem Japanese manufacturers meet in Vietnam is the weak supporting industries. Meanwhile, they don’t face the problem in Thailand.

International press in recent days has quoted the representatives of the Japanese automobile manufacturers in Thailand as saying that the political problems are threatening the car manufacturing in the country.

Some analysts have predicted that Japanese automobile manufacturers would leave Thailand for Vietnam, where they would be warmly welcomed, because Vietnam is eager for developing its automobile industry.

However, Yasuzimi has denied this, saying that Japanese would not give up their factories in Thailand, the big automobile manufacturing center in South East Asia, where the automobile supporting industries are very strong.

He went on to say that Vietnam cannot be comparable with Thailand in terms of the market scale. It is estimated that 2.5 million cars is churned out in Thailand a year, while the figure is just 100,000 in Vietnam. Therefore, Japanese manufacturers have no reason to choose Vietnam instead of Thailand.

In fact, the political uncertainties in Thailand have been existing for the last many years already. Japanese investors in Thailand also once suffered from the historic floods some years ago. However, Japanese enterprises still have been staying there.

A survey by JETRO has found that only 28 percent of materials needed can be found in Vietnam, while the other 72 percent need to be imported, which makes the production costs higher.

TBKTSG