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Viet Nam can gain from China’s success   2010-09-04 - VNS

Now that China has taken over from Japan as the world’s second ranking economic power, experts see opportunities for small economies, such as Viet Nam’s, to take more foreign outsourcing orders.

 

 

Workers at the Binh Dinh Footwear Co making sports shoes for export. In the first seven months, Viet Nam had an export turnover of more than $2.75 billion in footwear, a year-on-year increase of 13.8 per cent.

They predict that China will accept less outsourc-ing in industries using large numbers of workers, such as garments and textiles, and boost production of products with high added value.

 

The low production-cost advantages it now offers are expected to fade as wages and the cost of materials increase.

 

Diep Thanh Kiet, deputy president of the Viet Nam Leather and Footwear Association, said Viet Nam’s cheap labour costs would enable it to take large orders in garments and textiles, leather and footwear - and furniture.

 

Viet Nam’s garment and textile exports to South Korea increased 80 per cent thanks to tax reductions under the ASEAN-RoK Free Trade Agreement. Meanwhile, the Viet Nam-Japan Economic and Trade Agreement has helped boost Viet Nam’s garment and textile exports to Japan by 15 per cent over the same period last year.

 

In the first eight months of this year, Viet Nam earned nearly US$6.9 billion from garment and textile exports.

 

Kiet said many customers selected Vietnamese instead of Chinese footwear because the quality was higher and prices lower.

 

In the first seven months of this year, Viet Nam had an export turnover of more than $2.75 billion in footwear, a year-on-year increase of 13.8 per cent. Of this, almost $700 million was earned from the US.

 

However, Kiet said he was unsure if Vietnamese enterprises could accept much of the spin-off trade from China, which exports about 8 billion pairs of shoes a year.

 

He said if Viet Nam took just 10 per cent of this, the local footwear industry would have to double its production capacity.

 

The same would be true in the garment and textile sector. The sector would have to increase its capacity 2.5 times to receive 10 per cent of orders from China. In 2009, China exported $150 billion worth of garments and textiles, while Viet Nam exported $9.2 billion. To take advantage of the new situation, experts said Vietnamese industries must quickly overcome problems in human resources, materials and technology.



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