With the Coronavirus pandemic sweeping the world, companies seem to be shifting from China to Vietnam. In January, Samsung moved phone production from China to Vietnam due to restrictions implemented in response to the COVID-19 pandemic by the Chinese government, this mainly included moving the production line of technology away from China as a temporary measure.
However, before the pandemic, companies were doing the same regardless, with Vietnam expecting to have a 4.8% GDP growth throughout 2020 according to speculation by the Asia Development Bank, the highest of any South East Asian nation. Vietnam is also home to production lines for Nike, Adidas, the North Face amongst many other popular and well-known western brands such as Apple. Now, due to Vietnam’s swift pandemic response, the economy is resuming, and many companies are keen to shift production to Vietnam, recently Apple announced that they would be shifting 30% of production of Airpods to Vietnam also.
Another reason that companies may be shifting production, or partial production to ASEAN countries from China is that the United States’ government seem to be constantly increasing tariffs on products made in China, naturally lowering profit margins. This forces companies to move production away from China, leaving an opportunity for exports and an increased flow of income for economies willing to take on this labour pool.
Vietnam seems to be a big player in this shift of labour with the benefits from this increase not just being seen economically but also an improvement in employment statistics. However, with constant reports of bad conditions and a serious lack of worker’s rights in factories throughout China and other Southeast Asian nations such as Myanmar & Indonesia (where, according to the Huffington Post, a Nike warehouse used military force to ensure that workers complied to underpaid work), it is clear to see why some may be worried about working conditions under increased strain and the western perception of Vietnam as a cheap source of labour.
Unlike many other ASEAN countries, Vietnam holds a particularly high standard of workers rights. According to the International Labour Organization “the ILO has praised Vietnam’s latest move to bring its legal framework closer to international standards by the adoption of its revised Labour Code on 20 November 2019”, Vietnam aims to meet international labour standards by 2021, with Chang-Hee Lee, director of the ILO in Vietnam stating that “I am convinced that Vietnam will successfully complete this mission for its own future – a future built on higher productivity, better working conditions, the fairer sharing of economic gains, equality and the recognition of the voices of workers and employers”. Criticisms of the current labour system in Vietnam include those stating that employees cannot access a labour union without government affiliation, something addressed also in the revised Labour Code.
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The future looks bright for foreign investment in Vietnam, companies gradually continue shifting labour and production to the country, though the fact that the government is addressing this expansion head on seems to mark it separately from other cheap labour sources in the world. Worker’s rights shall be improved in the country despite an already enormous growth in labour outsourced to Vietnam; one can only hope that such investments are long-lasting and beneficial for both the workers of Vietnam and the economy, as well as the continuation of good trade relations with other nations that facilitate the growth of Vietnam as an economy already emerging as a powerhouse of Southeast Asia.
By Elliott Chapman (email@example.com). Elliott Chapman is a politics and international relations student; political activist. The opinions expressed here are his own.