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Vietnam Is The Next China, Part II. Only If You Completely Ignore Political Stability.

By Dan Harris and Steve Dickinson

Long-time client, a manufacturer of small steel products, has for months been "threatening" to move his factory to Vietnam, either to replace an existing factory in China or as an adjunct. Company was unhappy with China's increasing taxes and labor rates. Just spoke with client this morning (yeah, I know it's Sunday but he was about to board a plane for China) and I asked him about Vietnam. His reply was essentially as follows. "Forget Vietnam. Too risky. We found we just can't handle the inflation and the politics. Yes, China is getting expensive, but I just feel it is more of a known entity for us. Not worth chasing a few dollars in savings." Again, I am NOT saying Vietnam is the wrong place for business, because it most certainly is not and a number of my firm's manufacturing, food, and high tech clients have done quite well there. But what I am saying is that the next time anyone acts as though Vietnam is necessarily better than China for your business, make sure you look at all relevant factors, not just easily apparent costs. For more on Vietnam's political risks, check out this Asia Sentinel article, "Hanoi Pain."

Full post as published by China Law Blog on October 20, 2008 (boomark / email).