Although China has showed good numbers in 2019, investors are on the lookout for new Asian countries. Among them, Vietnam has been attracting foreign capitals, thanks to a booming real estate market, a political favourable situation and strong ties with the United States.
Several major companies, from Google to Samsung and Apple have already relocated to this new “dragon” country, where English is more widely spoken than in China, making trades easier for foreign individuals.
So, is Vietnam on the verge to become the new China? Since its demography is young and active, there is potential – but experts are warning about the country’s protectionism that might hinder its future.
Vietnam is a tech giants’ favourite
Since China’s labor has become more expensive, some of the most powerful American companies have decided to relocate their warehouses to Vietnam.
Alphabet Inc.’s Google relocated its production warehouse of Pixel smartphones in Vietnam, as well as Samsung Electronics that decided to permanently close its last smartphone factory in China. More surprisingly, even Chinese companies have relocated to Vietnam such as Goertek Inc who is manufacturing the AirPods for Apple.
As a result, “The country also notched just under 7% growth in gross domestic product, among the fastest in the world.”, analyzed the Washington Post.
Overcoming the US-China crisis
Secondly, Vietnam has played a role of a solid back-up in 2019, whereas the trade war with the United States has considerably weakened China.
The 2019 Hanoi summit resulted in “a combined $15.7 billion purchase of Boeing airplanes by two local budget airlines, with one of the Vietnamese carriers also signing a $5.3 billion deal with General Electric for aircraft engines”, highlights the magazine Foreign Policy.
The good and strong diplomatic relationship between Vietnam and the United States has confirmed the country key role in Asia.
Read on Alvexo: “Why Is Tesla Decreasing Its Prices in China?”
A long term investment
Last but not least, if its index has been showing promising numbers, they still remain lesser than China.
“The benchmark Ho Chi Minh Stock Index rose only 7.3% year-to-date, lagging well behind 32% gains in mainland China’s Shanghai Shenzhen CSI 300 Index. While emerging markets staged a Santa rally in December, Vietnamese stocks headed the other way.”, analyzed the Washington Post.
— Ashley S. Westerman (@_aswesterman) June 26, 2019
For some experts, Vietnam will only be able to surpass China once its infrastructure meets logistics – therefore, having easier access to railroads, ports and eventually international waters.
At the moment, 69% of the Vietnamese population is rural – the government is aiming to train two million students for technical jobs in order to match with the workforce needs in the few upcoming years.
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