The past few years appear to have been good for Vietnam’s export industry, as the country emerges as the big winner in the continuing trade war between the US and China. Vietnam’s exports to the US increased 36% , in the first six months of 2019 according to US trade data compared with the same period in 2018. The country has a strong infrastructure network and ports that are ready to export – essential elements for trade – while factory wages are cheaper than elsewhere. On the surface, it all looks promising.
But there is a sting in the tale. While Vietnam is taking advantage of changing trade flows, the Hanoi government is wary of becoming a channel for China to export to the US while dodging tariffs. Chinese companies have been moving their processing operations to the countries from which they previously imported unfinished goods: for example, fish caught in Vietnam by Chinese companies will be processed locally and exported directly to the US, rather than being sent to China for processing. Vietnam’s trade ministry has responded by implementing restrictions on what can be labelled as ‘Made in Vietnam’.
