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According to estimates by several companies, China's share in the supply chain has been reduced to 45-50%, while 15-20% of the supply chain has been transferred to Vietnam, India, the Philippines, Myanmar, Bangladesh and Cambodia. This will be an opportunity for Vietnam to usher in foreign direct investment funds in textile and garment factories.

Following the U.S.-China trade war, the COVID-19 pandemic is seen as a catalyst for stronger trends in global supply chain shifts.

Vietnamese experts say that in addition to the advantages brought by low labor costs and a series of free trade agreements (FTAs), Vietnam currently has the ability to produce and export certain commodities in the global supply chain, such as textiles, footwear, electronics, auto parts, etc. components and machinery.

Compared to many other productive industries in the supply chain, these industries have enormous potential and transfer dynamics, and the degree of transfer is also greater. Therefore, opportunities must be seized in the future to promote the attraction of investment capital into these industries.

Vietnam: Embracing opportunities for capital transfers

Although many technology companies have not completely withdrawn from the Chinese market, they have taken the initiative to transfer some production parts to other countries, including Vietnam.

Recently, multiple sources said that Apple will begin deploying the assembly of the second-generation wireless earphones (AirPods Pro 2) in Vietnam in the second half of this year. Previously, the company produced EarPods (wired earphones) in Vietnam, but this is the first time Apple has brought its line of wireless earphones outside of China.

Apple's biggest rival Samsung also closed its last smartphone factory in China in 2019 to move to Vietnam and India. Currently, Vietnam is home to the group's largest smartphone factory, accounting for about 60 percent of global sales.

Not only in the electronics field, many textile, apparel and shoe material production groups and companies are rearranging their production chains to reduce over-reliance on a single market and the impact of outbreaks and other risks.

According to the estimates of many companies, the rearrangement of the supply chain is to reduce China's share in the supply chain to 45-50%, while transferring 15-20% of the supply chain to Vietnam, India, the Philippines, Myanmar, and Bangladesh. countries and Cambodia in this way. This will be an opportunity for Vietnam to usher in foreign direct investment (FDI) funds in the production of leather footwear, luggage raw materials and accessories.

Not only that, Vietnam also has a great advantage, because as a country that has participated in a number of free trade agreements, Vietnam's exports to major markets will enjoy tax incentives.

The Vietnam Textile and Apparel Association (Vitas) predicts that between now and 2025, the transfer of investment funds from the textile and apparel industry to Vietnam will increase sharply, especially after the new crown pneumonia epidemic is brought under control. It is worth noting that this transfer comes not only from Asian countries, but also from European countries such as Italy, Germany and Russia.

For example, Italian companies have invested in a large-scale yarn-textile-dyeing-clothing production cluster in Phu Gi, Binh Dinh Province and a textile factory project in Pu Nuo Industrial Park, Hung An Province. This helps Vietnamese enterprises have the opportunity to accept and learn from advanced production technology and modern management level, while increasing the added value content in production and reducing the processing part.

Vietnam: Competing with many countries for the supply chain

According to experts, despite its many advantages, Vietnam also faces stiff competition from other emerging economies in attracting investment due to the shifting trend of new supply chains.

For example, compared to India, Vietnam has more advantages in terms of economic and political stability, participation in many free trade agreements, and basic conditions of industrial zones, etc., while India has many advantages in attracting high-tech capital flows, such as labor Abundant resources, information technology - the development of the Internet field, and a huge consumer market.

Similarly, countries in the same region such as Thailand, Indonesia or Malaysia have their own advantages in attracting foreign investment.

Although Vietnam has formulated a number of investment promotion policies, such as encouraging investment in the construction of industrial parks, processing zones, and focusing on the development of supporting industries, the reality shows that the implementation of these policies has many shortcomings and the effect is not good.

Therefore, experts suggest that, first of all, it is necessary to improve policies on import taxation, industrial park development policies and planning, improve labor productivity, and provide more favorable conditions for receiving investment funds that are being transferred to Vietnam. Furthermore, as investors always tend to implement supply chains to avoid high costs, it will be difficult to avoid the risk of FDI flowing into other countries when Vietnam reaches middle-income status.

Therefore, in order to retain investors in the long term, it is necessary to strengthen education, training and research and development to improve the productivity and skills of workers; strengthen the application of technology, and gradually transform from participation in labor-intensive industries to industries with greater added value in the global value chain .

Especially for labor-intensive industries such as textiles, clothing, and footwear, in order to reduce the risk of falling behind in the Fourth Industrial Revolution and welcome the inflow of investment funds from developed countries, Vietnam must take measures to strengthen automation and increase labor Skills and other directions are upgraded to produce high-end products with higher added value.