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East Asian Companies Keen on Vietnam as a China Alternative - Vietnam Briefing News

May 9 – More and more foreign investors, especially out of the textile and clothing industry, are looking to invest in Vietnam due to the increasing production costs in China.

Two weeks ago, a joint venture between Pacific Vietnam Textile Ltd and Crystal Corporation was authorized by the Hai Duong provincial People’s Committee. The collaboration is centered on a garment and textile complex in Hai Duong’s Tu Ky with a volume of US$180 million with a calculated revenue of US$590 million per year. According to the investors, it is the largest vertically integrated project in Vietnam. The production process includes knitting and dyeing, cutting and sewing, and reining the textiles.

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Three month ago, Danang’s People’s Committee licensed investment certificates in a similar way. In this case the certificates are for the Japanese Morito Group’s four garment plants Oishi (provides components for brands such as Adidas, Nike, Gucci, Dolce & Gabbana), Amagasaki Seikan, Inoue Ribbon, and Fukui Denka Koygo in the Danang Hoa Khanh Industrial Park with a total investment capital of US$15 million.

According to the senior consultant at the Japan International Cooperation Agency (JICA), Fumio Koyama, Vietnam is the logical choice for Japanese companies because of the reasonable labor costs. He refers to a JICA report about the average salaries for the manufacturing sector:

  • Vietnam: US$70 – US$116 per month
  • China: US$192 – US$290 per month
  • Cambodia: US$80- US$100 per month
  • India: about US$187.4 per month

Christian P. Schindler, director general of the International Textile and Manufactures Federation, added that Vietnam is an ideal location for many investors and Nguyen Thi Hong Tin, director of Vietnam National Textile and Garment Group’s market research and promotion department, said that many investors came here because of the economic environment, low cost sourcing alternatives and the stable political system.

Because of this special economic and investment environment, a delegation of 25 Macau companies and investment firms visited Vietnam last week for the first time to investigate the investment potential around the country. According to the organizers (Sao Kuhe Investment and Trade Promotion Organization, the Macau Trade and Investment Promotion Institute, and the Industry and Commerce Association of Macau), the Macau partners were introduced to 20 property projects. Ha Manh Dung, chief executive officer of the GIICO International Investment Corporation hopes that the Macau companies are interested in the projects, which includes a casino development in Venus Cat Ba – Halong International Resort Complex.

But the managing vice president of the Industry and Commerce Association of Macau said it was just the first step for a future investment of the Macau investors. The business matching was more to convey a general idea about the economic and investment environment, the political situation and the potential in Vietnam.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email [email protected], visit www.dezshira.com, or download the firm’s brochure here.

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