Vietnam gains as global companies diversify supply chains
Vietnam's role in the global supply chain has been undergoing a significant transformation, marked by its increasing importance as a manufacturing hub and a source of high-demand exports.
Founded in 2010 in Suzhou, China, Sinnotech Technology specializes in precision injection molding. Catering to global customers, its products are used in automobiles, consumer electronics, and industrial and medical sectors.
Allen Qiu, operations manager of Sinnotech Vietnam, was appointed to establish the company's Vietnam branch in April this year. Seven months in, he is now leading a team of 30 staff, the majority of them being locals.
"We have basically completed our investment for 2023, but only 30 percent of the plant's capacity is being utilized. So there's still room for expansion in the future. We've completed an investment of about 1.5 million U.S. dollars so far. We expect to invest about 7 million U.S. dollars in the whole project for the next three to five years. But it also depends on the situation of the whole market. It will be a gradual investment," said Qiu.
Since the beginning of 2023, Vietnam has attracted more than 25 billion U.S. dollars in foreign direct investment. Pledges from China were the highest at 8.2 billion U.S. dollars in the first 11 months, twice as much as in the same period last year. Industry experts say the increasing FDI growth is propelling Vietnam up the value chain.
"We see a very strong surge in leasing enquiries by more than 75 percent year on year. More than 40 percent of Vietnam's total exports are actually made up of high-tech related goods. And this is also similarly reflected in our tenants' profile, where more than 40 percent of our really big factory space taken out by tenants are from high-tech and electronics-related industry," said Fion Ng, chief operating officer of BW Industrial.
Lower labor cost and greater connectivity have made Vietnam extremely attractive for global companies. Hanoi has signed 15 free trade agreements with all major economic partners and is also part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
