Vietnam's high private wealth growth rate is due to the fact that “Made in Vietnam†is replacing “Made in China†to a certain extent, and Vietnam has become an emerging global manufacturing center. Indeed, with its important geographical location, fast-growing economy, low labor costs, flexible manufacturing capabilities and a growing market, Vietnam is becoming a new base for many brands.
According to the latest report from wealth research firm New World Wealth, Vietnam's private wealth growth rate was 210% from 2007 to 2017, becoming the country with the highest growth rate of private wealth in 10 years. China followed closely with a growth rate of 198%. , ranking second in the world.
New World Wealth Analysis believes that Vietnam's high private wealth growth rate is benefited from the fact that “Made in Vietnam†is replacing “Made in China†to a certain extent, and Vietnam has become an emerging global manufacturing center.
Indeed, with its important geographical location, fast-growing economy, low labor costs, flexible manufacturing capabilities and a growing market, Vietnam is becoming a new base for many brands. Large global manufacturing companies are shifting production centers to lower-cost Vietnam, including many Chinese manufacturing companies.
Vietnam’s reform and opening up
In 2008, Vietnam’s GDP was only $91.064 billion, and by 2016 it had soared to $20.16 billion. In 2017, Vietnam’s economic transcripts were still quite impressive, with GDP increasing by 6.81% year-on-year, higher than the GDP growth rate of 2011~2016.
The World Bank believes that Vietnam’s development results have been quite good in the past three decades. Under the framework of the "socialist-oriented market economy" proposed in 1986, the Vietnamese government implemented a series of economic and political reform measures, experienced rapid economic growth and development, and entered low- and middle-income countries from one of the world's least developed countries. .
Some Chinese entrepreneurs who have entered Vietnam say that Vietnam’s ability to become another manufacturing center is very important because “the Vietnamese government’s determination to reform and open up, especially the incredible positive changes brought about by China’s reform and opening up, gave The Vietnamese government has reassured that the Vietnamese government believes that the same social system is feasible and feasible. It will not only weaken but will strengthen the leadership of the ruling party."
The "2011-2020 Economic and Social Development Strategy" promulgated by the "11th National Congress" of the Communist Party of China defines three strategic breakthrough points, namely, improving the market economic system, developing high-quality human resources (especially modern industries and innovative talents), and realizing infrastructure. modernization. The Resolution of Economic and Social Development Plan for the Five-Year Plan from 2016 to 2020, which was adopted in April 2016, sets the economic development target as “the average annual growth rate of GDP in the five years is 6.5%~7%, and the per capita GDP will reach 3200 by 2020. ~3,500 US dollars, 2020 industrial and service industry accounted for 85% of GDP, social labor productivity increased by 5% annually, and admitted that the government must accelerate the pace of reform in some key areas.
In January 2016, the Twelfth National Congress of the Communist Party of Vietnam identified the private economy as an important driving force for Vietnam's economic growth for the first time; the first SME Support Law was passed in June of the same year, and on January 1, 2018. Formally implemented. Viet Nam particularly emphasizes the need to vigorously develop small and medium-sized micro-private enterprises, especially innovative high-value-added enterprises, manufacturing enterprises, and enterprises involved in global value chain production and in line with national development. The Vietnamese government plans to support such enterprises in various aspects such as tax policy, bank credit, business environment, technical support and government procurement.
The Vietnamese government plans to invest 130 billion U.S. dollars in infrastructure construction by 2020 to improve the status of infrastructure. At the same time, in order to maintain the fiscal deficit in the promotion of national infrastructure construction, the Vietnamese government plans to privatize at least 500 state-owned enterprises between 2014 and 2020, and accelerate the pace of reform of state-owned enterprises.
In terms of attracting foreign investment, in July 2015, Vietnam made additional amendments to the investment law, clarifying a series of policy issues, and at the same time greatly simplifying the administrative review procedures and giving foreign investors a greater preferential margin. UNCTAD has stated that Vietnam is the most foreign-funded country in ASEAN.
The Vietnamese government has further upgraded its national communications technology. From 2010 to 2020, it will invest $8.5 billion to develop information and communication technologies. According to statistics from the International Telecommunication Union, the density of mobile communication users in Vietnam ranks eighth in the world, and the coverage rate of 3G services in the country is as high as 93.68%.
In August 2016, the Vietnamese government approved the “Overall Plan for E-Commerce Development from 2016 to 2020â€. The plan proposes: strive to achieve rapid development of cross-border e-commerce by 2020, and B2B e-commerce transactions account for 30% of total import and export; 80 % of companies submit and accept orders through e-commerce platforms; 100% of supermarkets, procurement centers, and modern wholesalers install POS machines; 70% of water, electricity, and communication media providers provide non-cash settlement services.
According to the Global Manufacturing Competitiveness Index released by Deloitte & Touche and the US Competitiveness Council, Vietnam is expected to rank among the 15 most manufacturing-competitive countries in the world by 2020.
In the latest business environment ranking released by the World Bank, Vietnam has risen to 68th in 2017 and to 55th in the World Economic Forum Competitiveness Index.
Population - rich, young, hardworking
According to the American Institute of Management Accountants (Asia) (IMAAsia), in 2010, China's manufacturing wages were only $2 per hour; in 2016, it had risen to $3.9. In contrast, Vietnam’s manufacturing wages are still around $1 an hour.
According to data from the Chinese Ministry of Commerce, there are about 54 million laborers in Vietnam. In 2016, the unemployment rate of the working-age population in Vietnam was 2.3%. Starting in 2017, Vietnam’s official minimum wage for labor is between 2.85 million and 3.75 million VND, or about 775 to 1125 yuan.
Compared with Cambodia, Myanmar and Laos, the productivity of the Vietnamese labor force is closest to the average of China. The World Bank study also found that the health and education status of Vietnamese people has improved significantly compared to 20 years ago. In the past two decades, the educational rate in Vietnam has increased, the rate of early infant and young child decline, and the number of underdeveloped population has decreased, all of which provide a large amount of labor for labor-intensive manufacturing.
At the same time, more and more labor is invested in economic organizations such as non-state and foreign companies. The growth rate of laborers of non-state-owned enterprises and foreign-funded enterprises is significantly higher than that of state-owned enterprises. As of January 1, 2018, the number of workers in various industrial enterprises in Vietnam increased by 4.2% year-on-year. Among them, the number of workers in state-owned enterprises fell by 1.3%, that of non-state-owned enterprises increased by 2.4%, and that of foreign-funded enterprises increased by 5.8%.
Continuously upgrading manufacturing
In recent years, Vietnam has rapidly transformed its industrial structure. Electronic processing, textiles and infrastructure have become the pillar industries of the Vietnamese economy. The main export commodities have also changed from textiles to electronic products and machinery. Vietnam’s exports of high-tech products, which accounted for one-third of Vietnam’s total exports, grew by 33% year-on-year, exports grew by more than 20%, and trade volume reversed from a deficit to a surplus.
Statistics from the General Statistics Office of Vietnam show that the proportion of textile exports has declined since 2016 and has been surpassed by exports of electronic products and computers. Machinery exports have also increased in recent years, and are close to the export of footwear.
Let's take a look at a few examples: As of 2017, Samsung's production investment in Vietnam totaled $7.5 billion, LG's investment reached $1.5 billion, and Microsoft's investment was $320 million. At the end of October 2015, Apple opened a branch in Vietnam with a planned investment of US$1 billion to locate Apple's Asian R&D center in Vietnam. Foxconn also set up a factory in Vietnam.
In fact, many people in China may not have thought that Vietnamese mobile phones and their parts and components have been exported to the EU, China, UAE, South Korea, the United States and many other markets.
Or among the top 20 economies in the world
Vietnam has also actively expanded its diversified foreign trade relations, which has achieved relatively stable export earnings and mitigated the economic risks brought about by external economic fluctuations.
According to the latest statistics from the Ministry of Industry and Trade of Vietnam, in January 2018, China has surpassed the United States to become Vietnam's largest trading partner with an export value of 4.5 billion US dollars. This is followed by the United States (exports of 3.5 billion US dollars, an increase of 17%), the European Union (exports of 3 billion US dollars, an increase of 6.6%), ASEAN (exports of 1.7 billion US dollars, an increase of 15.7%), and Japan (exports of 1.5 billion US dollars, Growth of 18.6%), South Korea (exports of $1.3 billion, an increase of 28%) and so on.
In early 2017, PricewaterhouseCoopers released a long-term global economic status report, predicting that Vietnam will join India and Bangladesh as the three fastest growing economies in the world in 2016-2050. PricewaterhouseCoopers also believes that increased investment capital expenditures and advances in technology will lead to an increase in labor efficiency in Vietnam, leading to more efficient and quality GDP growth. As a result, PricewaterhouseCoopers predicts that Vietnam's economic status will increase significantly, from the 32nd global ranking in 2016 to 12th, and in 2050 it will become the 20th largest economy in the world.
New World Wealth also believes that Vietnam's wealth will grow further by 200% in the next 10 years, driven by strong growth in healthcare, manufacturing and financial services.
Some analysts said that Vietnam's advantage is that the labor force is sufficient and the price is low, the tax burden is low, natural rubber and other natural resources are abundant, the coastline is long, the port is numerous, and the shipping is convenient; the disadvantage is that the labor quality is relatively low and the industrial base is weak. Production materials are widely dependent on imports, and narrow land and weak infrastructure result in higher inland transportation costs. In general, Vietnam has indeed become a new investment hotspot for global manufacturing, and this situation will continue for a long time, but on the other hand, it is difficult for Vietnam to replace China as a world manufacturing center, Vietnam’s economic aggregate and infrastructure. The investment strength and the time that the cost advantage can be maintained are all constraints. If Vietnam can fight for and actively participate in the “Belt and Roadâ€, it will be able to add strong momentum to its economic growth and achieve win-win with other countries such as China.
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