Glass half full as red carpet is rolled out

MiTac Precision Technologi Vietnam

MiTAC Precision Technology Corporation, an international supplier of specialised plastic and metal mechanical parts, is a case in point.

Last week, the Taiwanese-backed firm trumpeted its plan to expand production in Vietnam this year to cash into the country’s  cost advantages.

MiTAC Precision said in a statement that with labour costs in China having augmented greatly over the recent years and the labour shortages in the coastal regions becoming increasingly serious, the quality of production had been affected. “

Compared to China and neighbouring countries, Vietnam has relatively lower manufacturing costs, cheaper electricity and a stable labour supply, with labour wages being merely half of that in China.”

A Mitac Precision Technology Vietnam Company Ltd. representative said Mitac was constructing its second factory in northern Bac Ninh province, where its first plant was located. This new factory would become operational this April and another factory might be built in the future. Total investment capital was not revealed.

Late last month, Danang People’s Committee granted investment certificates to four garment firms of Japan’s Morito Group namely Oishi, Amagasaki Seikan, Inoue Ribbon and Fukui Denka Koygo. The four projects have a total initial investment capital of $15 million and will produce garments on five hectares in the city’s Hoa Khanh Industrial Park. Morito provides textile components to brands like Adidas, Nike, Gucci and D&G. Morito’s move is part of its plan to gradually shift garment and textile production from China to Vietnam, a trend that the Vietnam Textile and Apparel Association (Vitas) forecast would continue in the future.

A senior consultant from Hanoi-based Brooks Bower Asia (BBA), a globally-known premier corporate services firm, said that in contrast to the still appreciating reminbi, yen and US dollar, the depreciation of the Vietnamese dong was more favourable for exports and had already lured many foreign investors to set up plants here or divert purchase orders to the country. The Mitac Vietnam representative said that foreign firms used reminbi or US dollars to buy dong to pay their workers.

 The consultant of BBA  said China’s land rentals were also rising, while the country began to selectively attract foreign investment projects, which were required to use high technology without labour-intensive performances. “Besides, China is applying strict quality standards for goods exported from this country, because the world’s consumers’ confidence in made-in-China goods has strongly declined.”

“We heard that there would be hikes in prices of petrol and power here next month. But, such hikes would not affect foreign enterprises’ shift to this country, because the hikes are still far lower than in China or Japan and South Korea,” the MiTAC representative said.