Sharp to relocate to Vietnam due to US-China trade war

Sharp will switch manufacturing bases to avoid the implications of the US-China trade war

Notably, Sharp has scrapped plans to produce displays for the American market in China and will instead build a new plant in Vietnam in order to avoid new tariffs being imposed in the long-simmering trade dispute between Washington and Beijing, according to newswire Nikkei Asian Review.

The Vietnamese factory will assemble automotive liquid crystal displays to be sold in the US. Some personal computer production of subsidiary Dynabook may shift to the new facility as well.

Most recently, US President Donald Trump announced a new round of tariffs on Chinese imports beginning from September 1, with LCD imports among the goods affected.

Sharp did not disclose the investment amount to build the factory, set to begin operating in fiscal 2020 near Ho Chi Minh City.

Along with the US-bound car display screens, which will incorporate LCD panels made in Japan, the plant will make air purifiers and other electronics to sell in Vietnam.

China accounts for nearly all of Dynabook's PC output at present, chiefly at facilities in Hangzhou. About 10 per cent of this is shipped to the US work that may shift to Vietnam.

Vietnam remains a hot destination for foreign direct investment in the region and is expected to top the ASEAN region in growth rates due to its diversified export markets and an increasingly attractive investment and business climate.

One of the key reasons behind Vietnam’s outperforming the region is that despite its large amount of exports to China, the country’s exports have not been affected too much by the US-China trade war. In addition, Vietnam currently has a large export market network based on its multilateral and bilateral FTAs as well as an increasingly attractive investment and business climate.

According to the Japan External Trade Organisation’s survey on more than 4,630 Japanese businesspeople investing in 20 nations and territories, including 652 active in Vietnam, 70 per cent of respondents said they will expand their business in Vietnam and continue considering the country an important investment destination. The same rate is only 48 per cent for China. Some 65.1 per cent of respondents said they are performing at a profit in Vietnam.

Not only Japanese investors, but also those from South Korea are said to be looking to expand their business in Vietnam instead of focusing on China. Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam representing over 6,000 South Korean businesses in the country, told VIR that the US-China trade war is “prompting many South Korean businesses to come to Vietnam from China.”