Manufacturing occupies a core position in the global economy, and the restructuring of supply chains has become a focal point for several countries in recent years.
Once upon a time, China was seen as the "world's factory," attracting substantial investment from international brands.
However, as labor costs in China have risen, more and more brands have begun shifting their manufacturing to Vietnam in search of cheaper labor.
Among Southeast Asian countries, Vietnam has become the preferred destination for foreign investment due to its large population and relatively low labor costs.
In recent years, however, Vietnam has faced a severe economic crisis, with over 40,000 factories shutting down, prompting people to ponder the reasons behind this situation.
Is it merely due to a loss of orders?
Vietnam has risen rapidly over the past few decades, and its successful economic development experience has attracted widespread attention from various countries.
As a country that has experienced war and poverty, Vietnam has sought to emulate China's successful model by vigorously developing an export-oriented economy to enhance its international competitiveness.
The upgrading of China's manufacturing sector and rising costs have presented Vietnam with a golden opportunity.
The Vietnamese government quickly recognized this trend and took measures to fill the market gaps left by China's transformation period.
European and American manufacturers have also begun considering relocating their production bases out of China to cope with rising costs.
This series of changes has greatly benefited Vietnam; in 2019, Vietnam attracted around 67,000 foreign-invested enterprises, with registered capital reaching 860 trillion Vietnamese dong, rapidly becoming an export powerhouse in textiles, electronics, and footwear.
These industries were once the pillars of China's economic boom, and Vietnamese entrepreneurs are convinced they are replicating the trajectory of China's development twenty years ago, aiming to surpass China.
However, the reality in Vietnam is far from its ideals.
Vietnam's exports have declined for five consecutive months, marking the longest drop in 14 years.
As early as the first quarter of 2022, orders in Vietnam's textile industry plummeted by 70%, delivering a heavy blow to a country reliant on textiles.
The ensuing factory shutdowns and wave of unemployment have left millions of workers in a difficult position.
So far, Vietnam's export volume has decreased by 80%, affecting not only business operations but also exacerbating pressure in the job market.
The worsening unemployment issue has further suppressed domestic consumption, creating a vicious cycle.
Data from 2023 shows that Vietnam's economic predicament has not significantly improved, with exports declining by 10.6% year-on-year in the first seven months.
Notably, exports in the high-tech smartphone industry dropped by 18.3%, serving as a warning for Vietnam's economy.
In the face of these challenges, the Vietnamese government and some companies have begun shifting the blame to external factors, asserting that orders have been seized by China as the primary cause of their current plight.
However, this perspective fails to address the deeper issues within Vietnam's economy and does not take into account the complexities of international market competition.
Japanese media have long analyzed the economic situation in Vietnam.
They believe that the decline in Vietnam's export orders is not directly related to China, but rather influenced by the global pandemic.
The pandemic not only hit global demand but also severely damaged Vietnam's production capacity, leading to labor shortages and impacting production efficiency.
Moreover, insufficient infrastructure in Vietnam is also a significant issue.
The influx of foreign investment has strained Vietnam's electricity supply, and frequent power outages and production interruptions have dissatisfied foreign enterprises, affecting production efficiency.
More critically, the quality of the labor market in Vietnam is uneven; workers have high demands for their jobs, yet their work efficiency is relatively low, leading to increased product defect rates and further weakening the competitiveness of the manufacturing sector.
An analysis by the *Nihon Keizai Shimbun* asserts that Vietnam's greater economic issue lies in insufficient domestic demand.
Despite the influx of foreign investment, Vietnam struggles to absorb its massive production capacity.
The economic difficulties facing Vietnam highlight a complex interplay of multiple factors, including inadequate infrastructure, low labor quality, and an imperfect industrial chain.
Vietnam should recognize that merely imitating other countries' development models cannot ensure economic success; only by aligning with its national conditions can it achieve sustainable development.
The current crisis presents both challenges and opportunities. Vietnam needs to reassess its development strategy, strengthen infrastructure construction, enhance labor quality, cultivate the domestic demand market, and optimize its industrial structure.
At the same time, it must adopt a more rational view of international cooperation, avoiding excessive reliance on a single market or industry, thus laying a solid foundation for future economic recovery and development.
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