Earlier this week FT reported that an online Chinese retailer was trying out manufacturing in Vietnam. At about the same time, CNN reported that Chris Devonshire-Ellis, founding partner of Dezan Shira & Associates in Beijing, which advises firms on foreign direct investment (FDI), as saying,”Companies are starting to think twice before building in China.”
He said the cost of running a factory in Dongguan, China with 300 workers would be about US$2.3 m. The same factory in Ho Chi Minh City, Vietnam would be US$650,000, and a similar factory in Chennai, India would cost about US$346,000.
“About 50 per cent of our work in Vietnam is setting up factories for companies which have relocated from South China because they want to add more (manufacturing) capacity (in the region), but they don’t want to have Chinese costs. Vietnam and Bangladesh are becoming subsidiary manufacturing nations to make goods for sale in China.”
Earlier this month, the Economist wrote, “Another manufacturing firm [making flags]moved its operations to Vietnam in 2004. “We have to migrate, like herdsmen chasing water and pastures””. Love the way moving to a cheaper place is described.