VIETNAM: Hanoi-based Bao Viet Securities Corp (BVSC) has reported that the Trump administration’s expansion of trade war to Chinese electronics will drastically impact key domestic exports such as mobile phones, smart devices and telecommunications equipment which carry an estimated value of US$256 billion. This equates to 50% of China’s total export turnover to the US.
Furthermore, due to increasing tariffs and labour costs brought upon by the trade war on Chinese mobile phones, Samsung is aiming to decrease its production by 40 million units in China and could look towards developing its manufacturing capabilities in other developing countries. Spurring the speculation that capital flows from Samsung’s operations in China may be diverted to Vietnam due to the country’s current status as the largest manufacturer of Samsung products with 240 million units being churned out per year. Although, India (50 million units), South Korea (40 million units) and Indonesia (8 million units) have also been identified as key mobile phone producers for Samsung.
Currently, China still holds key advantages in processing electronic products due to the presence of a developed infrastructure and auxiliary industries. However, the ongoing trade war may result in a loss of capital flows from large MNCS targeting the US market and this could re-divert foreign direct investment towards other Asian countries such as Vietnam. A trend that would result in increases in Vietnamese exports, growth in industrial zones and new job creation.
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