The Trade War Classified: Internal Vietnam is the Biggest - - PowerPoint PPT Presentation

The Trade War

Classified: Internal

Vietnam is the Biggest Beneficiary of the Trade War

Classified: Internal

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Trade War: Opportunities and Risks OPPORTUNITIES RISKS

• Vietnam is taking manufacturing

market share from China

• The development of local supply-

chains is accelerating out of necessity

• Vietnam could be targeted by

the US

• A Flood of Trade War motivated

FDI could overwhelm Vietnam’s Infrastructure & Labor Market

Classified: Internal

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1) The US Gets 60% of its Tech Imports from China... …But only 2% of US Tech imports are made in Vietnam 2) Vietnam Tech Exports to the US are Still Tiny VN Tech exports to US = $8b 3%/VN exports CN Tech exports to US = $250b 10%/CN exports 3) Vietnam’s main weakness: poor supporting industries… …But the FDI deluge is starting to prompt supply-chain upgrading

Classified: Internal

Trade War: Opportunities

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• Vietnam had the 5 th Largest Trade Surplus with the US in 2018:

China Mexico Germany Japan Vietnam

• Vietnam’s Trade Surplus with the US is up 30% in 9M19 !
• Companies appear to be circumventing tariffs via Vietnam

Exports to the US +28% yoy (Trade Balance = +$34b) Imports from China + 17% yoy (Trade Balance = -$28b)

$420b $81b $68b $67b $40b

Trade War: Risks

Classified: Internal

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Trade War: Risks Concerns that Vietnam is “Too Full” for more FDI

These concerns are mainly raised by low value-add firms (garments, etc.) Vietnam has adequate Logistics & Industrial Land Capacity (but urgently needs to upgrade physical infrastructure!)

Factory wage inflation could surge from 7% to 12%

If 5% of FDI in China moves to Vietnam

Note: Vietnam has ample workers

Less than 10% of VN’s workers currently employed by FDI firms

Classified: Internal

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