Vietnam is also worried about being snatched jobs? Export | year-on-year | grabbing job opportunities

In the first half of the year, Vietnam's foreign trade data continued to decline.

According to data from the National Bureau of Statistics of Vietnam, in May, Vietnam's exports decreased by 5.9% year-on-year, marking the fourth consecutive month of contraction, while imports decreased by 18.4% year-on-year. In the first five months of this year, Vietnam's imports and exports both declined, with exports decreasing by 11.6% year-on-year to $136.17 billion and imports decreasing by 17.9% to $126.37 billion.

From the segmented data, it can be seen that the export of manufacturing products has significantly decreased, including smartphones, computers, textiles, and footwear.

The World Bank released a macroeconomic monitoring report on Vietnam in April, which showed that the weakening of external demand this year has put pressure on Vietnam's exports and overall economic growth, leading to weak industrial production.

Roger, a veteran foreign trader who has been working as a freight forwarder in the United States for many years, told First Financial reporters that currently Vietnam is more like a processing and trade economy that relies on labor and land to grab orders and create employment. "In this model, Vietnam has developed rapidly in the past five years. However, this path cannot continue forever because Vietnam now has high land costs and relatively high labor costs." He said, "Vietnam's share may increase, but it will also be taken away by other economies, such as Cambodia, where labor and land are cheaper."

"More than half of the goods exported to the United States are furniture"

According to Vietnam's data, the export and import of goods in the first quarter decreased by 11.8% and 14.6% year-on-year, respectively. Currently, the second quarter has not ended, but exports continued to decline in April and May.

Taking April as an example with complete data, Vietnam's exports of smartphones, computers, machinery, textiles, and footwear saw year-on-year declines of 31%, 8%, 14%, 24%, and 10%, respectively.

Correspondingly, the import input into production has sharply decreased. Among them, the year-on-year decline in imports of electronic and computer components, smartphones, and machinery reached 19.6%, 64.4%, and 15.3%, respectively, reflecting the weak final demand in the United States and the European Union. In the first four months, Vietnam's exports to the aforementioned markets decreased by 22.1% and 14.1% year-on-year, respectively.

The Vietnamese Ministry of Labor, Veterans and Social Affairs predicts that the Vietnamese labor market will still face many challenges in the third quarter of this year. The employment opportunities in industries such as textile and clothing, furniture, etc. will continue to decrease, with an expected decrease of 38100 in the textile and clothing industry and 3800 in the furniture production industry.

In fact, as early as December last year to January this year, a certain trend can be seen in the changes in container exports from countries around the world to the United States. At that time, Vietnam's container exports to the United States only increased by 5.2% month on month, while India increased by 8.4% and South Korea increased by 19.9% during the same period.

Roger explained to First Financial reporters that the low growth rate in Vietnam at the beginning of 2023 is mainly related to its export structure. "More than half of the exports to the United States are furniture, and furniture is the category with the highest import decline and inventory in the United States, which has a particularly heavy impact on Vietnam's exports to the United States."

"There are three main types of goods exported from South Korea to the United States: mechanical equipment, cars and accessories, and plastic products. South Korea is a large automobile producing country, and in recent years, the automotive and parts business in the United States has been very hot. So far, if you want to buy a new car in the United States, you often have to pay extra, so imports are rapid." Roger explained, "From the perspective of the sources of imports from the United States, the top six countries with the largest volume of goods are China, Vietnam, South Korea, India, Thailand, and Germany, with India ranking fourth among individual countries. If you look at the categories of goods exported from India to the United States, the first category is furniture, lighting fixtures, and bedding, the second category is textiles, and the third category is machinery."

"Therefore, India is mainly focused on light industry, but unlike Vietnam, which heavily relies on a single commodity, the former has a relatively average category and the difference in the volume of goods exported to the top 10 categories in the United States is not too large." Roger said that Vietnam belongs to the category of "one bite at a time": due to the hot furniture sales during the epidemic, Vietnam's exports to the United States grew very rapidly, but once Americans adjusted their consumption demand after the epidemic, Vietnam also "suffered the most". ".

According to preliminary statistics from the Vietnam Wood and Forest Products Association, the estimated furniture export value from January to May was 4.7 billion US dollars, a decrease of about 30% compared to the same period last year.

Viforest Chairman Do Xuan Lap stated that furniture companies are facing difficulties in exporting due to declining demand in major markets such as the United States, Japan, South Korea, and the European Union.

Vietnam is also worried about being "snatched jobs"

The World Bank stated in its report that in April, Vietnam's agreement to attract foreign investment reached 3.4 billion US dollars, an increase of 46% compared to the previous month. However, the cumulative agreement amount to attract foreign investment in the first four months was only 8.8 billion US dollars, a year-on-year decrease of 17.9%.

Roger said that capital is profit driven, and wherever the cost is lowest and the profit is highest, capital will flow. Now, Cambodia's costs are lower than Vietnam's, and Vietnam itself is also worried about being taken over by Cambodia.

He further explained that countries such as Vietnam are engaged in relatively low value-added primary processing, such as furniture, furniture, and handicrafts, and do not involve high-tech products.

"Furniture manufacturing does not have high technological and industrial barriers, so whether in Vietnam, Cambodia, or India, the industry itself has low value and no high-tech content." He said, "At the same time, Vietnam's population is around 100 million, and production capacity and market are limited."

Roger believes, "Vietnam is actually a good supplement to China. After industrial upgrading, China has reduced its production of goods and Vietnam will take over. Furniture exported from Vietnam to the United States is not high-tech products, but even leather goods must be imported from China."

In addition, Roger stated that many of the foreign direct investment received by Vietnam comes from China, which means that American importers negotiating business in Vietnam are likely still doing business with Chinese people. "After all, many of the raw materials produced in Vietnam still come from China. Whether by land or sea, trade between China and Vietnam is very developed." He said, "This is closely related."

In January of this year, the Vietnamese Bureau of Statistics released data showing that as of January 20th, the total amount of foreign direct investment flowing into Vietnam reached 1.69 billion US dollars. Among them, Singapore ranked first with 767 million US dollars, accounting for 63.7% of the total newly registered capital, and China ranked second with 198 million US dollars, accounting for 16.4%.

Taking the textile industry as an example, Vietnam's cotton yarn and fabric also need to be imported from China. "The footwear and clothing industry is already an industry that China is reducing production in industrial upgrading, and China is transitioning towards higher value-added industries." Roger said that this normal transfer of capital cannot pose a threat to China.

"Firstly, China is currently the only country in the world with a complete industrial chain, capable of producing all types of products. Secondly, there is no country in the world that can match China's production capacity, quality, and speed. Only China can meet the above conditions." Roger said, "Importers may not be able to meet their needs when they place orders at factories in Vietnam."

In addition, Vietnam's manufacturing industry has not yet involved high-end products. "Vietnam has now started manufacturing mechanical equipment, but from the perspective of trade between Vietnam and the United States, Vietnam's exports of mechanical equipment and electrical products to the United States still account for a very low proportion of the total import value of the United States," said Roger.