For many years, China has been the centre of tech manufacturing due to low costs and efficient production. However, in recent years, China’s wealth has grown at blazing speed; and with this comes rising wage and operation costs. As such, big tech companies are looking for alternate options to shift production to.
In the heart of Vietnam’s Bac Giang province, where the occasional cow still roams the streets, a different kind of herd is arriving with a load of economic prosperity. Located just to the north of Hanoi, the rural landscape is slowly being replaced by industrial parks, filled with factories representing companies such as Apple and Hon Hai Precision Industry.
The local economy expanded by 10.9 percent through September from a year earlier compared with 2.1 percent growth for the whole country.
Bac Giang’s boom highlights how shifting global supply chains are reaching overlooked regions. As China’s manufacturing and employment costs continue to rise, Vietnam’s ability to attract more sophisticated tech manufacturing is truly amazing.
“We are living the changing of the global supply chain,” said Nguyen Dai Luong, deputy chairman of the People’s Committee in Viet Yen district, where four of the province’s five operating industrial parks are located.
The government is also supporting this shift in the supply line by building ports and setting aside space for the development of worker housings around the area.
Foreign-investment growth is almost doubling every year and the province forecasts the value of exports this year will reach US$11 billion, a tenfold leap in six years.
Every year, more and more manufacturers are descending upon Vietnam’s northern provinces and committing billions of dollars to set up operations. Some of the big names involved include Samsung Electronics, and Apple assembly partner, Pegatron.
However, this new expansion is not without its fair share of challenges. One such challenge includes ensuring the rights of factory workers and improving education, so the journey into from impoverished to industrial economy doesn’t lead to the middle-income trap.
For the moment, these new developments will provide many jobs and opportunities for the underserved rural communities of Vietnam.
