Vietnam contends for China’s tech crown

In the heart of fast-growing Vietnam, numerous factory workers are hard at work producing goods for major tech companies like Apple, Samsung, LG Electronics, and Microsoft.

Manufacturers are looking for alternatives to the largest economy and top industrial hub in the world because they are frustrated with China’s “zero-COVID” lockdowns that can abruptly stop output. Vietnam is a big gainer due to its affordable labour, geographic proximity to China, and stable political situation.

“For a lot of these companies, they withstood the trade war, they withstood rising labour costs in China, and then they withstood the breakdown of supply chains during COVID… [China’s] zero-COVID policy I think now is the straw that breaks the camel’s back,” Greg Poling, an industry expert told Al Jazeera. “Vietnam is not the only place that multinationals are looking to diversify out of China, but Vietnam is probably the most successful.”

Samsung, Apple, and Google are all advancing with firsts in the Southeast Asian nation. From 2023, Google will start producing its Pixel smartphones in Vietnam, while Samsung will start producing semiconductor components at a sizable factory in Thai Nguyen province the following summer.

Prior to its emergence as a centre of tech manufacturing in the late 1980s as a result of the liberal economic reforms known as Doi Moi, Vietnam was among the world’s poorest nations.

Following the widespread distribution of immunizations, Vietnam officially transitioned from “zero-COVID” to living with the virus after tight COVID lockdowns caused the country’s worst economic recession in decades last year. The Southeast Asian economy is expected to rise by 7.2 percent this year, up from 2.6 percent growth last year, according to the World Bank, while China’s GDP is expected to increase by 2.8 percent.

A significant portion of such rise can be attributable to exports, which in the first half of 2022 totalled $186 billion, up more than 17% year over year. Analysts note that Vietnam’s rising position dates back well before the pandemic, despite the fact that China’s COVID policies have eroded investor trust.

In recent years, Vietnam has made progress in promoting investment and commerce by signing 15 free trade agreements, including six with regional partners within the Association of Southeast Asian Nations.