Vietnam,
with the help of Western corporations, is
becoming an increasingly strong force in
capturing offshoring and outsourcing work
from developed economies, growing its already
sizable presence in low end goods while
successfully moving upstream into higher
end manufacturing and service offerings.
Over
the past decade, Vietnam has built a decent
business in basic goods such as apparel,
shoes and bicycles, based on its low labor
costs. Estimates are that wage levels throughout
Vietnam are only about one-third of those
in China’s eastern coastal region,
and land is also considerably cheaper there.
Companies chasing lower labor rates are
already increasingly moving production to
Vietnam.
But
the country is now looking to advance up
the supply chain, following China’s
so far successful model of facilitating
entrepreneurship and foreign investment
while the Communist government maintains
tight control over politics and social policy.
The
efforts are paying off. Last year, Intel
announced plans to build a large semiconductor
factory near Ho Chi Minh City, which has
led other companies to look more closely
at the country and in some cases make investments
in the country.
Vietnam
is also becoming a growing force in offshore
software development for Western companies,
offering increasingly strong technology
resources at rates much lower than India,
for example.
A
Wall Street Journal article recently noted
that Vietnam is beefing up its educational
system, and that a large percentage of university
students major in computer science, engineering,
and the hard sciences (chemistry, physics,
etc.) – all of which will position
the country’s labor pool and skill
sets for higher end manufacturing and technology
related work.
The
Asian Development Bank reports that direct
foreign investment in Vietnam more than
doubled in 2006 versus 2005 to over $4 billion. |