Vietnam: The New China

Edition 89 - Winter 2020

Dietmar Schwank heads the Foreign Trade Center in Ho Chi Minh City - and speaks in an interview about the comparison between Vietnam and China.

Economic delegate Dietmar Schwank speaks about Vietnam's role as the new China.
Dietmar Schwank, WKÖ economic delegate in Vietnam
Vietnam is slipping as one of the few countries in no recession this year. What do you expect for 2021? 

Sway: It can be assumed that a rebound will take place. I expect growth of at least five to six percent. This is also due to the fact that during the crisis Vietnam managed to position itself as an attractive investment location for companies that want to diversify in Asia: for those who want to reduce their dependence on a single supplier strategy, or for companies that have political and want to avoid economic risks that exist elsewhere in the region.

Elsewhere it is called China. Vietnam will partly traded as "the new China" - is that justified?

Sway: Yes, yes. However, one must not forget that Vietnam is only a fourteenth of China's population. Accordingly, not all of the industry will migrate. The Chinese market is much larger and more interesting than the Vietnamese for many industries. But there is definitely an influx of international companies leaving China and choosing Vietnam as their number one alternative destination. We subsume this under the so-called “China + 1 strategy”. This is a trend that is very important for Vietnam. In the low-cost sector but also in the field of electronics and consumer goods production, there is definitely increasing interest in diversifying towards Vietnam. This also applies to Austrian companies that are increasingly looking for locations in the region. 

The political imponderables are primarily about the trade conflict between the USA and China - Vietnam is considered to be the main beneficiary. How do you see it

Sway: Vietnam pursues an omnidirectional trade policy. You try to be really open to all countries here, regardless of whether it is China, the USA or Europe. And as a result, Vietnam is currently in fact the greatest direct beneficiary of both the trade dispute and diversification as a result of the corona pandemic. 

Thank you for the interview!

Dietmar Schwank heads the one that opened last year WKÖ Foreign Trade Center in Ho Chi Minh City.
Photo: WKÖ

To the main story

Vietnam: Economy Spotlight

Low numbers of corona infections, an up-and-coming economy, beneficiaries of various crises: Vietnam is on a very promising path and, thanks to a new free trade agreement with the EU, also offers enormous opportunities for Austrian companies.