Covid-19 Contingencies: Assistance with Relocating China Assembly to Vietnam

Changes in the global supply chain are taking place due to the China coronavirus (Covid-19) outbreak, with Samsung shifting part of their assembly process to nearby Vietnam as Chinese factories remain at below operational capacity. That problem is caused by workers from areas affected by the virus being unable to leave due to quarantine conditions imposed across parts of the country.

Samsung have instead been flying electrical parts to factories in Vietnam to maintain production schedules. A Samsung spokesperson told the Financial Times that “The Vietnamese government is restricting the daily transport volume from China to Vietnam through land routes, but we’re coping with it by increasing parts supplies from China via planes and shipping.”

Samsung is the world’s largest smartphone manufacturer, and produces nearly two-thirds of its phones, including its latest foldable and Galaxy S-20 5G models at plants in Vietnam’s Bac Ninh and Thai Nguyen provinces. However, the coronavirus crisis has left Vietnam’s manufacturers, both local and foreign-owned, vulnerable in areas from electronics to textiles and footwear because many have supply chains that rely on China. As factories in Vietnam resumed operations after the Tet  lunar new year holiday, companies found the border with China closed or restricted for trade in both directions.

Vietnam has reported just 16 cases of Covid-19.

The move to shift part of Chinese production facilities to Vietnam began nearly 15 years ago, with Dezan Shira & Associates, the professional services firm that assists foreign investors into Asia, very much at the forefront of that initial wave of businesses expanding and evolving into other parts of Asia. “That was partially to reduce China risk exposure, and partially as we could see that Vietnam’s production cost vs. production capacity gap was going to close,” says Chris Devonshire-Ellis, Dezan Shira & Associates Founding Partner.

The first issue of our sister publication, Vietnam Briefing was in 2008 and was titled “Global Manufacturing Moving to Vietnam.”

Now, Vietnam Briefing magazine is published in English, Italian, French, and Chinese. These can be downloaded on a complimentary basis.

Services that Dezan Shira & Associates provide from their three offices in Vietnam include sourcing bespoke factory and office premises, legal, corporate establishment, compliance, and tax consultancy, in addition to ongoing tax, accounting, and audit advisory. Foreign investors in China that need to urgently source assembly facilities or contractors in Vietnam may email Trent Davies at vietnam@dezshira.com for assistance.

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