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.
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 email@example.com for assistance.
- Relocating Your China Sourcing and Manufacturing to Asia: Procedures and Choices
- The China plus One Strategy in Vietnam
In this issue of Vietnam Briefing magazine, we discuss the growing popularity of China plus one manufacturing. We highlight market entry strategies available to investors, analyze the differences between these locations, and the important role that rules of origin play for companies seeking to tap into Vietnam’s network of trade agreements.
- Import and Export in Vietnam
Vietnam has followed an export-led growth model, combining trade liberalization and policies to attract foreign direct investment to spur exports. In this issue of Vietnam Briefing magazine, we examine Vietnam’s import and export procedures, as well as business models, duties, exemptions, and tax rates that traders need to be aware of.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at firstname.lastname@example.org.
We also maintain offices assisting foreign investors in Vietnam, Indonesia, Singapore, The Philippines, Malaysia, and Thailand in addition to our practices in India and Russia and our trade research facilities along the Belt & Road Initiative.