Vietnam surpasses Shenzhen, magnified anxiety

  Shenzhen attracts attention again. The reason is the “rise” of neighboring Vietnam.
  According to statistics from the General Administration of Statistics of Vietnam, in the first quarter of 2022, Vietnam’s total import and export of goods was US$176.35 billion, a year-on-year increase of 14.4%. Among them, exports were 88.58 billion US dollars, an increase of 12.9%. Imports were US$87.77 billion, a year-on-year increase of 15.9%.
  In the first quarter of 2022, Shenzhen’s total import and export volume was 740.48 billion yuan (about 109.96 billion US dollars), a year-on-year decrease of 2.8%. Among them, exports were 407.66 billion yuan (60.54 billion U.S. dollars), down 2.6%. Imports were 332.82 billion yuan (about 49.4 billion U.S. dollars), down 3.1%.
  Vietnam’s foreign trade import and export volume in the first quarter did surpass Shenzhen’s. The voice of “more and more blowing” on the Internet is also getting louder.
  ”This is magnified anxiety, don’t be nervous.” On May 17, 2022, Wu Sikang, director of the Science, Education, Health and Sports Committee of the Shenzhen Municipal Committee of the Chinese People’s Political Consultative Conference, said in an interview with Nanfengchuang that in the future international competition, we should pay more attention to how to promote China The transformation from manufacturing to Chinese creation, and the transformation of Chinese products into Chinese brands, should worry about how to iterate, not who replaces whom.
  Wu Sikang was the director of the Development Research Center (Policy Research Office) of the Shenzhen Municipal People’s Government. He has an accurate judgment on Shenzhen’s history and development tenacity.
The doorway behind the Vietnam craze

  The inquiry found that in terms of foreign trade import and export, as early as 2018, Vietnam was approaching Shenzhen, and it began to surpass Shenzhen in 2019. But at that time, the epidemic had not yet appeared or really affected people’s lives and economic operations. Therefore, Chinese people were not sensitive to Vietnam’s transcendence, nor did they care.
  With the emergence of the new crown epidemic, depressed people often magnify the anxiety behind the data. In fact, the analysis will find that Vietnam is hardly a threat to Shenzhen, especially China’s economic development.
  Lin Zhenwen is a Taiwanese businessman. He came to the mainland in 1996 and has been engaged in manufacturing in the mainland for nearly 30 years. At present, he has opened 3 factories in Dongguan, Guangdong and Suzhou, Jiangsu (2 in Dongguan and 1 in Suzhou), mainly producing and selling. Inorganic non-metallic materials and products, automobile and motorcycle molds, high temperature insulating materials, etc.
  In mid-May this year, Lin Zhenwen told Nanfengchuang that after the Sino-US trade war, due to tariffs and other reasons, many guests also invited him to set up factories in Vietnam, but he had no plans to move to Vietnam, “because the bubble economy there is also very strong. “.
  Lin Zhenwen pays more attention to the market in the Yangtze River Delta and the Pearl River Delta. Therefore, he arranged the factories in Guangdong and Jiangsu respectively, which is conducive to the supporting needs of the development of the industrial chain of upstream and downstream manufacturers.
  ”Vietnam is full of construction sites, and a new wave of reform and opening up is being launched.” On the Internet, We Media described Vietnam’s development prospects.
  Will Vietnam today be Shenzhen more than 30 years ago?
  ”From the perspective of its operation mode, it is impossible. This is not the same as the mode of many industries entering China at the beginning.” Lin Zhenwen said that at the beginning, China mainly developed the industrial economy such as manufacturing, but now, many enterprises enter Vietnam, mostly chasing the circle Just go. Some manufacturing manufacturers are also operating at a loss, because their losses in the manufacturing field can be made up by arbitrage in the capital market.
  ”Vietnam’s exports surpassed Shenzhen’s because after the trade war, many of the company’s products from Vietnam have lower tariffs.” Lin Zhenwen pointed out, “This involves the issue of entrepot trade, which is also a secret known in the industry.”
  The so-called entrepot trade, such as some products whose origin is in China, is sold in the United States, but they go directly to the United States from China, with high tariffs, and they are exchanged in less developed regions such as Vietnam or in countries and regions that the United States intends to support. For re-exports, the country of origin becomes Vietnam and other places, and companies can save some costs on tariffs.
  In Shenzhen and other places, there are trading companies that specialize in helping enterprises to do entrepot trade. A salesperson of a trading company told Nanfengwindow that the entrepot trade is to avoid the high tariff problem brought by the trade war to the enterprise, which needs to be carried out through processes such as changing cabinets and changing the origin.
  If the container is not changed, the relevant US departments can check the container number to find out where the container came from. When changing the container in the entrepot trade, the workers at the entrepot need to carry the goods out one by one, and then replace them with local ones. New containers are transported to the place of sale in new containers, which not only reduces tariffs, but also enjoys benefits such as export tax rebates.
Many companies enter Vietnam, mostly just for the enclosure. Some manufacturing manufacturers are also operating at a loss, because their losses in the manufacturing field can be made up by arbitrage in the capital market.

  According to Vietnamese official media reports, since the Sino-US trade war, many Chinese manufacturers have turned their goods through Vietnam to avoid high tariffs before exporting from Vietnam.
  In response to this phenomenon, the United States has also warned Vietnam. Therefore, Vietnam Customs has also strengthened the inspection and certification of the certificate of origin of goods to prevent foreign goods from appearing in the European, American and Japanese markets with the label of “Made in Vietnam” (Made in Vietnam).
  According to the disclosure of the aforementioned trading company, the United States has put pressure on Vietnam, repeatedly urging Vietnam to strictly investigate the export of “washing origin”. Vietnam has also repeatedly adjusted its rules for the confirmation of the origin of imports and exports.
  Previously, the draft standard for “Made in Vietnam” (country of origin) issued by the Ministry of Industry and Trade of Vietnam stipulates that the country of origin must be indicated on the product label. If the product is made in the final processing stage in Vietnam, it must meet the relevant requirements for the conversion of the commodity code (HS) and the domestic added value ratio of more than 30% before it can be marked as “Made in Vietnam”.
  The salesperson of the aforementioned trading company told Nanfeng Chuang that it is still feasible to think about re-exports in Vietnam at present, but due to the tight inspection, the related costs have also increased a lot.
  ”The total cost is about 15,000 USD (US dollars) for two layers of sea freight. If it is made in the Philippines, it needs to add 1,500 USD, and the cost of changing the cabinet is 1,000 USD, so it is 17,500 USD.” He said that a container is more than the direct shipment from China. 7500USD, the good thing is that the tariff is low and there is a tax rebate.
  The phenomenon of entrepot trade has already attracted the attention of the United States. After the Sino-US trade war, according to US government statistics, in the first five months of 2019, Vietnam’s exports of computers and electronic products to the United States increased by 71.6% year-on-year, while at the same time, electronic products, computers, machinery and Other devices surged from the same period in 2018.
The core of competition lies in qualitative improvement

  Luo Bin is from Dongxing, Guangxi. Because he is proficient in Vietnamese, he went to Vietnam more than ten years ago after graduating from Guangxi University for Nationalities. Currently, he manages a Chinese company in Vietnam.

  ”Vietnamese workers’ wages range from 1,800 yuan to 2,000 yuan per month. Ho Chi Minh City’s wages are relatively high, and some are 2,500 yuan.” Luo Bin bluntly said that compared with mainland China, Vietnam’s manufacturing industry has a cost advantage, but workers Professionalism needs to be improved.
  In addition, many of the Chinese companies currently stationed in Vietnam still maintain their Chinese manufacturers and sales, mainly relocating some low-end production or processing links to Vietnam, while the core links remain in China.
  Luo Bin said that in the past two years, due to the severe epidemic, almost all production workshops in Vietnam were closed, and many enterprises lost money or even closed down, which subsequently led to some orders returning to China.
  Now, after the epidemic situation in Vietnam has eased a little, it has shown a retaliatory growth. “Vietnamese land is being fired at a very high level, and I can’t see it clearly, because it is unbearable for local people’s purchasing power.” Luo Bin said that the local manufacturing industry is mainly concentrated in textiles, clothing, shoes and hats, as well as furniture and mobile phone production Wait.
  Zhang Yang is a division-level cadre of Guangxi’s investment promotion system. He has been stationed in Shenzhen for a long time to attract investment. In his view, even if Vietnam’s export trade does not have false growth brought about by re-export trade, there is no need to worry that its total volume exceeds Shenzhen’s. “According to my observations and research, it is not an energy level at all.” He told Nanfengwindow.
  ”Of course, Vietnam’s development also needs a process.” Zhang Yang said that the current surpassing in volume is only due to a temporary environment – it has benefited from the Sino-US trade war and the transfer of some low-end industries, which may be in the export of low-end products. up, measure up. However, from the perspective of the foundation of Vietnam’s industrial development, it does not have a solid industrial foundation. Unlike Shenzhen, which started from nothing, it is a gradual and progressive growth pole, and is constantly given the responsibility and mission of innovation and breakthrough.
  ”Vietnam is a country with a population of about 100 million and an area of ​​329,500 square kilometers. Shenzhen is a city of less than 2,000 square kilometers with a resident population of about 18 million.” Wu Sikang said in an interview with Nanfeng Window that in import and export In terms of total volume, it is normal for Vietnam’s total volume to exceed Shenzhen.
  ”We want to promote the transformation from Made in China to Created in China, and promote the transformation of Chinese products into Chinese brands.” Wu Sikang said that in terms of export trade, we should not only look at the quantity, but also analyze the technological content and capital content of the exported products, and the quality of Shenzhen’s export products. The technological content and capital content are very high.
  Although Vietnam’s exports increased significantly in the first quarter of this year, Vietnam’s trade surplus in the first quarter was only US$1.46 billion, and its economic added value was not high.
  In terms of import and export markets, in the first quarter of this year, the United States was Vietnam’s largest export market, with an export value of about 25.2 billion US dollars. Meanwhile, China is Vietnam’s largest import market, with an import value of US$27.6 billion.
  In the first quarter of this year, Vietnam’s trade surplus with the EU was about 7 billion US dollars, an increase of 24.5% year-on-year; its trade deficit with China was 14.3 billion US dollars, an increase of 21%. Many parts and raw materials of Vietnam were imported from China, processed in Vietnam and then exported to Europe and the United States and so on.
  In this sense, the growth of Vietnam’s exports also has a positive impact on China. The key to the problem is how to seize a higher value-added position in the industrial chain and maintain this advantage for a long time in the international division of labor and cooperation between China and ASEAN countries. , complete self-iteration and upgrade.
Substitution or iteration?

  When people are still arguing about who replaces whom, Wu Sikang focuses on the issue of how Chinese cities and the future will complete the iterative upgrading of the industry.
Although Vietnam’s exports increased significantly in the first quarter of this year, Vietnam’s trade surplus in the first quarter was only US$1.46 billion, and its economic added value was not high.

  Shenzhen has gradually transformed from a strong manufacturing city to a big service city. The added value of Shenzhen’s secondary industry dropped from 40.3% in 2016 to 37.8% in 2020; the added value of the tertiary industry increased from 59.7% in 2016 to 62.1% in 2020. Its export structure is also changing, and most of its exports are high-tech products such as computers.
  The economic operation data released by Shenzhen in 2021 shows that in 2021, Shenzhen’s GDP will be 3,066.485 billion yuan, an increase of 6.7% over the previous year. Among them, the added value of the tertiary industry was 1,929.967 billion yuan, a year-on-year increase of 7.8%. The added value of the secondary industry was 1,133.859 billion yuan, a year-on-year increase of 4.9%.
  It can be seen that in 2021, Shenzhen will continue its past development path. The added value of the tertiary industry will account for about 63% of the total GDP, while the added value of the secondary industry will account for 37%.
  ”Shenzhen’s service industry has accounted for more than 60% for many consecutive years, and the proportion of manufacturing has declined year after year, which shows that Shenzhen has entered a stage of highly developed urban development. After this stage, transformation is inevitable.” Wu Sikang said that low-end industries gradually Transferring out is also the inevitable law and inevitable result of economic development.
  ”Securities Times” under the “People’s Daily” also paid attention to the debate on the rise of Vietnam on the Internet. A front-page report on May 9 this year mentioned that the “Four Little Dragons” in Asia from the late 1960s to the 1990s , namely South Korea, Singapore, Taiwan and Hong Kong, China has achieved rapid economic development by seizing the historical opportunity of industrial transfer in developed countries.
  After the rapid economic development driven by exports, the “Four Little Dragons” in Asia carried out industrial upgrading in a timely manner, and finally successfully entered the ranks of developed economies. However, the “Four Little Tigers”, namely Indonesia, Thailand, Malaysia and the Philippines, who were once as famous as the “Four Little Dragons”, were not so lucky. After the Asian financial crisis in 1997, the economic development of the “Four Little Tigers” slowed down, fell into the middle-income trap, and failed to cultivate more competitive industries.
  With the weakening of the demographic dividend, China’s cost advantage is also weakening. The transfer of low-end labor-intensive industries to Southeast Asian countries such as Vietnam is in line with the laws of economic development. From a longer-term historical perspective, it seems inevitable.
  As “Securities Times” mentioned in a comment: After 40 years of rapid development, China’s economy has begun to face the choice of becoming a “dragon” or a “tiger”, “but the transfer of low-end industries is not for Chinese enterprises. It does not mean the end of the world, it is the failure to promote industrial upgrading as soon as possible.”

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