Vietnam’s economy is quietly humming along. It has become a haven for manufacturing all around, and technology exports have become its largest source of export revenue, soaring by a staggering 91 percent in the first ten months of this year.
The most important reason for this shift is one we’ve been noting for a long time: the lower cost of labor, especially relative to China. But there are other factors, as Bloomberg reports:
Vietnam is also benefiting from a move by manufacturers to diversify away from China, said Alessandro Parimbelli, a Bergamo, Italy-based senior vice president of global business units at Jabil.
“We’re trying to offer alternatives to our customers for whom some products are made in China, who whether because of the currency’s appreciation or for other reasons, don’t want to have all their eggs in one basket,” Parimbelli said.
Chinese officials, meanwhile, have pointed to their plan to transition the economy to higher value exports. This is a reasonable goal, but it’s a long and difficult process, and there are no guarantees that Beijing is ready to pull it off.