The lives of previously poor people in the northern provinces of Vietnam are being changed, for the better, due to incoming manufacturers in the global tech supply chain. They are committing to investing billions of dollars to set up operations. Manufacturers like Samsung Electronics, Nokia, Apple assembly partner Pegatron Corp. and Hon Hai Precision Industry Co.
This story is an example of how a powerful supply chain can totally alter a region and drastically improve the standard of living of the people.
The Bac Giang province was always one of the poorest regions in Vietnam until the global tech supply chain decided it was a good place to set up business. Foreign investment has doubled year on year even during 2020 and the coronavirus pandemic.
Today the per capita income for the Bac Giang region is forecast at $3000 for 2020 – over a 120% increase from 10 years ago.
Unemployment in the region is close to zero and the assembly line workers are earning a salary that is almost double to the nation’s average annual salary.
Manufacturers are moving away from China, as a base for business, due to the rising labour costs, the US-trade war and logistics vulnerabilities as a result of the pandemic. Vietnam implemented control measures early on with the virus, and as a result, they have only experienced 300 cases and not a single death.
Vietnam has become a very appealing location for manufacturers for the following reasons:
- They addressed and sorted out public debt
- Introduced measures to reduce the budget deficit
- Fought against corruption and delivered tangible results
- Improved governance
- Invested in infrastructure
- Made it easier to do business and allowed the public sector to flourish
- Introduced investor-friendly policies
- They promote tech start-ups
They moved the economy to focus on manufacturing and services which are both productive and lucrative industries. This caused the economic growth in 2019 estimated to be about 6.8%, which is over double the world average.
This economic growth has instilled confidence among investors overseas and made Vietnam one of the most popular destinations for companies looking to tap into cheaper labour.