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China to export to US via Vietnam?

Sep 27, 2018
China to export to US via Vietnam?

Vietnam could suffer collateral damage if Chinese businesses use made-in-Vietnam labels to avoid US tariffs, experts warn. Economist Vu Dinh Anh says it is “highly possible” that Chinese businesses would seek to export their goods through Vietnam to the US amid the trade war between the world’s two largest economies. One way they can do this is exporting their products to Vietnam and asking a Vietnamese business to label them as “made in Vietnam,” he adds.

The Chinese entrepreneurs can also set up factories in Vietnam and manufacture products with materials imported from China, experts opine. “This will result in bad consequences for Vietnam as the US might impose the same tariffs on Vietnam as it did on China,” they say. Vietnam’s textile and footwear industry insiders expressed the same concern.

Diep Thanh Kiet, vice chairman of the Vietnam Leather, Footwear and Handbag Association (LEFASO), says there is a “very high” possibility that Chinese bags would be exported to the US through Vietnam. If Chinese bag makers want to export to the US, they can set up a factory in Vietnam to facilitate the exports, and this can be easily done with a budget of just $200,000, he said. If this cannot be controlled, there could be grave consequences for Vietnamese textile firms since the US might apply the same tariffs as they have done on China,” he warns.

But there are opportunities for Vietnamese consumer goods exports amid the trade war. About 27 percent of Chinese goods set to be affected by the new tariffs are consumer goods, and Vietnam exports many similar items to the US, says Can Van Luc, chief economist with the Bank of Investment and Development of Vietnam (BIDV). “The escalating trade war will create opportunities for Vietnamese exporters of consumer goods to expand their market share in the US,” Luc adds. A recent report by Bao Viet Securities (BVSC) says footwear and textile products have a “great opportunity” to grab US market share from China. Since the Chinese yuan has weakened against the US dollar and dong, Vietnamese businesses would be able to import garment, leather and other materials cheaper, and this would result in more competitive prices in the US, the report says.