CPTPP takes effect in Vietnam, my country’s textile industry arouses vigilance
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, Comprehensive Progressive Trans-Pacific Partnership) officially entered into force in six countries: Japan, Canada, Australia, New Zealand, Mexico, and Singapore on December 30, 2018, and entered into force on January 14, 2019. It officially came into effect in Vietnam on the same day. In addition, Brunei, Chile, Malaysia, and Peru will begin to implement the agreement 60 days after the completion of the agreement approval process. It is reported that the CPTPP agreement countries account for 13% of the global GDP and involve a population of more than 500 million. After the CPTPP officially came into effect, Japanese officials told the media that Thailand and the United Kingdom may join the negotiation of this agreement in 2019 and become new signatories of the agreement.
The impact of CPTPP on Vietnam’s economy depends largely on Vietnam’s ability to seize opportunities and overcome challenges. CPTPP gradually eliminates 98% of tariffs on agricultural and industrial products, relaxes investment regulations and strengthens the protection of intellectual property rights. Joining the CPTPP will bring an unprecedented market to Vietnam, and “Made in Vietnam” may become the biggest winner.
The people in Vietnam are not only hard-working, but also full of vitality. Currently, there are about 30 million young adults. While my country’s population is aging obviously, Vietnam’s population is relatively young. Vietnam will maintain this advantage for a long period of time, thereby increasing the competitiveness of its labor force.
In the textile field, MadeinVietnam is now quietly squeezing MadeinChina’s market. In 2009, Nike’s Vietnam OEM completed its comprehensive surpass of China’s production capacity; in 2012, Adidas’s last mainland China factory closed in Suzhou; in April 2018, Uniqlo announced that China’s production capacity would be transferred to Southeast Asia, and Vietnam would bear 40% of the total production.
Not only foreign brands, but also many private shoe, hat and apparel companies originally rooted in Guangdong and Fujian, China, have set off a wave of relocation of factories to Vietnam, attracted by cheap labor. Chinese textile and apparel companies are also accelerating their move to Vietnam. Bosideng, a Chinese down jacket manufacturer and seller, will also expand production in Southeast Asia. Leveraging its capital partnership with Japan’s Itochu Corporation, Bosideng has begun experimental production at a Vietnamese textile factory related to Itochu Corporation, and plans to further expand production based on production trends.
The reason for the transfer is not complicated, because the labor costs can be reduced by nearly 50% when going to Vietnam. The average monthly salary of Vietnamese production workers is US$216. According to World Bank data, Vietnam has one of the countries with the largest labor force in Southeast Asia, with 57.5 million workers, followed by Malaysia and the Philippines with 15.4 million and 44.6 million workers respectively.
Against the background of the trade friction between China and the United States, China’s foreign trade orders are struggling, but Vietnam is making great strides forward, which cannot help but arouse the vigilance of the industry.
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