Chinese Enterprises Invest In Vietnam To Investigate Low Tariffs And Low Tax Rates As The Biggest Advantage.

Vietnam has taken up half of China's capital to attract foreign investment. Since last year, Chinese manufacturing enterprises have flocked in. After the Spring Festival this year, Chinese enterprises also experienced labor shortage while labor costs increased.

In early April, reporters drove from Hanoi to Haiphong City, a manufacturing city in northern Vietnam. Rough statistics showed that there were about 30 industrial parks on both sides of the road in the 1.5 hour journey.

In the first quarter of this year, Vietnam attracted foreign investment totaling 10 billion 800 million US dollars, an increase of 86.2% over the same period last year, of which China accounted for half of its capital and Chinese capital played an important role.

What is the investment situation of Chinese enterprises in Vietnam?

The Securities Times reporters and three people went to 3 municipalities directly under the central government of Hanoi, Haiphong and Hu Zhiming, and Haiyang and Longan provinces.

In a survey of manufacturing industries in the north and south of Vietnam, the Securities Times reporter found that since last year, Chinese manufacturing enterprises have flocked in. After the Spring Festival this year, Chinese enterprises also experienced labor shortage while labor costs increased.

Southward relocation of enterprises

Industrial park two years "full garden"

After reaching the China Vietnam (Shenzhen Haiphong) economic and trade cooperation zone, looking from the Industrial Park building, many naming plates of domestic listed companies are very eye-catching. Here is the leader of China's motor industry -- Wolong electric drive, the largest airbag manufacturer in China, Huamao technology, and China's leading electronic component company, three Hua Zhi control, and the leader of China's micro motor industry.

"The investment speed in the park is much faster than expected. Almost every day, we are receiving customers from our country, and we are overwhelmed by waves."

Song Wenjian, deputy general manager of Associates Investment Company, who is responsible for the construction and development of the cooperation area, said that from the past experience, the industrial park generally needs about 6 years to complete the garden, but in the past 1 years, the Shenzhen Industrial Park has been attracting more than half of its investment. This year, we may complete the investment ahead of schedule. "We plan to expand the industrial park and consult with the local government of Vietnam."

In the park, Zou Rongming, general manager of Huamao technology Vietnam company, said: "after the Spring Festival in 2018, we took the initiative to investigate and find investment opportunities.

Because our customers are mainly general motors and Volkswagen, where are the upstream industry chain customers?

In May 2018, it formally signed up for the industrial park, and then began piling infrastructure, which was completed half a year ago. At present, the Vietnamese company has recruited more than 50 people, and is in the stage of staff training. "

It is not just Hua Mao technology, but also more enterprises are aiming at Vietnam.

According to incomplete statistics, since 2008, a total of more than 60 A share listed companies have announced relevant investments in Vietnam, and nearly 20 enterprises have issued notices from 2017 to 2018.

Over the same period, the scale of foreign investment received by Vietnam continued to rise, and Vietnam's total foreign direct investment in 2018 reached US $35 billion 400 million.

1800 kilometers away from Haiphong City, Hu Zhiming is also an important manufacturing base.

A senior manager of an accounting firm told reporters: "after May 2018, many Chinese entrepreneurs came to consult with them, hoping to complete the registration and landing of Vietnamese companies within 4 months as soon as possible.

But in such a short time, it is very difficult to complete. "

Around the city of Hu Zhiming, textile enterprises from China are also increasing investment. They even use the "golden year of Vietnam's textile industry for ten years" to describe this process. Huafu fashion, Tianhong textile, Ru Tai and Bailong Eastern large textile enterprises have expanded their capacity in Vietnam.

Low tariff and low tax rate

Into the biggest competitive advantage

What is the most important thing to invest in Vietnam?

In the process of investigating Vietnam by the Securities Times reporter, zero tariff and low tax rate have become the focus of investment by Chinese enterprises.

"Vietnam's exports to Europe and the United States, textiles, many are zero tariffs, the provincial tariffs are profits."

Kin Sheng group (11.310, 0.39, 3.57%) Lv Jianjun, general manager of Vietnam company.

From a tariff point of view, Vietnam has formed a relatively large and mature free trade system, and Chinese enterprises have become more and more popular in order to avoid trade barriers and increase investment.

Especially after 2019, Vietnam's new foreign trade agreements came into effect, and Vietnam's export tariff advantage is further highlighted.

In January 2019, the comprehensive and progressive p Pacific Partnership Agreement (CPTPP) came into effect in Vietnam.

At the end of 2019, the European Union and Vietnam are expected to formally sign the EU - Vietnam free trade agreement.

The two big agreement is great for Vietnam's manufacturing exports.

According to the agreement, Vietnam's export tariffs will be greatly reduced, while the EU will cut 99% of its tariff duties.

Compared with the tariff level of Europe and the United States, the tariffs imposed by the United States and Europe on most of Vietnam's products are much lower.

For export oriented manufacturing enterprises, only one tariff reduction can bring huge profits.

In addition to low tariffs, Vietnam's local preferential tax policies should not be underestimated.

Located in southern Vietnam, Longan Province, Huafu (Vietnam) Industrial Co., Ltd. is enjoying Vietnam's "four exemption, nine reduction and half" tax preference.

In accordance with the Vietnamese policy, a special preferential policy of "four exemption and nine reduction" should be implemented for enterprises with an investment of 300 million US dollars, or annual sales of US $500 million, or more than 3000 jobs.

Obviously, under the double incentive, the enthusiasm of industrial pnational pfer has been greatly enhanced, especially in the export oriented American market.

From Vietnam's export statistics, the United States is Vietnam's largest commodity exporter in the first quarter of this year, and its total exports amounted to US $13 billion, up 26% over the same period last year.

The analysis report from Panjiva, a trade data company, shows that from the industry perspective, the pfer of orders from us to furniture, household appliances and tires in China is more obvious.

Retailers such as home depot, IKEA and other retailers imported 13.5% less furniture from China and 37.2% from Vietnam, while the United States imported 28.6% from China and 141.7% from Vietnam.

The other side of the investment boom.

Land speculation and labor shortage

With the acceleration of foreign investment and construction in Vietnam, Vietnam's labor costs, land and factory rent are rising rapidly.

Song Wenjian said, "the rent price basically differs from that of the first tier industrial parks in the country, basically maintained at 4 US dollars per square metre."

Two years ago, Vietnam's outdoors Limited by Share Ltd, a Vietnam based subsidiary of Tianyu outdoor (Vietnam) Limited, invested in the relatively remote industrial zone in Jincheng County, Haiyang, Vietnam.

"When we came in 2017, the factory rent was 2.2 US dollars per square metre," said Miss Wei, the office director of the company.

The rent has risen to $2.8 now.

It's going up very fast. "

Even so, from the perspective of enterprise feedback, most industrial parks are generally in full load operation.

Rents in northern Vietnam are rising, while land rents in southern Vietnam are also soaring.

The reporter learned from several industrial parks in the surrounding provinces of Hu Zhiming that the local rent rose from 30 US dollars per mu in 2015 to 100 US dollars, up 2 times.

Labor costs are rising at a much faster pace. Vietnam's wages are now about 50% higher than in 2014.

In 2019, the minimum wage in the first region of Vietnam was equivalent to RMB 1237 yuan per month.

What is the actual salary of Vietnamese employees?

From the survey of many enterprises visited, the monthly average wage level of factory workers ranged from 2200 yuan to 2400 yuan, and enterprises generally expected that the labor cost of Vietnam would be unchanged from 7 years later.

"Vietnam has begun to show signs of labor shortage."

Miss Wei said that many new factories in the site selection, the main consideration is the recruitment problem.

People can be recruited by advertising before, but as the number of factories increases, the difficulty of recruitment is also rising. Enterprises will have to go to remote areas to recruit, and the situation of wage rise will continue.

All these seem to be the repetition of China's reform and opening up process in the past 40 years, and the history is often strikingly similar.