For a decade, Liu Nanjie ran a factory in China’s southern manufacturing hub of Guangdong, using the highly precise computerized numerical control (CNC) machines to make steel and aluminum materials for electronic devices. But his business struggled during the pandemic. In mid-2023, during a vacation in Vietnam, he met other Chinese entrepreneurs and got the idea to invest in a new plant in the country. He soon shipped over four CNC machines to Vietnam. “There will be demand [for the metal materials] for sure,” Liu, who now rents an apartment in the Bac Ninh province and plans to split his time between Vietnam and China, told Rest of World. “It’s still in the growth stage.”
Liu is part of a growing Chinese expatriate community in Vietnam, as global manufacturers diversify from China following its disruptive Covid-19 lockdowns and rising tensions with the U.S. More than 10,000 Chinese people currently reside in Bac Ninh, an industrial hub northeast of Hanoi. Chinese-owned restaurants, hotels, and bubble tea shops have popped up in the area to serve the expat community, forming a new Chinatown next to Korean shops that have been around for close to a decade.
Home to Samsung and Apple suppliers like Goertek, Bac Ninh neighbors the Bac Giang province, which has Foxconn and Luxshare-ICT factories. Bac Ninh attracted over $1 billion in foreign direct investment in the first 11 months of 2023 — more than triple compared to the same period in 2022. According to Bac Ninh Online, a state-owned news site, this rise is a result of the government’s push to attract investment from foreign companies, notably in China. In the first 11 months of 2023, China had the highest number of newly registered projects in Vietnam, accounting for over 22%. The expanding electronics manufacturing industry has brought in an influx of Chinese engineers, managers, and their families.
The trend is likely to only grow, particularly after Chinese President Xi Jinping’s Hanoi visit last month, as it signals the government’s interest in enhanced cooperation and bilateral trade, Ivan Lam, senior analyst at Counterpoint Research, told Rest of World. “Chinese enterprises are notably establishing local factories in Vietnam,” he said. “The traditional notion of ‘Made in China,’ confined to assembly within mainland China, is expanding to encompass a broader global supply chain.” Multiple Chinese and Taiwanese companies are expected to move to Vietnam or start projects there.
For global manufacturers, Vietnam has been a popular alternative to China due to lower labor costs, proximity to China, as well as its 16 free-trade agreements, with three under negotiation. Foxconn began manufacturing in Vietnam in 2007, and Samsung has invested at least $18 billion in factories in the country since 2008. Since the beginning of the pandemic, Apple has moved part of its production process for AirPods, iPads, Apple Watches, and MacBooks to Vietnam. Taiwanese manufacturers that specialize in laptop circuit boards, laptops, and internet network devices are also expanding and constructing plants in the country.
After the leading contract manufacturers expanded to Vietnam, electronics suppliers followed. In late 2023, Liu took monthly trips to Bac Ninh to scout factory land and meet potential customers. The upscale hotels were often fully booked by Chinese people, he told Rest of World in November.
Ngoc Han Cong Chua, a street in Bac Ninh, is packed with Korean businesses on one end. But the other side is now being taken over by restaurants, convenience stores, massage parlors, and visa agencies with signboards written in Mandarin, Vietnamese, and occasionally Korean. Outside a Chinese-run hotel, a banner advertises a dating app that automatically translates between Vietnamese and Mandarin. Posters featuring WeChat QR codes are plastered across the streets, advertising real estate, casinos, and workspaces available for rent.
“The number of Chinese customers has shot up,” Ngoc Van Thang, a manager at Bep Kinh Bac, a high-end restaurant that serves Chinese, Thai, and Vietnamese food, told Rest of World. When the restaurant opened in 2019, there weren’t many Chinese diners, but in recent months, they have comprised around 40% of the customers, Thang said. A Bac Ninh native, he believes the influx of Chinese manufacturers creates jobs and brings in more customers for his restaurant at a time when the economy is stagnant.
Two business owners told Rest of World the number of Chinese restaurants in Bac Ninh and nearby cities has almost doubled over the past year. The wide selection of food and entertainment options has made engineers and factory managers feel at home. “It’s as if I had never left China,” Amy Gu, who moved to Bac Ninh in August 2023 to work for an equipment company in Apple’s supply chain, told Rest of World. Her local colleagues have been studying Mandarin to improve their career prospects in electronics manufacturing. “Bac Ninh looks like a Chinatown right now,” Gu said.
Language centers teaching Chinese and Vietnamese have mushroomed along Bac Ninh’s China street since 2022, after most Chinese companies started rewarding their expatriate and Vietnamese employees for speaking each other’s languages. In 2023 alone, Chinese language center QTEDU opened two new branches in Bac Ninh and Bac Giang. “Most of the students study for work … in Chinese companies to get a pay raise,” Nguyen Quoc Tu, founder of QTEDU, told Rest of World. His company has also trained translators for Apple suppliers like Goertek.
HK School, another language center in Bac Ninh, teaches Vietnamese to around 600 Chinese business owners and workers, according to co-founder Nguyen Van Huong. Having realized the shortage of Vietnamese professionals who speak Mandarin, he plans to approach major Chinese companies in the area to create a scholarship that would allow Vietnamese students to train in China and then come back to work for them in Vietnam. Last year, study-abroad agency Fast Edu — Huong’s second business — sent 400 Vietnamese students to China, double from the previous year, he told Rest of World. When Huong surveyed the demand for studying in China in 2018, he found people were wary of it. In 2019, only a few dozen went to study in China, Huong said.
Companies also bring in staff from mainland China to meet a shortage of experienced factory managers, according to CY Huang, co-founder of the Southeast Asia Impact Alliance, a business group that facilitates Taiwanese investments in Southeast Asia. Huang told Rest of World the group is planning a program to train Vietnam’s future semiconductor manufacturing talent. “China can’t be replaced in the short run,” he said. “But in the long run, [the industry] will gradually become more spread out.”
Xie Qing, a Chinese property agent in Bac Ninh, told Rest of World many Chinese companies had been looking to rent factory facilities this year, and some took over plants left empty by retreating Korean manufacturers. “At first, [people] moved here because Apple forced them to,” Qing said. “But recently, more people are coming voluntarily.”
Liu said the current electronics manufacturing boom in Vietnam is similar to that of China 20 years ago, when he had first moved to Guangdong as a young assembly-line worker. A lack of factory suppliers means equipment costs several times more in Vietnam compared to China, he said, but he wanted to test the new market before it was too late. “The industry is still small here … [Factories] don’t get everything we need here, and the customer base is still growing,” said Liu. “When things get developed, the prices will become more like China.”
Source: restofworld.org
