US Companies Set Up Shop in Vietnam

As labor costs in China soar, manufacturers are moving on
By Jason Farago,  Newser Staff
Posted Jun 18, 2008 9:53 AM CDT
As Chinese labor costs rise, Vietnam is becoming a prime destination for foreign manufacturers.   (AP Photo/Andy Wong)
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(Newser) – Foreign manufacturers invested $83 billion in China last year, keeping it at the top of the list  of overseas producers. But a confluence of circumstances—high inflation, changing government policies, and, above all, rising wages—have led corporations to start looking elsewhere in Asia,  the New York Times reports. The shift to other parts of Asia, especially Vietnam, reflects a "China-plus-one" strategy, in which multinational corporations diversify their manufacturing operations.

Wages are so low in Vietnam that several Chinese companies have opened outposts there. And as in China, one-party rule makes Vietnam an appealing place to do business: "Communism means more stability," said one industrialist. But as foreign money pours into the country, the cost of doing business there rises, too.