Recently had a session with a group of highly talented new HR and Development  Consultants to ASEAN , the discussions with whom made me to think and ask this question:

Will Vietnam be China’s + 1?

‘Crowding out’ effect of China has worried many for the past years, but yet again China presents itself a big opportunity!  China could become world’s fastest growing economy by turning itself into the world’s largest factory.  While China’s dominant position on this is not a question, rising overheads and wages are driving many companies to look for alternatives and additional low-cost manufacturing in the region.

With joining WTO in 2007, lower wages and strategic location, Vietnam is a convenient bridge between Southeast Asia and China. It is so well-situated that entities are growing a “China’s + 1” approach towards this nation of  87 million people.

However Vietnamese are hostile to China and that they know running their business in the shadow of a giant dragon isn’t easy and risk free, but their ruling Communist party has maintained close ties with Beijing and opened up their economy to private sectors by similarly putting ideology aside.

Vietnam’s economy has been growing over the past decade and according to World Bank the country attained “Average/Middle Income” status in 2011. However there is macro economic instability there, but in my view Vietnam can resolve that by fostering reform in their bureaucracy, education system, infrastructure and boosting exports. Vietnam can certainly gain from China and enjoy being ‘China’s + 1’ .

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