CHINA - Most large companies operating in industrial parks hit by anti-China riots in Vietnam last week have resumed operations, underscoring the irresistible pull of the country as a low-cost manufacturing hub with a relatively skilled workforce.
Manufacturing has increasingly shifted away from China in recent years as wages there are climbing and there is a growing shortage of labour. The speed with which companies have returned to work in Vietnam's industrial parks, which were the focus of rioting just last week, demonstrates the economic draw of doing business in the country, despite the risks.
The riots, which erupted after protests over disputed territory in the South China Sea, had sparked speculation that foreign investors could flee the country, but most say they have no plans to do so.
Vietnam has about 200 industrial parks and they have been a major driver of the country's economic growth, accounting for more than 30 per cent of exports and attracting around US$110 billion (S$140 billion) in foreign direct investment.
"Vietnam is one of the most attractive places to do manufacturing. It's a combination of people who are skillful and a good work force that is diligent and compe-tent, and also wage levels that are competitive compared to the rest of Asia," Jerry Shum, a spokesman for Yue Yuen Industrial Holdings Ltd , told Reuters on Monday.
Operations at Yue Yuen, a $4.7 billion company that makes footwear for the likes of Nike Inc and Adidas , had returned to normal after production was temporarily suspended last week, he added.
Companies from Taiwan, Singapore and Hong Kong told Reuters that their investment strategy in Vietnam was unchanged, even though state-run Chinese media said Hanoi's commitment to foreign investors was in doubt.