India Today: Firms moving from China to Vietnam is a lesson for India

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According to a Qima’s report, a Hong Kong-based quality control and supply chain inspection company, there has been a rapid surge in the demand for inspections and audits by North American and European customers in South-East Asia and South Asia, India Today cited at the beginning of the article.

It was reported in May that India has identified a land pool of 4.62 hectares to attract businesses from China (Photo: India Today)

As revealed by Qima, companies utilize these inspection and audit reports to move to a new region. Qima said that there are 45 percent surge in demand for South-East Asia (with Vietnam, Myanmar and the Philippines in the lead), and 52 percent in South Asia, where Bangladesh is still a top destination for Textile and Apparel brands.

The shifting demand rose sharply in January and February when most of China's provinces were under lockdown by COVID-19 pandemic.

Qima informed that after China lifted lockdowns since the beginning of March, its manufacturing industry has increased sharply. Nevertheless, the rebound was cut short as the volumes of inspection and audits in China collapsed again. This is due to the fact that American and European companies are severely affected by COVID-19.

More importantly, in a Qima poll of over 200 businesses with global supply chains, there are 87 percent of respondents said that COVD-19 could result in considerable changes in the global supply chain. Over 50 percent noted that they had started switching to suppliers in unaffected areas.

The Qima poll of over 200 businesses with global supply chains, 87 percent of respondents said that COVD-19 could result in considerable changes in the global supply chain (Photo: Tuoi Tre)

Besides the COVID-19 epidemic, the shifting trend has emerged since the US-China trade war began. It is projected to keep going on even whether Donald Trump win the US presidential election or not in this November.

The"shift' sentiment is projected to keep going on even if Donald Trump loses the US presidential election (Photo: Tampa Bay Times)

According to India Today, This "shift" sentiment brought hopes in India that it would probably attract foreign businesses because of its democratic polity and open market.

A report in May revealed that India has identified a land pool of 4.62 hectares to draw businesses from China. About 1000 American firms were approached with incentives for moving their manufacturing plants to India. Even some states like Uttar Pradesh established a special task force to lure foreign investors. However, it seems to be that companies still do not choose India as a destination, added India Today.

A study by Japanese financial group Nomura unveiled that the destination for these companies remains in the East and South-East Asia. The statistic of Nomura showed that 56 companies switched from China in 2018-2019, Vietnam received 26 of which, Taiwan got 11 and Thailand got 8. Only three companies moved to India. These companies are seeking safer destinations post-COVID-19 which manage pandemic better.

Vietnam has emerged as a role model country in the combat against coronavirus pandemic. The country has reported only 327 Covid-19 cases with no deaths related. With a country having almost 100 million people, this is incredibly a praise-worthy success.

Vietnam has emerged as a role model country in the combat against coronavirus pandemic (Photo: Tuoi Tre)

India Today also gave an example of West Bengal – a state of India with the same population as Vietnam but has reported 8,613 COVID-19 cases and more than 400 deaths.

Also according to India Today, to make itself a more appealing destination, Vietnam sanctioned free trade agreement with the European Union (EVFTA). It enables to eliminate 85 percent tariff by the EU towards export goods manufactured in Vietnam and phased remove imports from European countries.

“This could be the reason why India is not the preferred country for companies that are actually shifting or having schemes to move out of China. Accessing to India's large market is not the only determining factor for them, even when India is regarded as a rival to China”, India Today emphasized.

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