Boom time for rural Vietnam as Apple, Samsung supply chains shift amid pandemic, US-China trade war

Per capita income has increased almost fivefold since 2010 in some northern provinces, where manufacturers have committed billions of dollars

Vietnam’s low costs, political stability, investor-friendly policies and state-backed efforts to promote tech start-ups make it appealing

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Customers shop for smart phone cases at a stall set up at a makeshift market near the Van Trung Industrial Park in Bac Giang province, Vietnam, earlier this month. Photo: Bloomberg

Published: 10:09am, 22 Oct 2020Updated: 1:16pm, 22 Oct 2020

Not long ago Vietnam’s Bac Giang province was one of the nation’s poorest regions, known for producing rice, lychees and poultry dubbed “running chicken”. That was before the global tech supply chain shifted its way.

Now officials in the rural area north of Hanoi host representatives from Apple and Hon Hai Precision Industry Company. The growth in foreign investment is almost doubling every year – even during the coronavirus pandemic – and the province forecasts the value of exports this year will reach US$11 billion, a tenfold leap in six years. Residents have swapped loud, dirty motorbikes for new Honda two-wheelers while others drive Toyota SUVs and Mercedes sedans on freshly metalled roads.

“Life is heaven now and it’s thanks to the factories,” said Nguyen Van Lanh, 64. His family, which once could not afford to buy meat, runs boarding rooms for workers built with their factory salary savings. One relative with a loan business for plant employees drives a red Mercedes-Benz.

The boom in Bac Giang highlights how the shift in the world’s supply chains is touching regions previously left behind. Vietnam’s ability to attract more sophisticated manufacturing is accelerating with rising Chinese labour costs, the US-China trade war and logistics vulnerabilities amid the pandemic, which the nation’s communist leaders have so far successfully curtailed within its borders.

Morning commuters make their way to work in buses and on motorcycles near the Van Trung Industrial Park in Bac Giang province. Photo: Bloomberg

During the decades after the Vietnam war as the country opened its borders to foreign investors and trade, Bac Giang remained poor. Its 2010 per capita income was US$650, about half that of the nation overall, according to government statistics. The region’s flood-prone plains produced low-yielding crops, so its residents looked for factory jobs some 1,700 kilometres from home in the south. Now the province is experiencing its first boom as per capita income is forecast at US$3,000 this year.

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