With sparks flying from the US-China trade skirmish, companies are seeking cover in Vietnam - shifting their supply chain activity and some operations to the rapidly expanding southeast Asian economy. Vietnam’s emergence as perhaps a new trading hub is a process that was long underway, due to a lower cost of labor and the allure of a ‘mini-China’ story of labor force productivity - and a demographic dividend to boot. With a comparatively low rate of urbanization, Vietnam is attracting significant investments to its budding cities: the government capital of Hanoi in the North, and Ho Chi Minh City (HCMC), the country’s commercial artery (often still referred to as Saigon by locals).
At the macro level: Vietnam has been a top performer in greenfield FDI in emerging markets, unseating Malaysia and Thailand. Vietnam is also witnessing a significant expansion of its capital markets.
At the geopolitical level: While some companies and investors are sold on Vietnam’s ‘mini-China’ story at the macro level, some executives harbor a certain amount of reticence when it comes to allocating capital to the country.
At the sector level:
Cornering the Globe is a publication of PwC’s Geopolitical Investing practice, and is intended to highlight key issues our clients should be considering as they think about expanding into global markets. At the Macro level, long-term economic and demographic trends indicate an abundance of opportunities to profit and expand in emerging markets. However, the risks of doing business in these regions - such as exchange rate volatility, political uncertainty, meeting the skills gap, and shifts in tax and regulation - often hamper decision-making, forcing companies to react to events, rather than prepare for change, and capitalize on potential dislocations. By critically assessing key geopolitical issues that impact our clients, we provide insight into the ways in which companies can build capabilities to weather political and economic change in their foreign operations. Our Geopolitical Investing team combines rigorous insight into the key macroeconomic and geopolitical issues facing business leaders today, with deep industry and sector expertise, helping companies to strategically allocate capital to grow specific business units or assets in markets around the world.