‘Made in Vietnam’ export boom defies Trump’s trade threats

Bloomberg

From mobile phones to furniture, Vietnam’s export boom shows no signs of losing steam, defying a gloomy outlook at the beginning of the year when US President
Donald Trump persisted with his trade threats.
Furniture maker Xuan Hoa Viet Nam Co. is planning for a 20 percent increase in export orders next year by investing $3 million on equipment to expand production, General Director Le Duy Anh said. The company, based near Hanoi, makes office tables and cabinets for clients including Ikea.
“I’m quite optimistic about our sales next year,” Anh said. “We have new customers in Europe while our regular clients also sent more orders than last year.”
When Trump pulled the US out of the Trans-Pacific Partnership in January, it was seen as a blow to Vietnam, which exports about a fifth of its goods to the world’s largest economy. Instead, a global trade recovery and Vietnam’s young and low-cost workforce have been magnets for international investors like Nestle SA, which have opened factories in the country this year. That’s helping underpin its economy, which expanded 6.81 percent in 2017, among the fastest in the world.

Coming of Age
“We’ve seen Vietnam’s coming of age this decade with its rapid transformation to a manufacturing powerhouse,” said Eugenia Victorino, an economist at Australia & New Zealand Banking Group in Singapore. “The diversification of products and markets provides a tailwind to exports. We are very bullish on growth, though we remain cautious of structural issues of legacy bad debts.”
Gross domestic product rose 7.65 percent in the fourth quarter from a year earlier. Exports increased 21 percent in 2017 to a record $214 billion, with mobile phones and parts making up the biggest segment at about a fifth.
The strength of the US economy bodes well for Vietnam, which was the top exporter of goods last year among Southeast Asian nations. Sales to the US rose 8 percent this year. Nguyen Sy Hoe, deputy general director of Phu Tai Corp., which makes home furniture for Wal-Mart Stores Inc. outlets in the US, forecasts a 30 percent increase in exports in 2018. Phu Tai, based in a central province of Vietnam, relies on the US for 40 percent of its sales.
Vietnam’s shipments abroad accounted for 90 percent of GDP in 2015, compared with 64 percent a decade ago, according to the World Bank.
Xuan Hoa is buying three machines that make wooden furniture parts and equipment to make steel cabinets, Anh said. The company is also boosting its workforce by 20 percent with the hiring of 100 more labourers.