Tan Cang – Cat Lai Port in HCM City. (Photo: VNA) After three years of disruption, international supply chainsappeared to be returning to normal, it said.
The cost of shipping freight by sea or air had largely returned topre-COVID-19 levels; container ships were no longer queuing outside major portsand businesses no longer cited “supplier delays” as one of their most pressingproblems.
This did not, however, mean it was business as usual forlogistics, manufacturing and other industrial sectors.
The pandemic and geopolitical tensions had exposed the fragilityof supply chains and placed a new emphasis on resilience.
Meanwhile, cost continued to be key in a tough economic climate.
Cost remained a powerful lever of location decisions.
Jack Harkness, director of regional industrial and logisticsservices at Savills, said rising labour costs in China mean it is not ascost-effective as it once was, particularly when domestic incentives tore-shore and ongoing security concerns are factored in.
“Companies already embedded in China are not necessarilywithdrawing. But there may be a slowdown in new facilities being establishedthere.”
Harkness points out that many companies with facilities in Chinaare looking to complement rather than replace existing plants. Apple, forexample, has announced plans to diversify away from China, while Siemens hassaid it is looking at other locations in Southeast Asia.
“This process is being accelerated across sectors deemedstrategically important to US and European industrial policy.
“Furthermore, there has been scepticism around state influence ofsome Chinese tech firms, which suggests the western expansion of Chinese firmswill be more constrained in the future.”
According to John Campbell, associate director, head of industrialservices at Savills Vietnam, Vietnam’s north and south have distinctcharacteristics: the former typically experiences a high demand forelectronics, while it is more diverse in the latter.
In terms of nationality, there has been an increase in Europeancompanies, particularly German and French manufacturers, which demonstrates thepositive impact of the EU-Vietnam Free Trade Agreement (EVFTA).
There is still strong interest from Asian manufacturers, withTaiwanese electronics companies preferring the north and manufacturersdisplaying confidence in the south.
After the global slowdown in the first half of the year, he saidhe anticipated a much better second half.
The challenges faced by the manufacturing sector, indicated by thedecline in the purchasing managers index and industrial production, were nowbeing reversed, he said.
This had improved confidence among manufacturers, investors andlogistics companies, leading to a likely better performance in the second halfof the year.
There would be a significant turnaround in the country’s economicperformance by December, he added./.
VNA
