Vietnam expected to be a key player in global Supply Chain

  • 08 Sep 2021
  • Lisa,  Marianna
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Companies who migrated their factories over from China to Vietnam now face COVID 19 disruptions, but despite this, Vietnam is still being echoed by analysts as an important player in the global supply chain and is expected to see long term growth.

Adam Sitkoff, Executive Director of the American Chamber of Commerce in Hanoi, told Bloomberg that currently most manufacturers have shut down in Vietnam leaving many American companies facing a shortage in goods over the coming holiday season.

Suspensions in manufacturing have been prominent causing companies to face high costs for less workers and slower production. Amid the rise of the Delta variant, the situation for many Vietnamese factories has worsened. They are now facing reduced revenue against a high demand for service, delays in licensing, work permits and visa approvals, and the lack of vaccines to protect workers has been the tip of the iceberg for many companies.

As global supply chains continue to be disrupted, the delivery of some key goods such as  clothing, computer chips and cars is expected to suffer delays. Apple have warned that the global chip shortage will affect their production of iPad tablets and Mac computers; and many car manufacturers will see the continuation of semi -conductor chip shortages.

However, according to the International Monetary Fund (IMF), “Despite COVID-19, Vietnam’s economy has remained resilient”. In 2020, it expanded by 2.9% and growth is projected to be 6.5% in 2021.  It is one  of the fastest growing economies in Asia; it has managed to pick up most of the business lost by China in the ongoing  trade war with the US, whilst still  establishing solid relationships with both nations. Mr Sitkoff believes that Vietnam’s economy will continue to grow and the country will play  a key role in the global supply chain, especially for American consumers.

Analysts for Banking groups in Australia and New Zealand also echo a similar tone, highlighting that the longer term growth of Vietnam’s market far outweigh the current drop. A report from the IMF explained that Vietnam entered the pandemic with solid economic fundamentals and policy buffers” which made the country more resilient to the shock of the pandemic. The Vietnamese government is also expected to continue to support a policy to support economic recovery – which is also advantageous to foreign business owners who are investing in Vietnam in the long term.

COVID-19 has shaken international trade and will also drive the reshaping of manufacturing supply chains over the medium term. Moreover, political tensions - such as the one between the US and China – will encourage a ‘reconfiguration’ of supply chains. Key beneficiaries of this shift will be countries in the South-East Asia region, with Vietnam expected to be one of the main ‘winners’.


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