May 15 (Bloomberg) -- Anti-China protests escalated in Vietnam as attacks on Taiwanese companies left two people dead and at least 129 injured, while more foreign-owned factories shut production and Chinese workers fled the country.
Vietnamese staff at a Taiwanese steel mill in Vung Ang in the central province of Ha Tinh yesterday looted the site, leaving 90 Chinese injured, and one Chinese person died of heat stroke, mill owner Formosa Plastics Group said in a statement. Taiwanese workers were not involved, it said.
A Chinese technician at Taiwan’s DDK Group, which makes bike parts, choked to death as one of the company’s plants was set on fire, Matthew Shih, a manager, said by telephone in Taiwan. A Chinese employee is hospitalized in stable condition after violence at DDK’s factories 30 kilometers (19 miles) north of southern Ho Chi Minh City.
The attacks follow damage to factories in the southern province of Binh Duong amid anger over a Chinese oil rig placed in disputed waters near the Paracel Islands claimed by both Vietnam and China. Vietnam and China fought a border war in 1979, with ties normalized in 1991.
With China, Singapore and Taiwan calling for Vietnam to protect their citizens, Prime Minister Nguyen Tan Dung issued an order for the violence to be brought under control as the country seeks to preserve its status as a home for foreign companies producing clothes, shoes and furniture. While Vietnam’s leaders have condemned China’s actions over the rig, large-scale anti-China protests in the country risk an investment backlash.
‘Stop the Violence’
“Vietnam’s appeal as a destination for foreign direct investment, as a stable location for manufacturing has certainly taken a large beating,” said Wai Ho Leong, a Singapore-based economist at Barclays Plc. “The worst thing that can happen to a strategic investor is sporadic unrest popping up at critical junctures, disrupting supply chains, in a world where margins are already under pressure.”
Dung instructed provincial governments and security forces to take “quick actions” to stop the violence, the government said in a statement on its website. The Ministry of Public Security increased forces in the southern province of Binh Duong, where protests broke out at factory parks on May 13, and the situation has stabilized, it said in a separate posting.
In Ha Tinh, about 128 people were admitted to hospital, according to Tran Thai Son, the deputy head of the health department in the province. “People who got injured during the riot in Vung Ang area were hospitalized yesterday, including some Chinese,” Son said by phone.
The riot was tied to a fight between two groups of workers and order has been restored, Vietnam foreign ministry spokesman Le Hai Binh said at a Hanoi briefing. Provincial police detained 76 protesters after the riot, while almost 500 people were detained for questioning over damage to property in Binh Duong, according to local officials.
“People overreacted, broke the law and destroyed properties of companies including foreign-invested firms, causing public disorder, affecting businesses and people’s lives, and harming the country’s investment environment and government’s external policies,” Dung said, according to the statement. “This situation is serious.”
China said Vietnam’s government had connived with those behind the protest, demanding it punish perpetrators and do more to protect Chinese citizens and property.
“What happened in recent days targeting Chinese businesses and personnel -- the vandalism, smashing, looting and burning -- are directly related to the Vietnamese government’s indulgence and connivance toward domestic anti-China forces and criminals,” Foreign Ministry spokeswoman Hua Chunying said today at a briefing in Beijing.
Authorities in Vietnam had permitted peaceful demonstrations against the rig to be held in major cities starting last weekend. Those protests morphed into attacks on businesses even if they had no direct link to China, reflecting the resentment that remains from the war decades ago.
The violence was not “what the authorities wanted, or foresaw,” said Martin Stuart-Fox, an emeritus history professor at the University of Queensland in Brisbane. “The Vietnamese authorities walk a fine line when they permit anti-Chinese demonstrations,” Stuart-Fox said by e-mail.
China, which has deployed more vessels and aircraft to the oil rig area in the South China Sea, continues to use water cannons against Vietnamese vessels, causing damage to ships and hurting crew members, Binh said. Vietnam will take all necessary measures to protest the rig, he said.
Protesters set fire to the buildings of 10 Taiwanese companies as of yesterday, according to Taiwan’s Ministry of Economic Affairs, with more than 100 companies invaded. Hundreds of Taiwanese companies stopped production on safety concerns, the ministry said in a statement.
Li & Fung Ltd., the world’s biggest supplier of clothes and toys to retailers such as Wal-Mart Stores Inc., said most of its supplier factories in Vietnam were closed. The company expects a week-long delay in production, chief executive officer Bruce Rockowitz said in Hong Kong today after a shareholder meeting. Vietnam’s VN Index fell 1 percent today.
Four Taiwanese airlines, plus Vietnam Airlines, provided a combined 3,307 seats to fly people to Taiwan today, with a further 2,754 seats tomorrow, Taiwan’s Civil Aeronautics Administration said in an e-mailed statement. China Airlines will put on two extra flights today, it said.
“Thousands are leaving,” said Chen Bor-show, director general of the Taipei Economic and Culture Office in Ho Chi Minh City. “They are waiting at the airport, waiting to take off,” he said by phone. More than 600 Chinese business people and tourists crossed the Vietnamese border into Cambodia yesterday to escape the violence, the official Xinhua News Agency reported, citing the Cambodian police.
Taiwanese companies have invested in Vietnam in part to avoid being too reliant on China, according to Shelley Rigger, a professor of political science at Davidson College in North Carolina.
“They wanted to diversify,” she said. “In a way Vietnam’s gain has been China’s loss. For Taiwanese investors to be punished for making that move is kind of shocking.”
To contact Bloomberg News staff for this story: Jason Folkmanis in Ho Chi Minh City at email@example.com; Nguyen Dieu Tu Uyen in Hanoi at firstname.lastname@example.org; John Boudreau in Hanoi at email@example.com; Yu-Huay Sun in Taipei at firstname.lastname@example.org
To contact the editors responsible for this story: Rosalind Mathieson at email@example.com Neil Western