Vietnam as an alternative to Chinaby
Back in the mid-1990s, then-Taiwanese President Lee Teng-hui tried to steer local companies away from investing in China by encouraging them to look at Southeast Asia. The “Go South” strategy was a bit of a bust. Despite the best efforts of independence-minded Lee and his successor, President Chen Shui-bian, the pace of Taiwanese high-tech investment in China increased. Today, pretty much all Taiwanese computer companies make their desktops and notebooks in China, with Southeast Asia little more than an after thought.
But maybe there’s something to Go South after all. Taiwan’s biggest electronics company, Hon Hai, has announced plans to invest $1 billion in Vietnam. (See here for instance.) Now the Taiwanese press – citing a report from Vietnam’s state-controlled media – is saying that Hon Hai is thinking much bigger. According to these reports Hon Hai’s investment in Vietnamese factories will total $5 billion. This comes at a time when labor costs in China are rising and Hon Hai has had to deal with embarrassing publicity, in both the foreign and Chinese press about working conditions at its factories there. So far, most of the other big Taiwanese electronics companies have not followed Hon Hai’s lead. But a $5 billion investment is bound to attract the attention of other Taiwanese execs.