Things Have Changed
Things Have Changed
How Vietnam Transformed into a Global Manufacturing Powerhouse
Ever wondered how a nation transforms from a war-torn past to a thriving economic powerhouse?
Vietnam's transformation has been nothing short of astonishing, as it deftly navigated through technological advancements and strategic partnerships to establish itself as a pivotal player in the global trade landscape. This Asian tiger, now a central hub for manufacturing, produces a wide range of goods, from shoes to cutting-edge technology, harnessing the potential of the internet, smartphones, cloud computing, and data.
If you are currently listening to this podcast on a smartphone, there's a significant likelihood that the device was manufactured in Vietnam. Notably, mobile phones represent Vietnam's top export, generating export revenues exceeding $45 billion in 2017. In a period when global trade has stagnated, Vietnam's trade has skyrocketed, accounting for 190 percent of its GDP in 2017, up from 70 percent in 2007.
So, how did Vietnam emerge as a manufacturing powerhouse? In this episode of the Things Have Changed Podcast, we shine a spotlight on Vietnam and explore how the nation has firmly positioned itself as a vital player in Asian global trade, offering a fresh narrative of prosperity in the era of Slowbalization.
Join us as we delve into the heart of Vietnam's economic renaissance!
Links:
- Joe Biden’s Visit to Hanoi is a signal to China
- Why are Vietnam’s schools so good?
- Vietnam is emerging as a winner from the era of deglobalisation
- Vietnams Richest Man wants to sell EV’s to America
In the past few decades it's been like watching the world shrink right in front of us.
Speaker 2:Once considered key to increasing trade, fostering peace and raising the standard of living, globalization is now seeing a pushback.
Speaker 1:Globalization has turned our planet into this super connected place where everything's buzzing Borders. They've become kind of blurry Businesses. Oh man, they're popping up all over the globe. In tech, well, it's like the ultimate game changer, making even the most remote spots possible market hotspots. But the winds of change are blowing once again.
Speaker 2:Now the issue was raised at Davos with new data showing world exports and imports are now in retreat for the first time since the Second World War. Partially driving this retreat nationalistic policies and protectionism.
Speaker 1:Enter globalization. While it might sound like we're hitting the brakes, it's a bit more complicated than that. Countries are revisiting the whole global trade angle thanks to the volatile past few years we've witnessed from rising trade tensions, evolving geopolitics and supply chain crises driven by COVID.
Speaker 3:Yeah, the showdown with Russia. You also have supply chain issues, post pandemic tensions with China. Everyone's wondering what globalization will look like in the 21st century.
Speaker 1:We're moving from that whole worldwide party mode to a chill regional hangout scene.
Speaker 4:If you're listening to this podcast on a smartphone, there is a good chance that you are looking at a device that was made in Vietnam. Global phones are Vietnam's number one export, generating export revenues of more than $45 billion in 2017. So, while global trade has stagnated, vietnam's trade has soared to 190% of GDP in 2017, from 70% in 2007. So how did Vietnam emerge as a juggernaut in manufacturing? On this episode of Things have Changed podcast, we spotlight Vietnam and how the country has anchored itself as a critical global trade partner in Asia and painting a fresh narrative of prosperity in this era of globalization. Drive with us into the heart of Vietnam's economic renaissance.
Speaker 3:If you had known how important the technology economy was 20 years ago, would you have done things differently? The internet, cell phones, the cloud and data Things have changed. We're here to talk about it, hi.
Speaker 4:I'm Jed. Hi, I'm Shikhar. Welcome to Things have Changed your new economics and technology podcast.
Speaker 1:Just today this morning actually I had come for my first football game slash soccer game for you Americans early, early in the morning and I'm freaking tired.
Speaker 4:Were you in the starting 11 or a sub I already know the answer Even before I say the question Dude of course I'm starting 11.
Speaker 1:What are you talking?
Speaker 2:about.
Speaker 1:What are you talking about? I am dude. I am literally messy. When he was still like 21.
Speaker 4:That's literally every dad, every uncle that has ever played football like ever, even for like two hours in their whole lifetime. We'll say that, you know, before I got that knee injury, I was basically Ronaldo.
Speaker 1:Well, all jokes aside, I do see a lot more parents these days pushing their kids to like be really good at football, now that Messi is here.
Speaker 4:Also Project Mbappe dude 300 million for one car Crazy crazy.
Speaker 1:If you want to get rich don't become a banker, just train your kid. Okay, messi is here, now it's going to level up MLS. Dude, you know what? During this game, I noticed something pretty interesting the ball that we were playing with in this game, when I was inspecting it for holes and if it was good enough to be at my level of playing, or were you picking it up?
Speaker 4:from the goal full, because I know you've become left for the audience out there who does not see Jed on a regular basis. He's added some heft, so I think he's probably the goalkeeper in this case, that's classy, actually I'm actually a forward and a right mid Depends on what I'm feeling.
Speaker 1:But what I noticed was, dude, when I picked up this ball, was that the ball was made in Vietnam. Really interesting, because a lot of the times I don't know if you did this also growing up, shaker, but I looked at all of my clothes all the time to see where it was made, to see which ones were good quality, and that's just kind of become a thing you look at the back of your shirt just to see if it was made in China, if it was made in Italy. You feel a little differently. Vietnam I've been seeing made in Vietnam a lot more frequently, dude. Not just clothes, not just shoes anymore, like footballs, that's kind of new right. So what else is happening in the world, dude, of Vietnam?
Speaker 4:It's insane, dude. I think we went through this phase where everything was made in India and now we start seeing a little more diversity in just where it's made. From Anyone who has a Puma, soccer ball or volleyball that'll be made in Bangladesh or Vietnam, or a lot of retail stores you go to Banana Republic almost everything is made in India, made in Vietnam. So you're starting to see these names emerge and what's so interesting is how manufacturing can be such a force for good and change, because Vietnam has emerged as this global manufacturing hub. Right, and just think about how, you know, 40, 50 years ago, it was in a really bad position For them to like move from where they were, especially in the poverty levels, to now.
Speaker 4:It's crazy to think that they are one of the largest hubs for electronic manufacturing. So how did that happen? How did like? We're talking about 40 year transformation, so much so. President of the United States is in Vietnam right now as we speak, biden's actually visiting Vietnam strategic partners, and that's what Vietnam has become, because they are like the global manufacturing hub for like everything from your shoes in a parallel to like furniture and high tech, high, high tech consumer products.
Speaker 1:Last 40 years has been crazy growth for Vietnam, and I think you know a lot of what had happened in the last few years, something that I was doing my research on, like, how did Vietnam's economy all of a sudden get globally connected? You know, we're seeing stuff that's made in Vietnam all the time now, like we were talking about, and it turns out prior to becoming this open economy that we have today with actually significant foreign direct investment, vietnam was kind of like a really closed economy, similar to how China was. Prior to Deng Xiaoping's plans right of putting in special economic zones, they enforced something called the doi mui, which is basically liberalizing trade for Vietnam, and it was really interesting because this wasn't like special economic zones in China, where it's basically an experiment right in regions of the country. This one is countrywide. They realized that they needed to work with other nations to be able to build certain things, and so much so that it hasn't just been clothes anymore, it's not just shoes anymore that we're seeing out of Vietnam.
Speaker 1:Like Shikar just mentioned, we're seeing electronics come out of Vietnam, right, and that's not an easy feat to do, like the last two episodes that we had chat about. We talked about Brazil and Mexico right, and how Mexico has served as kind of like a source, another source of trade for the Americans, after kind of trade relations between US and China has been, you know, a little bit dodgy lately, and so Vietnam is one of those countries that are actually stepping in as well to provide some of this manufacturing demand, not just the US but globally.
Speaker 4:Most of Samsung's phones are made in Vietnam. It's insane. So the Galaxy you know the latest, with God knows how many pixels now the cameras are. There are like 10 cameras on a phone. Now you know those are being made and built in this country, right, and so you can't just overnight start producing these high tech products. There needs to be a lot that goes into it, you know. Firstly, your country needs to be stable. Right, politically, economically, it has to be stable. You need to have a good, educated but growing workforce.
Speaker 1:Yeah, dude, it's a melange of things, right, like also, at the same time, you were talking about having a young workforce.
Speaker 1:We're seeing issues like this across different types of countries where the workforce is aging, where, you know, the support of the government kind of has to be a lot bigger as well, with those social services for older folks, and, at the same time, nobody's replacing the guys who are in the factories, the guys who are working, who keeps the economy running right, the folks who are working, and so it's very interesting that Vietnam has these kind of mix of things that makes it such a perfect place for this type of growth, not to mention, like, strategically, their region is just filled with so many trade partnerships as well, and Vietnam has kind of like been one of the leaders of these partnerships.
Speaker 1:Like we could talk about the Trans-Pacific Partnership that you know Trump was trying to pull out of during his presidency, right, like that came into picture again when Trump, the Trump administration, tried to pull out of that partnership that we had over there. And this point where there are a lot of partnerships between Southeast Asian countries and Europeans or the West, really, where you reduce certain tariffs for these goods, right, that gives them a really good advantage on manufacturing, because that's pretty much the agreements that they've had with countries like China for the longest time, right, so this elevates them in a way that they can trade with a lot of companies in these really massive economies. And ASEAN I haven't even mentioned ASEAN. That's my country also. The Philippines is part of ASEAN and it's one of those things where all of a sudden you have access to 600 million people and geographically it just makes sense for folks to partner up with. Whether supply chains already exist, slash China.
Speaker 4:Yeah, on that dude, like I was reading about Samsung's decision to actually choose Vietnam, and this was like 2008, 2009. And this was the. This was prior to the. You know, this whole globalization trend that we've been talking about in the last two episodes and near-shoring, where the US has looked at near geographies and manufacturing hubs close to home right, in this case, samsung. Back then the terminology was China plus one.
Speaker 4:So you want to look for a partner in addition to China that's going to help just be an alternative, right so? Samsung invested late 2000s, right so 2008, 2009. And now Vietnam's become like the hub for that company. Factory wages are almost half as that of China, while the quality is comparable in many sectors. That is very enticing for companies thinking, hey, we could probably get close to the efficiency and yields that we get in China, in a different location, at significantly less of cost and risk. Right, we're talking more about risk of disruption of that supply chain. So very interesting to see how Vietnam's competitive advantage is just becoming all the more, it's plain to see.
Speaker 1:basically, no really cool developments as what we've done in these previous episodes with these markets that have been really growing and coming into the spotlight in the last few years. We looked at the tech scene, what's happening in the tech scene in Vietnam A lot of interesting stuff as well, because, as we mentioned earlier, a lot of manufacturing has been growing in Vietnam. The level of skills of the workers are also growing, because coming into the electronics manufacturing space, as Shikar mentioned, is not a joke. There's a lot of people who need to know a lot of things before you need to be able to do that in a country. You can't just pour billions of dollars into it.
Speaker 1:One such interesting story I think to us was the VIN group story. This is it's startup. Right, it's not at all a startup. In fact, if you have lived in Vietnam before or know somebody who has, they're probably familiar with the company VIN group, because VIN group is literally in everything. They're like some of those companies in the Philippines that own the malls, own the schools, own the universities. They got one for everything.
Speaker 1:Vin group is one of those. They are a real estate company that has grown so massive to be. Their assets are like 5% of the GDP. It's kind of ridiculous. This company is huge. It's huge. One of the things that makes it interesting is they've tried an experiment in the last three years, which is they wanted to become a tech company. This guy, who was a real estate tycoon in Vietnam for the longest time, who ran this company, who ran VIN group, wanted to create an electric vehicle company. He brands himself as the Elon Musk of Vietnam. That's his whole branding. He's always created a lot of value for the Vietnamese economy with VIN group. Electric vehicles is a different ball game. They got all the money in the world.
Speaker 1:but that stuff is just remarkably complex Getting into the tech space Complex supply chains, expensive.
Speaker 1:Those things, I think, are a huge challenge for anybody to get into the EV space. The car space itself is so complex already. When you get to EVs it's like, oh man, we got to create whole new supply chains for this type of thing. Enough said, it's a complicated business to get into, but VIN group, within 24 months from the ground up, was able to build a company called VINFest, the EV company that they're getting into. The remarkable piece for me in this VINFest story is it's been swinging a lot. The amazing thing that they've done is created an electric vehicle company from Vietnam who plans to sell to the US market. I mean, how crazy is that, dude? How crazy do you have to be to compete with Tesla if you weren't like an incumbent?
Speaker 4:Think about how many competitors are in the EV market already Ford, GM, Tesla, Hyundai, Kia, luxury markets, Rivian that's just me just walking through what I know in three seconds. Imagine how many startups out there are fighting for the same pie. It takes real courage. Now whether it'll last, that's tricky, because they've listed only 1% of their shares for trading just 1%. The parent company still owns 99%. Just going by the stock surge is not something that I was really keen at looking because we see these massive pumps and dumps the stock down like 50% in the last week.
Speaker 4:This is rising and falling and super volatile, but what's important to the important measure here is how many cars are they actually able to produce? So which is interesting because this is a very small company, very new company they delivered 7,400 cars this year sorry, last year and this year they're projecting 50,000 cars, so that is a more Real figure. It's grounded in reality rather than the share price, at least in the short term. So I think that's something. Regardless of where this company ends up, I think it's very interesting to see that they are able to build a car. Think about all the companies that announced that they want to build an EV, electric vehicle and have not built it.
Speaker 1:Exactly.
Speaker 4:Dyson Dyson comes to mind. They want to have the latest vacuum cleaners and dryers and stuff and they weren't able to do it. Apple's had their project internal special project for an EV for the last 10 years, so there are all these players who have not really acted on it. This company, winfast, has, so let's see how it goes, but it's still interesting that their ambitions are global. I think that's the step one where ambitions are global and we have the manufacturing base within Vietnam to potentially re-tool some of that into different other industries.
Speaker 1:You know the brand of having a Japanese-made car, as well as a brand of having a German-made car. Well maybe in 10 years we'll have pride in buying something that was Vietnamese made and that's interesting to us because these supply chains we've been watching since we started this show and it was really particularly interesting because now that things are shifting post-pandemic and post-relationships and geopolitical tensions it's very interesting to see these countries come up to the plate and try and test their manufacturing might.
Speaker 4:We always have battery discussions on. Things have changed and cattle right. Cat. They started off as just a phone battery company and now they are the largest producers of electric vehicle batteries. So maybe Winfast does not crack the EV market it doesn't mean it's a failure, because they could potentially pivot to hey, we might just do the batteries right, or the EVs, maybe the charging infrastructure. So there are so many different ways that they could tackle it. Watching them emerge as a global player is very interesting, and one thing that's so cool is how they are balancing between the US and China.
Speaker 1:CAT. Oh, that is the most interesting.
Speaker 4:They have good relationships with both sides, and there are very few countries on that list.
Speaker 1:CAT. It is, it is. And I'll just echo one thing how they play on cultural alignment on China and how they play on supply chain alignment with the US is fascinating. See that in example, all the time when I see news about Vietnam. So really cool stuff.
Speaker 1:One thing I'll just quickly point out there before we close out here is that Winfast model is pretty interesting too, because they're copying some of the Chinese models where the battery isn't owned by you. You lease the battery. Therefore they still own the batteries that they'll sell, and so they own the maintenance, they own recycling. So I think that's actually a pretty big unlock for them. We don't know if it'll work in the US. It's worked in China very, very well, so be interesting to see what happens there. Also, the price point is this is mass consumer. This is not Tesla. They're not luxury car market. Their EVs are made for the average Joe. So that'll be an interesting thing to see in the US, where EV is completely focused on larger market. And how they'll build off, I don't know. We'll see, we'll see how it all goes.
Speaker 1:So, says, as we draw this episode to a close, let's step back and just consider you know what we've unpacked the ebb and flow of global economies, the intricate dance of trade and geopolitics, and the astounding potential of countries like Vietnam, brazil and Mexico. But our journey doesn't stop here, right? Really exciting stuff coming up. Next On Things of Change podcast will be turning our gaze to Nigeria, a nation brimming with youthful energy, rich resources and one of the fastest growing tech scenes in Africa. Beyond its vibrant, cultured music, nigeria stands as a beacon of what the future might hold for African economies. I'm really excited for this next episode because this will be the first time we're really covering Africa after the Uganda episode we had with our very first guest on the show. So really excited for that stuff. And, as always, take care, the information and opinions expressed in this episode are for informational purposes only and are not intended as financial investment or professional advice.
Speaker 1:Always consult with a qualified professional before making any decisions based on the content provided. Neither the podcast nor its creators are responsible for any actions taken as a result of listening to this episode.
