i3 - March/April 2019 - 36

Policy

By Elizabeth Fong

P O L I CY U P DAT E

Vietnam:
A Strategic
Solution
to the
U.S./China
Trade War

Other Asian nations have stepped up to
meet changing demand. Suppliers in the
region are building, buying and expanding
manufacturing capabilities in emerging
markets to minimize tariff-related disruption and cost increases.

Emerging Economies

Not only large economies such as Japan
and India are offering alternatives.
Emerging manufacturing centers like
Burma and Vietnam are bolstering

existing manufacturing capabilities and
leveraging decades of infrastructure
investment and business-friendly economic policy. Along with American customers, manufacturers with production
centers in China are looking at these alternatives to supplement their capacity and
give them more flexibility in delivering
non-tariffed goods to the U.S. market.

Redrawing the Supply Chain Map
U.S. companies and their overseas

DID YOU KNOW?

190%

Vietnam's trade
increased to
190 percent
of GDP in 2017
from just 70
percent in 2007.

1.5 MILLION 1 IN 10 $45 BILLION 10,000

Vietnam's
manufacturing
sector added
more than 1.5
million jobs
from 2014-2016.

Source: The Brookings Institution

MARCH/APRIL 2019

Smartphones
globally are
produced in
Vietnam.

Vietnamese
smartphone
exports
generated
revenues of $45
billion in 2017.

Estimated foreign
companies that have
a manufacturing
presence in Vietnam,
today, including
global leaders
like Intel, LG and
Samsung.

suppliers are working together to
explore viable alternatives to minimize
the cost implications of tariffs.
GRE Manufacturing, a leading Hong
Kong OEM/ODM contract manufacturer of electronic products and electromechanical components is an example
of this approach. With tariff costs at the
top of mind for supply chain managers
at US companies, GRE Manufacturing
is strengthening its support for trade
compliance, tariff impact analysis and
relocation planning. GRE undertook a
major expansion of its Vietnam factory
to help customers avoid import tariffs
and build long-term cost advantages
without sacrificing quality.
The GRE Manufacturing factory
located in Binh Duong Province is an
ISO 9002, ISO 13485 and ISO 14000
certified site, with more than 120,000 sq.
ft of production space. The location will
have state-of-the art capabilities to support plastic injection, SMT, PCBA, tooling, testing, packaging and transformer
winding services - ready to produce anything from LED lighting controllers,
power supplies and transformers to consumer electronics, DC motors, and medical devices and parts.

Vietnam-based Manufacturing

According to Richard Fong, GRE
Manufacturing's executive director,
"Vietnam is a very natural and advantageous location for us to increase our
manufacturing capabilities. Not only are
I T I S I N N O VAT I O N

Courtesy of GRE Manufacturing

nited States and Chinese companies spent much of last
year facing uncertainty because of the escalating trade
war between their governments. On July 6, 2018, the
U.S. imposed 25 percent tariffs on more than $34 billion on
Chinese products including solar panels, semiconductors and
electronics. Suddenly, U.S. businesses dependent on Chinese
goods had to seriously rethink their supply chain to remain
competitive in the face of steeply rising prices. As of late
February, there were U.S. tariffs between 10-25 percent on
$250 billion worth of Chinese made products.

i3 - March/April 2019

Table of Contents for the Digital Edition of i3 - March/April 2019