There was a glance at the accounts of the 10,000-person packaging factory in the capital of Vietnam of Hanoi. Stuart Donegan told Hanoi that the big wave is coming.
Hanoi site is the Donegan’s company. In addition to that, Sino Manufacturing employs 1,500 at a plan in the city of Ho Chi Minh City in the south of Vietnam. The three other factories in Indonesia and China are making packages for electronic goods. They are working with the world’s five biggest firms of electronics.
Nevertheless, many of the parts for assembly lines around the world are made in China. Component manufacturing in China is still in varying degrees of Shutdown. Thus, many factories in Vietnam are expected to run out of parts over the coming months and weeks.
Donegan said that if companies like Apple and Flextronics can’t produce products, then, of course, they won’t need packaging. He forecasts that the February numbers at his company will be a disaster. They are planning to get back on track for May or June; nevertheless, that is uncertain at the moment. The company doesn’t have to make layoffs for some time. Donegan will see where at the end of March they will be. Nevertheless, it all depends when factories will reopen in China.
Papaya and the dragon fruit are rotting in the sun. It is because of closures along with the country’s northern border with China. The apparel factories cannot get fabrics out of Guangdong. The electronics are assembling lines blazing through components, and they are not able to source replacements. Donegan’s situation is an excellent example that illustrates the massive hit Vietnam will take from the coronavirus epidemic. Chains of Asian supply are ransacking.
Situation in Vietnam
Over the long-term prospects for an economy has become a poster child for the post-war manufacturing ending from China, many remain bullish. It continues the reliance on its giant neighbor to the north. Thus, it means a succession of virus-induced gut punches will be particularly painful in the short-run.
Supply chains are very involved. Companies are now finding out how difficult it is to wean themselves off China, despite Vietnam’s tariff-induced windfall.
From China comes around 30 percent of the components used in Vietnamese manufacturing. Moreover, China buys 20 percent of exports of Vietnam’s agriculture. Also, 32 percent of all tourists to Vietnam are coming from the mainland.
Firms of South Korea, such as LG and Samsung, also invested massively in Vietnamese manufacturing over the past decade. The intricate smaller component manufacturers are popping up around them. Also, there was a blanket ban on flights from China. Thus, Vietnam has had to issue targeted travel bans for parts of South Korea, where coronavirus vases have been skyrocketing.
Trinh Nguyen is the Hong Kong-based economist. He talked this week, with the Carnegie Endowment for International Peace. Nguyen said that Asia Northeast exposure to Southeast Asia and mainland China through investments mean that the supply chain impact on Vietnam is felt very slowly by major Northeast Asia corporations Such as Sony and Samsung.