The Bac Giang province in Vietnam has been one of the country’s poorest regions, but fortunes are changing thanks to shifting tech supply. The province north of Hanoi will now host Apple Inc. (NASDAQ:AAPL) and Hon Hai Precision Industry Company representatives.
Bac Giang’s exports to hit $11 billion
Growth in foreign investment in the country has been doubling each year, even during the COVID-19 pandemic. The province expects the value of exports to hit $11 billion this year, which is a tenfold jump in six years. There is a change in the province with residents swapping their loud and dirty motorbikes for Honda two-wheelers and even Toyota SUVs and Mercedes sedans.
The boom in Bac Giang is a reflection of the shifting global supply chains reaching the region. The ability of Vietnam to attract tech manufacturing has been growing in recent times due to the increase in labor costs in China, the US-china trade wars as well as logistics vulnerabilities due to the pandemic. According to the chairman of Viet Yen district’s People’s Committee, Nguyen Dai Luong said that we are currently changing the global supply chain conditions. The district hosts four of the five industrial parks in the province.
Favorable conditions in Vietnam attracting manufacturers
After the Vietnamese War, the country opened borders to trade and foreign investors, but the Northern Province remained poor. The province is now witnessing its first boom, with per capita income expected to be $3,000 this year. Manufactures have been knocking on the doors of the Bac Giang province to set up operations. For instance, Samsung Electronics produces almost 50% of its smartphones in the country, and Apple’s assembly partner Pegatron is planning to invest $1 billion in Haiphong. Recently the Cupertino-based company posted job openings in Vietnam.
According to Luong, the Vietnamese government is constructing a river port for the shipment of parts and has provided land for workers at Apple’s request. The success experienced in the Northern provinces has created a trade surplus between Vietnam and the US, which is its largest export market.