This article focuses on the analysis of Vietnam's economic development in recent years, and explores the synergy and differences in industrial development between China and Vietnam, although some multinational companies are also seeking countermeasures to promote supply chain div

[Text/Observer Network Columnist Chen Jing]

Since the outbreak of the novel coronavirus epidemic, the interruption of the supply chain has affected foreign companies' operations in China to a certain extent, and there are endless arguments about the epidemic promoting the accelerated removal of China. However, how strong the motivation for enterprises to transfer supply chains is and how feasible is, it is not as simple as "leave it just by saying "leave it".

This article focuses on the analysis of Vietnam's economic development in recent years, and explores the synergy and differences in industrial development between China and Vietnam, although some multinational companies are also seeking countermeasures to promote supply chain diversification. However, since global companies are highly dependent on China's supply chain in some areas, large-scale supply chain transfers are unlikely to occur due to the epidemic, and the epidemic is not the "turning point" for companies to transfer supply chains to Southeast Asia.

On the afternoon of July 14, 2016, Premier Li Keqiang met with Vietnamese Prime Minister Nguyen Xuan Phuc at a hotel in Ulaanbaatar

Inspired by the good economic growth data in recent years, Vietnamese Prime Minister Nguyen Xuan Phuc proposed the grand goal of "becoming a high-income country by 2045" on December 30, 2019, and attracted another wave of attention. In the late 1980s, Vietnam was almost the country with the lowest per capita GDP in the world, with less than US$100. Since the "innovation and opening up" in 1986, after years of development, the per capita GDP reached US$2,800 in 2019, and began to imagine the "high income" of US$12,000 per capita.

The "per capita income" in international news reports actually generally refers to per capita GDP. The United Nations changed the English term of GDP to GNI (Gross National Income), which was translated into "national income", which is not the same as the personal income understood in Chinese news. Nguyen Xuan Phuc means that the per capita GDP reaches US$12,000, which is approximately equivalent to the current per capita level of China and Malaysia. If it can be achieved, it will be a very remarkable achievement for Vietnam.

The author believes that the "high income" development goal proposed by Vietnam for the first time is indeed feasible, and it is not a vague brag. Observing the entire Southeast Asia, Vietnam's future economic development can be divided into a clear stage of development. Vietnam's development is not inconsistent with China, and the manufacturing industry chain of China and Vietnam should not be opposed. China should have confidence and not compete with Vietnam, but should actively participate in international competition with more strategic heights and technical content.

1. In the past three decades, the only country that can compare with China's development speed

The author pointed out in the article "Upper and Lower Limits of Economic Development compared with China" in August 2016 that Vietnam is a better choice for global capital to engage in manufacturing, except for China. This judgment has been confirmed in these three years. The article also judges that the lower limit of Vietnam's economic development is Thailand's level and the upper limit is Malaysia's level. The 2045 vision of the Vietnamese Prime Minister is to regard the "upper limit" of Malaysia as a long-term goal.

The article also introduces some economic data from Vietnam as of 2015. Now four years have passed, what kind of development has Vietnam's economy been? Why does the Vietnamese Prime Minister seem very confident?

Vietnam's economic data has indeed improved comprehensively in the past four years and is in the best period of development in history. In terms of the span of 30 years, compared with 1990, China and Vietnam are the only countries with a per capita GDP of about 30 times. Such rapid growth has finally made Vietnam "find a feeling" in recent years and dared to imagine a bright future. Further ahead, Vietnam, although its economic growth rate is high, its absolute value of per capita GDP is still very low. Many data are not enough to be afraid of crisis. The country is still too poor and cannot be said to be fast.

Vietnam Dong to US dollar exchange rate

Vietnam's per capita GDP in 1990 was only US$96. This extremely low data needs to be explained by exchange rate and economic transformation. The Vietnamese Dong depreciated against the US dollar in the 1980s, which led to such a low per capita in 1990. In fact, this is a special factor in the transformation of a socialist country. China's per capita GDP in 1990 was only US$310. China actually developed very well in the 1980s, but the gap between GDP and developed countries such as Japan widened, and the situation was similar to Vietnam. Some people also wrote articles about why the 10-year reform of opening-up has made such a big progress, but the gap between them is even greater. In fact, the RMB exchange rate has depreciated significantly.

Since the late 1990s, the RMB exchange rate against the US dollar has become much more stable.In recent years, the exchange rate of the Vietnamese Dong against the US dollar has been basically stable, and from 2012 to 2019, it only depreciated by about 10% relative to the US dollar, which performed quite strongly.

China Vietnam is not so miserable because many "implicit GDP" (very low-priced welfare or economic output) in socialist countries are not expressed in the form of currency. Later, through monetization reform, it was gradually released and statistically increased, and per capita GDP in the US dollar increased rapidly.

China's per capita exchange rate GDP rose 25.5% to US$473 in 1994, and another 28.8% to US$609 in 1995. It is impossible to explain it with conventional economic growth. There were also major increases later, such as the surge of 28.3% in 2007 to US$2,699 per capita. Vietnam is similar, with per capita GDP growing from US$96 in 1990 to US$2,800 in 2019, up 29 times, almost the same as China's multiples. It’s not that economic growth is stronger than China, but that “implicit GDP” has been released, which was not that low at the beginning.

By 2019, China and Vietnam still had some "implicit GDP" not released, such as the university tuition is very cheap (less than one-twentieth of the United States), the train tickets are cheap, and the food and accommodation at the bottom are cheap. Vietnam is a relatively rare country in developing countries and has a significantly higher living standards than per capita GDP. For example, Vietnam's per capita GDP in the past few years is similar to India, but its living standards are significantly better than India. Judging from the photos, there is no such miserable feeling as "slim and wrinkles" as Indians. Vietnam has a similar characteristic to China.

Vietnam performed the best, with foreign trade data, and its per capita value even higher than China. In 2015, Vietnam's total import and export volume was US$327.76 billion, accounting for 95 million people, and the per capita import and export volume was US$3,450; China's total import and export volume in the same year was US$3.95 trillion, and the per capita import and export volume was US$2,883, which is less than Vietnam.

In 2019, Vietnam's import and export trade volume reached US$517 billion, a 57.7% increase compared with 2015, with an average annual growth rate of up to 12%. China's import and export trade volume in 2018 was US$4.62 trillion. Imports and exports of RMB 22.91 trillion in the first three quarters of 2019 increased by 2.8%, and the annual growth rate should be similar, but the average exchange rate of RMB against the US dollar fell by 4%.

Therefore, China's trade volume in US dollars in 2019 should have dropped slightly by 1% by about 4.57 trillion US dollars, an increase of only 15.7% compared with 2015, with an average annual growth rate of 4%. In 2019, Vietnam's population grew to 96.5 million, with an average import and export volume of US$5,357, 64% more than China's per capita US$3,271.

China's only Guangdong's total import and export volume exceeds US$1 trillion is significantly higher than Vietnam, Jiangsu has led Vietnam with more than US$600 billion, and Zhejiang, which ranks third, has been surpassed by Vietnam. Just in terms of import and export volume, Vietnam is quite prominent in the world. Vietnam's import and export volume in 2019 is equivalent to the US$509.8 billion that China entered the WTO in 2001.

Vietnam's foreign exchange reserves also increased from US$30 billion in 2016 to US$71 billion in October 2019, and it is expected to exceed US$100 billion in another two years. This is an epoch-making progress for Vietnam and a sense of security has increased greatly.

Vietnam has US$71 billion in foreign reserves, which is equivalent to India having US$1 trillion in foreign reserves (now US$450 billion). Vietnam had more than $30 billion in foreign reserves in 2016 than before, but it was still scared. Exhausted foreign exchange reserves is a very realistic threat, and the 2014 Asian Games have been abandoned. After four years, Vietnam's foreign exchange reserves have indeed improved a lot, and if it reaches US$100 billion, there will be a considerable room for maneuver.

Vietnam's foreign exchange reserves are related to the continuous improvement of the trade surplus. Vietnam's trade surplus in 2019 was about US$10 billion, a significant increase from US$6.3 billion in 2018. Vietnam still had a trade deficit of US$2.6 billion in 2015. It used to have an annual deficit from time to time, and was worried that there would be insufficient foreign reserves.

Vietnam has a very good industrial data. According to data from the Vietnam Cement Association, Vietnam's cement production in 2018 was 97.02 million tons, and its exports were 32.09 million tons, making it the world's largest cement exporter. Vietnam's per capita cement production is almost 1 ton that of Türkiye, which is comparable to China's 1.57 tons, far higher than the world's per capita 0.29 tons except China.China's cement production accounts for 55% of the world, but due to the differences in capacity reduction and development stages, Vietnam's cement production capacity is overcapacity and exports to China in demand. China is Vietnam's largest cement exporter, accounting for more than one-third of its exports. India's per capita cement production is about 0.2 tons, far behind Vietnam, although the development stages of the two are similar in terms of per capita GDP.

In 2018, Vietnam's crude steel production was 24.19 million tons, an increase of 15%, and continued to grow by about 9% in 2019. The per capita crude steel production is about 0.27 tons, about 40% of China and about twice the per capita 0.14 tons in the world outside China. This data is worse than Türkiye and Russia, but much stronger than India's per capita 0.079 tons.

Judging from the per capita steel and cement production, Vietnam is not like a country with a per capita GDP of less than US$3,000, and its potential is still quite great. The per capita housing area of ​​Vietnam is 23.8 square meters, which is similar to the 25 square meters in Russia, slightly lower than Türkiye and 39 square meters per capita in urban areas in China. Hanoi has an average of 27.7 square meters, while Ho Chi Minh City has an average of 21.9 square meters. In the world, this is all acceptable data, and the living conditions of Vietnamese people are not bad. It can also be seen from the photos of the stowaway families that the housing conditions of low-income families in China are similar to those of China, much better than those of slums.

Vietnam has superior rice production conditions. The Mekong Delta in the south and the Red River Delta in the north are very suitable for rice cultivation. It can be planted for three seasons and produces about 45 million tons of rice annually. Since 2004, Vietnam has been the world's second largest rice exporter (Thailand is the first in the long term). In 2012, it also exported 7.72 million tons of rice to the top 3.5 billion in foreign exchange, and later fell back. The weakness of Vietnamese rice is that its quality is not as good as Thai rice, and its reputation in the international market is much weaker, and its demand is not as stable as Thai fragrant rice.

Vietnam's rice production accounts for 85% of the total grain output, and the annual grain output is at the level of 52-53 million tons. Judging from China's total grain output of 650 million tons, Vietnam's per capita grain output is 15% higher than China's, so there is no problem with eating. Vietnamese rice noodles also have a certain global popularity and have a tradition of agricultural production. However, it is similar to before China's reform and opening up. Due to historical factors, there was also the problem of not having enough food, but it was quickly resolved.

In 2019, Vietnam also suffered heavy blows from African swine fever, losing 7.4 million pigs, accounting for 27% of the total (China's live pig inventory decreased by 40%). In 2019, Vietnam's annual pork production fell by 21%, and per capita pork consumption was 25 kilograms, a year-on-year decrease of 17%. 2018 is a normal year. Vietnam's per capita pork consumption is 30 kilograms, which is not low, exceeding the world's per capita meat consumption. China is the level of 40 kilograms of pork per capita.

Judging from the per capita grain and pork consumption, Vietnam's agricultural production is not bad. Vietnam's food and drink level is much better than India and closer to China. The proportion of agriculture in GDP is not high in all countries. Although Vietnam's agriculture is still acceptable, it has no effect on boosting per capita GDP. But in terms of living standards, Vietnamese eat well, and they definitely do not have the noodles and dishes, and they are not much different from Chinese.

Before the 1990s, the image of a Vietnamese being dry and thin has definitely not met in recent years. Due to problems such as race genes and balanced diet, the average height of Vietnamese men is 1.64 meters, and the average height of women is 1.53 meters. Although it has increased compared to the past, it is still at the bottom of the world. Vietnam has formulated a national plan and hopes to increase the average height of men to 1.68 meters by 2030. Vietnam's obesity rate is low internationally, but it has also increased from 5% to 13%, far higher than North Korea's 4.6%. The obesity rate of primary school students in Vietnam increased to 29%, but they lost weight when they grew up.

Vietnam's annual GDP growth rate 2005-2018

Vietnam's GDP growth rate, the latest 2019 data is 7.02%, and the Bureau of Statistics has come out to report the good news. This is indeed a very impressive growth worldwide. In recent years, economic growth has been more prominent in China, India and Vietnam. Once, China and India had a high growth rate of more than 8%, and their size was much larger than Vietnam. The attention was mainly occupied by China and India, and India only saw China. However, China's economic growth rate has gradually declined to 6%. India encountered financial credit problems, from a growth rate of 8% in 2015 and 2016, and suddenly the growth rate fell sharply to 4.5% in the third quarter of 2019. There are a lot of negative growth data, and I have no face to brag about economic growth. Vietnam has a growth rate of around 7% in 2017, 2018 and 2019, and its momentum is very good.

From the perspective of development trajectory, we can see the difference between China and Vietnam and India. In 1990, India's per capita GDP was US$367, more than three times that of Vietnam and a little higher than China. However, India does not have much "implicit GDP" to be released, and the international community even suspects that India's GDP statistics are bragging. Vietnam's per capita GDP reached US$2,800 in 2019, which surpassed India's US$2,100 (2019 estimated value).

Another thing that excited Vietnam’s whole country is the rapid progress of Vietnam’s football. This is not funny, football has a very obvious effect on improving the national spirit. In recent years, Vietnam has repeatedly celebrated the team's victory by 10,000 motorcycle parades in 1999. What is comparable to China's entry into the World Cup in 2001.

On December 10, 2019, the Vietnamese men's football team defeated Indonesia 3:0, winning the championship at the Southeast Asian Games for the first time. Fans celebrated

Vietnam is already the overlord of Southeast Asian football and won the Suzuki Cup championship in 2018. In Asian football, Vietnam's youth and adult teams have achieved better results than China in recent years. For example, in the U23 Asian Cup held in China in January 2018, the Vietnamese team reached the final and won the runner-up, and the host Chinese team was eliminated in the group. In the 2018 Jakarta Asian Games, Vietnam entered the semi-finals and won fourth place, and China lost 3:4 to Saudi Arabia in the quarterfinals and was eliminated. In the 2019 Asian Cup, China and Vietnam were all in the quarterfinals.

China will also receive strong supplements from naturalized players one after another. I personally feel that the men's football team has a stronger foundation than Vietnam. However, the achievements made by Vietnamese football are already amazing, and the Vietnamese people celebrate the whole country from the bottom of their hearts. It is not that it is a result that dominates Southeast Asia, but that it is quite competitive in Asia, which is a height that Southeast Asian teams have never reached.

2. China and Vietnam should not be compared to each other

The above mentioned some good economic data for Vietnam. But it is worth noting that why Vietnam's per capita import and export volume is much higher than China, and its food and drink are not bad, but its per capita GDP is only more than a quarter of China's?

Many people pay attention to Vietnam, but in fact they are out of traditional concerns or a negative attitude towards China, and they always want to find the weaknesses of China's economy. Because Vietnam has performed relatively well in the manufacturing industry, it seems to pose some threat to China's industrial chain, which has become the focus of repeated attention. It was not because of the Sino-US trade frictions. There were various concerns about the industry moving out of Vietnam over 10 years ago. However, what I used to say was clothes and shoes, and later a mobile phone and computer were added.

An analysis method says that Vietnam's industrial chain is not fully equipped, and Vietnamese workers are not as efficient as Chinese workers. They interpret it from the direction that Vietnam's industrial chain is not as good as China, so they don't have to worry.

People think that whether it is advocating that Vietnam can threaten China's manufacturing industry chain or that Vietnam does not have much threat to China's industrial chain, they are all opposing China and Vietnam for analysis. Because I pay too much attention to China's industrial development, a strange tone atmosphere has been formed, and this kind of thinking tendency is actually extremely unreasonable. The problem with this perspective is that China, like Vietnam, regards it as a low-development country with global companies condescendingly. Then give a conclusion: China is not as good as Vietnam, or Vietnam is still not as good as China. This perspective is still in line with the development stage for Vietnam and is also Vietnam's main international competitiveness. But for China, this is no longer valid.

Global companies are no longer able to conduct elegant investigations and analysis of China, but will face fierce competition from Chinese local companies.

For example, Samsung has moved almost all mobile phone production capacity from China to Vietnam, and the last Huizhou mobile phone factory was closed in October 2019. In 2018, 50% of the mobile phones sold by Samsung were produced in Vietnam, and one-third of the electronic products were produced in Vietnam. Vietnam's Samsung exports US$60 billion throughout the year, accounting for one-quarter of Vietnam's total output. After 2019, more Samsung's production capacity will be shifted to Vietnam, and South Korea has a national development concept in Vietnam.

If Chinese mobile phone brands such as Huawei, Xiaomi, OPPO, VIVO have not risen globally, this is a bad thing for China. However, since Chinese companies have come out to compete strongly, they cannot be strongly accused of China's mobile phone manufacturing industry just because Samsung's mobile phone production line has moved to Vietnam. The most direct thing is to look at the global market share of Samsung and Chinese mobile phone brands, rather than looking at the Samsung mobile phone production line in Vietnam or China.

How should China, South Korea and Vietnam distinguish between mobile phone industry? Are China and Vietnam at the same level, and South Korea at the higher level? Or is it China and South Korea at the same level, and Vietnam at the same level? What is certain is that South Korea and Vietnam are not on the same level. South Korea will not go to Vietnam because of its production line. It says its mobile phone industry is no longer good, and Samsung will only worry about competition from Chinese companies. At the very least, it can be said that some Chinese mobile phone brand companies are closer to the South Korean level and have also gone to open factories and sell mobile phones around the world. Because the independent industrial chain of parts is not as complete as Samsung, Chinese mobile phone brand companies can be said to be lower than Samsung, but they will never be in Vietnam.

There are also some Chinese companies that take orders in the mobile phone processing industry chain, who take the initiative to go to Vietnam to provide services and provide supporting facilities for Samsung. These companies are not as high as mobile phone brand manufacturers in the industrial chain, but are higher than those of Vietnam's factories and workers.

Vietnam develops its mobile phone industry chain, and the threat to China is still at a low level. It is the lowest level, providing factories and workers with low wages. For example, in some places in China, if you want to use these tricks to build Samsung mobile phone factories, you will face competition from Vietnam. In China, this is a highly criticized economic model, and relying on low workers' competitiveness is harmful. Why has it become a major threat to China's industrial chain? This makes no sense.

Even if it is a major threat, China's solution is not to reduce workers' wages to Vietnamese level, but to hope that Huami OV will grab the global share of Samsung's mobile phones, which is not bad. In other words, even if China believes that Vietnam's manufacturing industry chain is a threat, it should not compete with Vietnam, but rather with the multinational companies behind Vietnam's industrial chain.

If Chinese companies lose to multinational companies in global competition, this is not good, but it is unlikely that China cannot compete with Vietnam, but loses to the ability of multinational companies. In any case, China and Vietnam should not be placed in an opposition and competitive relationship.

More likely, Chinese companies go to developing countries such as India to open factories, defeating global companies. Chinese mobile phone companies are opening factories in India and squeezing Samsung is a very realistic means of competition. In the third quarter of 2019, not only did Xiaomi's India market share significantly surpass Samsung, but OPPO and sub-brand Realme also surpassed Samsung in total. Modi has added tariffs on the entire mobile phone, and mobile phone brands have opened factories in India, which cannot stop Chinese companies.

Will Samsung feel at ease because of observers' macro theory that "the artificial competitiveness of Vietnam's mobile phone industry chain is stronger than China", or is it because "Chinese mobile phones have nearly zero Samsung's market share and continue to chase India"?

In other words, even if global companies like Samsung transfer all production lines from China to Vietnam, the competition is far from over, if Chinese companies are strong enough. What's more, there are not many global companies like Samsung that have the ability to independently decide on "turning to Vietnam in a comprehensive way". When opening a factory in Vietnam, you will face various problems, especially the troubles in the organization of the industrial chain. Samsung is awesome and has strong industrial chain autonomy and control capabilities, so it can be a big hit in Vietnam.

If Vietnam can develop a local supplier system like China and even create independent brands, it will be a threat to China's industrial chain. In this regard, we can examine Thailand's manufacturing industry chain.

It is worth noting that Thailand's population is less than Vietnam's 69 million, and its import and export volume in 2019 is close to that of Vietnam, both of which are more than US$500 billion. Thailand's per capita import and export volume is 35% higher than that of Vietnam, more than twice that of China. Vietnam has similar economic models to Thailand, and Vietnam seems to be developing towards the level of "lower limit" Thailand. Thailand has also developed well in recent years. In 2018, per capita GDP exceeded US$7,000 for the first time and reached US$7,270.

Why are few people saying that Thailand is a threat to China's manufacturing industry chain? Thailand is also engaged in imports and exports, so that the export of industrial manufacturing products can have such a high per capita import and export value.

This is because China and Thailand are a catch-up relationship.In the past, China's per capita GDP was only one-fifth of Thailand's, and then it caught up all the way, and the industrial level had long exceeded. What level is China's trade exchanges and what Thailand can do, and I know it well and I will not think it is a threat to China. Vietnam has always been behind China, and it seems to have developed well, and the manufacturing industry chain is progressing rapidly. I don’t know what it will be like, and I have imagination. The intuition of

is actually wrong. Thailand's manufacturing level and industrial chain level are higher than Vietnam, otherwise the per capita GDP would not be twice and a half times that of Vietnam. The difference in the development level between Thailand and Vietnam is not in the billions of dollars of exports of fragrant rice and japonica rice, but in complex commodities such as automobiles.

In 2018, Thailand's automobile production increased by 9.0% to 2.17 million vehicles, domestic sales increased by 19.2% year-on-year to 1.04 million vehicles, and export sales of 1.14 million vehicles remain the same as last year. Thailand has 150 cars sold by 10,000 people, which is not much different from China's 200 cars. Thailand's automobile exports are more powerful than China. More than half of the automobiles are exported and sold to the world. China's automobile exports are not good, mainly domestic sales. China's automobile exports exceeded 1 million vehicles in 2019, similar to Thailand, but there has not made much progress in many years.

In 2019, Vietnam's automobile sales were about 380,000 vehicles, and 39 cars sold for 10,000 people. This data cannot be said to be particularly bad, it can be considered as some automobile consumption. However, compared with Thailand and China, it is obviously still in its infancy. The popular means of transportation in Vietnam is motorcycles. India's car sales in 2019 were about 3 million units, down about 10% from the previous year, and the sales of 22 vehicles for 10,000 people were not as good as Vietnam. Judging from the car sales, it is reasonable for Vietnam and India to have a per capita GDP of less than US$3,000.

Automobile is a very important industrial product. Although India's automobile sales are not high, it already accounts for half of manufacturing output and is a very important economic component. If Vietnam can increase car sales like Thailand, there will be a solid foundation for doubled per capita GDP. To be honest, the direction of Vietnam's economic development is not to compete with China's manufacturing industry chain with "lofty ambitions", and it cannot be achieved. To expand important consumer markets such as automobiles is a feasible and practical development direction. Vietnam's per capita GDP has gradually increased, and it has reached such a "middle-class consumption" stage.

Thailand has basically never thought about competing with China, maybe it was just a little bit of a problem in the early 1990s. At that time, it was said that Thailand could not compare with the poor China with cheap manpower, but it could develop scientific research education and maintain its competitive advantage over China through the "knowledge economy". One observation believes that the important reason for the Southeast Asian financial crisis in 1998 was that China joined the global manufacturing industry chain, which seriously affected the global competitiveness of Southeast Asian Tigers.

But the so-called "scientific research knowledge economy" is funny. In fact, Southeast Asian countries and China are better than cheap manpower. The efforts and determination required to develop scientific research and education knowledge economy are extraordinary and have no feasibility at all. This is the biggest difference between developing countries and advanced countries. In the data, RD expenditure accounts for GDP. China has 2.1% of the company has caught up with some developed countries, while developing countries are generally just a few percentage points.

From the perspective of development goals, China has developed seriously according to the routines of advanced countries. In the past few decades, in order to climb the technology tree, China also had over-corrected over-reflection under the crisis of "being behind will be beaten". I didn't feel confident until I found out that I seemed to have a lot of things I could make.

Thailand's automobile industry is considered to be the best industrial model among developing countries other than China. Thailand's automobile industry is much stronger than Vietnam's mobile phone industry. Even parts are produced in Thailand and are exported to the world in large quantities. However, Thailand's automobile industry still relies on the capabilities of Japan's automobile industry to output.

In the 1960s, Toyota and Mitsubishi started their business in Thailand. Thailand has become a regional automobile manufacturing center. Unlike simple assembly in general developing countries, Thailand's automobile industry has further advanced to the parts industry. By imposing 80% tariffs on imported cars and increasing tariffs on parts, the Thai government has strongly supported the development of the automobile manufacturing industry. There are now 1,500 parts suppliers in Thailand, and there is almost no need to import them. In 2017, the total value of Thailand's automobile parts exports reached US$19.8 billion, an increase of 15.5%.

Thailand even brought in the Japanese auto parts suppliers. Going further up, you can't develop and reach the top. The executives of Thai car suppliers are basically Japanese, and the local suppliers are very weak. Among the 709 automobile OEM supporting enterprises in Thailand, 80% are essentially owned by Japanese capital. One type is directly Japanese-funded enterprises, the other type is joint venture technology provided by the Japanese side, and the other type is local enterprises, but the Japanese side provides technical support and authorization according to the contract.

India and Vietnam are trying to bring in parts suppliers in the industrial chain through tariffs, like Thailand's automobile industry. This is a good move. It can create a market of a certain scale and is a very good development move in developing countries. But further up, it will not develop. This is true for Thai cars, Indian mobile phones, Vietnamese mobile phones, and cars (the Japanese and Korean systems have been laid out).

is actually easy to explain why it reached the top. Because multinational companies cannot let go, and they will not teach their true skills step by step to Thailand, India and Vietnam. Go to the local assembly and production, no problem, come and open a factory. Are parts companies also coming to local production? No problem, supporting suppliers are here too. Teach local companies to make parts, produce complete vehicles, develop local brands, and seize the market share of their own brands? Sorry, don't teach, learn by yourself. The requirements for local labor are always "working" and how to operate on the production line. The seemingly simple operation is the result of countless R&D efforts. There is no need for R&D based on the underlying principles for the labor force, and this behavior is not encouraged.

The entire industrial system is very complex. Even if a smart person from Taiyinyue understands a technology, it is meaningless to leave the entire industrial chain. Therefore, it is unlikely that local suppliers can open a R&D system themselves, and it will only be in vain that they cannot make anything. At most, we can make some low-value, non-critical simple supporting facilities, with low technical levels, and more importantly, the complexity of R&D cannot be improved.

is only China, and the requirements and goals from the beginning are to learn real technology. Generally speaking, if foreign capital is introduced, we do not receive technology transfer. We must reflect on and summarize the failed experience. However, multinational companies entered China because of the large market and low production costs, they are mature in supporting facilities. They are not willing to let China learn technology. But as I was doing it, I found that if China works hard to learn technology, it is actually more convenient for foreign capital to come in to open a factory because the supporting facilities are easy to handle. Therefore, the relationship between the two parties is relatively subtle.

For example, China's automobile exports are not good. From the perspective of Thailand, it is because joint venture brand cars produced by Chinese joint venture car manufacturers cannot be sold outside. If it can be sold, it will squeeze out a lot of national markets. Maybe the brand cars exported by Thailand will also be produced in China. China can only use its own brand cars to market outside and compete with global brands, but its foundation is not good. However, China's independent automobile industry must exceed Thailand's level.

How to learn technology in China is a long story, and there are many lessons learned in various experiences and lessons. The conclusion is that this matter is very difficult, and a lot of people need to work together and the overall planning of the country is also required. At one point, some people even thought that China had not learned advanced technology and could not do the original technology. It is not possible to rely on others, it is not possible to just be willing to work, it is not possible to just do simple labor, it is necessary to carry out complex R&D planning and continue to invest in long-term unprofitable money. A rational choice is to give up R&D, and it can develop well. Investing money in R&D is equivalent to throwing it into water, and the success rate is not as good as that of venture capital. If you can do a good job in learning technology, embark on the R&D path, and create sufficient R&D complexity in the economic system, you will not stop at the level of a developing country and will inevitably become a developed country.

This requirement is too high. Except for China, it is difficult for other developing countries to embark on the R&D path. Vietnam may not be able to really learn from China, but it is extremely difficult. Of course, you can learn on the surface, and it is the first step to go out of the factory to engage in manufacturing. But can Vietnam embark on the R&D development route? I have great doubts about this. India still has some imagination. If there are too many people, they may start research and development, and it should not work.

3. Vietnam's development roadmap

Vietnam does not need to learn from China's research and development. It should adhere to the route of introducing foreign investment. If it develops like Thailand, it can do a good job.

If Vietnam reaches the level of Thailand's per capita GDP of about US$6,000 in 2015, it can be considered that Vietnam's "lower limit" will be reached. Vietnam's per capita GDP will be more than doubled, and it will be almost done. If Vietnam can maintain a growth rate of 7%, it is expected that it will achieve a per capita US$6,000 in 2030; with this starting point, it is really feasible to reach the "high income" target of US$12,000 in 2045. Prime Minister Nguyen Xuan Phuc’s goal of 2045 should not be casually stated, but refers to the development level of countries in the same region.

In fact, Southeast Asian countries have generally developed well in recent years because of their very good geopolitical factors. Southeast Asian countries have formed ASEAN, with a population of 600 million and a certain level of development, and are a very important regional market. China, the United States, Japan, South Korea and other countries are all trying to win over Southeast Asia, and no one dares to ignore it and strive to release favorable benefits over ASEAN.

2017 The 20th ASEAN 10+3 (China, Japan and South Korea) Manila Conference

China's trade volume with ASEAN has exceeded its trade volume with the United States. In 2018, China's trade volume with ASEAN reached US$587.87 billion, a year-on-year increase of 14.1%. In the first three quarters of 2019, China's trade with ASEAN reached 3.14 trillion yuan, an increase of 11.5% in RMB, which is enough to make up for the trade volume that fell by 10% and was reduced by trade with the United States. ASEAN's rapid growth is very important to China's foreign trade.

Developing countries do not need to engage in research and development, but they can also have quite strong economic growth. As long as the people are politically stable, the people are willing to work, have a certain population size, and cooperate with countries with advanced industrial technology, there will be good development opportunities. Judging from the development trends in recent years, there is no need for special natural resources. Vietnam's South China Sea oil resources are not the biggest reliance on development.

For example, Vietnam has imported high-yield hybrid rice seeds from China since 1992. In recent years, Vietnam has imported 12,000 tonnes of hybrid rice production seeds from China every year, accounting for three-quarters of the imported rice seeds. Compared with conventional rice seeds, the single-production capacity of hybrid rice increases by 40%. This kind of cooperation is very beneficial to Vietnam and is regarded as the output of China's agricultural technology capabilities. As a country that masters advanced production technology, China can help Vietnam solve the problem of grain production, which is also a must for the peaceful development of the world.

For example, the previous article said that Vietnam is a major cement producer, but Vietnam's cement production technology is backward, and 90% of production equipment needs to be imported, mainly from China, Japan and other countries. Only by innovating the process of complete cement production equipment can China efficiently produce 55% of the world's cement. Vietnam imports advanced cement production equipment from China, which is a very good cooperation.

Countries around the world, including China, will not have any opinions on the economic development of ASEAN or Vietnam. As ASEAN countries develop well, neighboring countries have more opportunities to make money. Therefore, East Asian countries are willing to export industrial capacity to ASEAN countries and transfer the industrial chain from infrastructure to manufacturing. The general tone is vigorous cooperation. Moreover, ASEAN countries do not have the ability to engage in complex research and development, and they do not pose a threat to advanced countries, so they are more at ease in cooperation.

ASEAN countries, including Vietnam, are basically following the route of peaceful development. Although the United States has repeatedly incited the Philippines and other countries to cause trouble with China in the South China Sea, countries around the South China Sea have basically negotiated calmly. They didn't bother to provoke China, and they didn't fight each other. It would be fine if they were verbally attacking each other, but there was no big problem. The ruling parties of ASEAN countries switched, and the economic and trade infrastructure contracts with China were affected, which was inevitable. Overall, bilateral trade volume is growing rapidly.

Vietnam will also face the problem of "middle income trap", but it is still early. Russia, Brazil, Mexico, Türkiye, Malaysia and other countries have stagnated per capita GDP for about 10,000 US dollars, and are entering a trap. In fact, the per capita GDP development level of US$10,000 is not low, and it was considered the level of developed countries in the past. This is due to the inflation of the US dollar, and more importantly, the "scientific and technological achievements of human society naturally spread", which can help countries around the world generally raise the level of development.

Workers of Vietnamese clothing processing enterprises Image source: Vietnam+

Even if the scientific and technological achievements of human society are mainly developed in East Asia, Europe and North America, these achievements will spread to developing countries through economic activities. Driven by economic interests, global companies have "naturally spread" a large number of scientific and technological achievements and industrial products, which are not difficult for countries around the world to obtain.For example, basic medical and health products and services have greatly increased the average life expectancy of the world; electronic products such as TVs and mobile phones can also be widely used in developing countries. No matter what country, there will be some development, and those with low starting points may also grow rapidly, and globalization has accelerated this process. When countries with low starting points are far from middle-income, the main role will be "the natural spread of scientific and technological achievements."

As long as Vietnam comes steadily, does not cause trouble, does not think about random things, and challenges China, and waits for "scientific and technological achievements to spread naturally" to its own country, there will be quite good development opportunities. If you lack infrastructure, save money and borrow money to build it. If you don’t have enough money, just slow down. With the production of automobiles and commercial housing, there is still a lot of room for economic development.

Vietnam's politics is relatively stable, with less interference in ethnic and religious issues, and is willing to develop peacefully. Vietnamese are willing to work and strive to pursue a happy life. From the perspective of countries around the world, their potential should be considered ok. Although complex research and development cannot be carried out, the top development of the "middle-income trap" should be US$10,000 per capita GDP, which is in line with the "high-income" goal set by Prime Minister Nguyen Xuan Phuc.

Vietnam was traumatized by war from World War II to Vietnam, so its development level was once relatively low. After 30 years of rapid economic growth, Vietnam, which ushers in peaceful development opportunities, has entered the best period of development in history. The future prospects are bright and there is a certain development roadmap. We can continue to be optimistic in the future. But don’t imagine Vietnam as a role that challenges China’s manufacturing industry chain, and the two countries should not be opposed.

China exports industrial technology and scientific and technological achievements to help Vietnam and ASEAN develop. It has been effective in the past and will continue to create brilliant achievements in the future. The friendly and cooperative relationship between China and ASEAN will surely become a model for common progress in human society's peaceful development and common progress.

This article is an exclusive article by Observer.com. The content of the article is purely the author's personal opinion and does not represent the platform's opinion. It may not be reproduced without authorization, otherwise legal responsibility will be pursued. Follow Observer.com WeChat guanchacn to read interesting articles every day.