Forwarders Fear for Vietnam Imports and Export BusinessTuesday, May 20, 2014 > 09:20:28
(Lloyd’s Loading List – Mike King)
Forwarders believe import and export demand to and from Vietnam could be affected for an extended period after many of the country’s key industrial parks closed as a dispute with China over maritime rights escalated into violent anti-China protests last week.
In southern Vietnam, some 300 Taiwanese and Chinese-invested companies in industrial parks across the provinces of Binh Duong and Dong Nai have suspended operations, a spokesman for Panalpina told Lloyd’s Loading List.com earlier today.
“In the north of the country, Foxconn has not resumed full work yet,” he added. “In the centre of the country, all factories except for some Chinese and Taiwanese factories have resumed work.”
Tensions between Vietnam and China have been rising since May 1, when a China state-owned oil exploration rig was placed in disputed waters near the Paracel Islands. But protests against China – Vietnam’s largest trading partner – only turned violent last week. The riots at industrial parks in southern Vietnam resulted in the deaths of two Chinese workers. More than 100 were also injured and at least a dozen factories were razed in arson attacks by looters.
“To our knowledge, the protest started off peacefully but turned violent when protesters began to loot and set fire to factory properties indiscriminately,” said Morten Damgaard, CEO for South East Asia at Agility Logistics. “As a result, exports and imports may be delayed due to factory closures and related issues.
“Manufacturing activities will take weeks or even months to resume, depending on the extent of the damage and manpower issues.”
The majority of the impacted factories were Chinese and Taiwanese owned, but manufacturing plants owned by companies from Korea, Japan and Singapore were also damaged after being mistaken by rioters for Chinese factories.
Thousands of Chinese nationals have now fled the country and the governments of China and Taiwan are evacuating nationals.
“Chinese expatriates have been moved to safe areas or sent back to their home countries,” said Damgaard.
“Factories owned by Korea, Japan and Singapore are hanging their national flag alongside the Vietnam flag as well as putting up banners that proclaim ‘We love Vietnam’ in front of their factories.”
With pick-ups and deliveries to many factories suspended on safety grounds, he said import and export delays were expected but Agility was doing its utmost to provide contingency service to customers.
“Some factories have kept their main gate open while closing off the manufacturing and warehouse areas inside,” he added. “Local factory workers have been advised not to join the protests, with many being sent home by management until the situation improves.”
The riots are expected to take a heavy toll on Vietnam’s economy. Some of the worst affected industrial parks were in Binh Duong province, located north of Ho Chi Minh City. It has 13 industrial zones and in the first quarter of this year generated nearly US$3.2 billion in exports and US$2.7 billion in imports, according to the provincial Department of Industry and Trade. Yet with many of the province’s parks currently shut down, revenues will tumble in the second quarter.
A spokesman for Japanese investment bank Nomura said the textile industry – a key export revenue generator – was most exposed to the production plant shutdown.