Technology manufacturing companies have been steadily investing into the Southeast Asian region as a way to capitalise on cheap labour costs. However, as manufacturing infrastructure and quality of product is still behind China, this progress has been slow, albeit firm. Recently, with the global shakeup from the Russian invasion of Ukraine and the supply chain shock of China's Covid Zero policy to 'letting it rip,' it's only natural that top manufacturers will seek to bolster their supply chain resilience by expanding manufacturing into other countries.

Viet Nam is among the top candidates thanks to its cheap labour costs and eagerness for foreign investment, as they aim to vastly improve their manufacturing industry, outlined by the government.

Several of Apple’s suppliers like Pegatron, Wistron, Luxshare and Foxconn are already planting their feet firm into Vietnamese soil. Luxshare is producing a number of Airpods already, whilst other Apple products are geared up to being produced in Viet Nam’s ever expanding industrial parks. The Taiwanese suppliers of Apple products have been investing in the Quang Chau, Bac Giang, and Hai Phong regions for increased manufacturing capacity, as well as housing projects intended for the tens of thousands of workers to be employed in these areas.

Whilst this may seem like a big blow to China’s manufacturing industry, all of this expansion will only account for 25% of Apple products by 2025. Although it isn’t a large number compared to the sheer volume of tech parts that come out of China, it needs to be considered in conjunction with other economic and geopolitical factors.

The overall up-skill of factories in Viet Nam will entice more investors to consider this region as a viable option, along with the foundational infrastructure developed over the past few decades and the relative cost effectiveness. In addition to that, because the foundation is relatively newer, there is an opportunity to implement and scale Industry 4.0 capabilities, creating factories of the future from the ground up.

Furthermore, the lower possibility of geopolitical tension will appease investors and company executives, as recent complete trade breakdowns have shown how potent of an inhibitor it can be. Viet Nam has shown their openness to foreign investment, with the goal of boosting Viet Nam outside of the developing nation category. It also helps that the relations between the country and others like the USA, Japan and South Korea have drastically improved thanks to positive diplomatic efforts along with the soft power embedded into Vietnamese pop culture and consumer behaviour.

Examples of this can be found with the prevalence of Japanese fast food chains Yoshinoya and Sukiya in Hanoi and Ho Chi Minh City, as well as the recent debut of the K-POP girl group NewJeans where one of the members, Hanni Pham, is Vietnamese-Australian.

In saying this, not all the results that come out of this trend is beneficial. A critique to this may be that in late stage capitalism, this move will seek to increase the inequality already prevalent in the Southeast Asian region. However, as international trade has the ability to undergo massive changes, nothing is really guaranteed, as the possibility of policy and attitude change towards this expansion may halt progress. But according to current forecasts, Viet Nam should be one of the economies to pay close attention to in the future.