Vietnam's manufacturing sector could benefit from Brexit
Release Date: July 14, 2016
Manufacturing in Vietnam could be a big winner following last week’s Brexit vote, according to a consulting firm with deep roots in Asian and Western manufacturing.
Dezan Shira & Associates, a Hong Kong-based consulting firm, said the political chaos of Brexit would give Vietnam a key advantage as an Asia manufacturing location, since it already had a free trade agreement signed and awaiting implementation with the European Union (EU).
Most of the other nations of emerging Asia, by contrast, have made little progress in their ongoing trade talks with the EU. And the current eurozone turmoil meant that was unlikely to change.
“Vietnam is likely to be the big winner in the face of Brexit,” the firm said in a report.
“Lagging EU trade negotiations with other member states [in the ASEAN bloc] will make the communist nation one of the most exciting opportunities for low cost investment from a European perspective.
“Given its unique position in low cost manufacturing, Vietnam will likely be more competitive than ever among European consumers,” the firm said. “The longer that negotiations are drawn out in other ASEAN states, the more solidified Vietnam’s advantage will become.”
Chris Devonshire-Ellis, the founding partner of Dezan Shira, echoed that view in a separate June 27 essay. He noted that China, India and the rest of Association of Southeast Asian Nations had not moved ahead with their free trade negotiation talks with Europe.
“Free trade discussions with ASEAN and India have been ongoing for most of the past decade with little tangible progress, while discussions with China over the past four years have still not even been able to determine what the discussions should actually be about,” he wrote.
Devonshire-Ellis, a UK national, said he saw Brexit as a positive for the UK, if the country could properly manage to pivot its trade policies to Asia.
The European Union, he said, had become too focused on territorial expansion into the former Soviet bloc, at the expense of other priorities.
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