New connections

A recently published book argues that China's supply chain is 'overflowing' to Vietnam, Fang Aiqing reports.

A growing number of manufacturing industries from home and abroad are moving their factories to Southeast Asia, and especially Vietnam, to avoid risks caused by Sino-US trade disputes and the COVID-19 pandemic.

As doubt grows as to whether or not Vietnam will replace China as the "factory of the world", Shi Zhan, a professor at China Foreign Affairs University in Beijing, has given his answer based on field research: "Not likely."

Shi sees this as the "overflow" of Chinese supply chains rather than the relocation of industries, and has pointed out the consequences of increasing incompatibility between the operational logics of the private sector and government policies.

He details these ideas in his new book, Yichu (The Overflow), published in January.

In 2019, Shi and his team went to some of Vietnam's major industrial cities, namely Hanoi, Haiphong and Ho Chi Minh City, to visit industrial zones, guilds, law firms and enterprises.

Before and after the trip, they also visited the Yangtze River Delta and Pearl River Delta regions-areas with the highest concentration of manufacturing in China-to learn more about supply chains' interconnections.

This research can be seen as an extension of his earlier book, The Hub, published in 2018, in which he says China's manufacturing sector has seen a transition in the world trade order's structure over the past few decades. It's playing an important role in connecting innovative and high-end service industries in developed countries with raw-materials industries in developing countries.

This change has led to an imbalance of the economic order around the world and within some countries. This imbalance may result in trade friction or, hopefully, governance reforms, Shi says.