In May, hundreds of workers at a furniture factory here got a nice surprise. Their Chinese bosses were giving them a nearly 45% raise.
Factory owner Ren Li said so many other Chinese factories were moving to Vietnam to avoid high U.S. tariffs that he needed to give his workers a big increase to keep them from getting poached.
“They just flood in,” Li said of Chinese companies. “And that will cause a tsunami.”
For factory owners, the economic logic is simple. Goods made in China generally face tariffs of 40% to 50% when imported into the U.S. Vietnam is a relative bargain after President Trump this month announced a new tariff rate of 20%, upholding expectations that Vietnam would get more-lenient treatment. Western buyers such as Lowe’s and Hasbro have promised to cut their exposure to China.
The rush to produce in Vietnam and other lower-tariff countries, far from wiping China off the map, keeps Chinese companies at the center of the export trade. Chinese businesspeople typically have the edge when it comes to building factories anywhere in the world—even in the U.S.
“They have all the technology, all the know-how,” said Le Hong Hiep, a senior fellow at Singapore’s ISEAS-Yusof Ishak Institute think tank. “It will take them less time to set up factories in Vietnam than for local companies to develop their own capabilities.”
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