Foreign companies, especially Chinese, are investing and hiring more staff in Vietnam to shift their production to the country or expand.
In the first half of the year recruitment and payroll services provider Adecco saw a 10% year-on-year jump in demand for personnel in manufacturing.
The positions included specialists and senior quality assurance and supply chain managers with a common requirement being moderate proficiency in Chinese.
“As Vietnam is attracting lots of foreign investment, there is increasing demand for workers proficient in English and other languages, particularly Chinese, to strengthen connections with international partners,” Adecco said.
Headhunter Navigos Search reported that manufacturing companies with Chinese investment are shifting to or expanding their operations in Vietnam.
They require a diverse workforce, with 68.3% preferring experienced personnel and nearly 22% seeking management skills.
Navigos Search added that demand has increased in the high-tech, components, electronics, and automobile sectors.
According to recruitment firms, the recent surge in labor demand in the manufacturing sector indicates that foreign companies are embracing the supply chain shift to Vietnam.
The world’s second largest economy has been one of the top investors this year, with Hong Kong and mainland China accounting for $2.53 billion or 23.4% of new FDI.
More Chinese companies are relocating due to the China Plus One strategy, which involves diversifying production.
FDI disbursement hit a four-year high of $12.55 billion, with most of the money going into industrial zones in the north.
In the second quarter Bac Ninh Province attracted several new investments such as Taiwanese electronics giant Foxconn’s 14.26-hectare circuit board plant worth $383 million in its Nam Son – Hap Linh Industrial Park.
This month industrial real estate developer KCN Vietnam began work on the second phase of a project that will add over 80,000 square meters of mixed-use warehousing and high-quality storage space in the DEEP C Industrial Zone in Hai Phong City.
It is launching more projects in anticipation of higher demand from foreign clients as Hai Phong is one of three localities attracting the most FDI in the country.
In fact, the demand is so high that foreign firms are even considering industrial zones that have yet to be completed.
Kinh Bac City, another industrial real estate developer, said it has received inquiries for a 20-hectare battery plant from a South Korean investor and a 60-hectare induction cooktop and oven manufacturing factory from a Chinese enterprise, both in Trang Due 3 Industrial Park in Hai Phong. The zone is set to open once it gets approval from authoritie.
According to HSBC’s July report, Vietnam is a “top FDI destination, surpassing other Southeast Asian countries” amid the global production shift due to its competitive costs and labor.
Over the past 20 years the country has emerged as a major manufacturing hub and integrated into the global supply chain. Its exports have grown at over 13% annually since 2007, primarily driven by foreign enterprises.
Its wages for manufacturing workers are lower than in China while other costs, such as energy prices, are also competitive.
The country has the second lowest electricity rates for production in Southeast Asia and relatively inexpensive diesel, a fuel widely used in industrial manufacturing.
Another appealing factor is the active support from the government through the tax system.
The corporate income tax rate is 20% and the government offers tax waivers, deferrals and cuts to aid businesses.
“Vietnam’s integration into the global value chain has significantly increased over the years and is now comparable to that of Singapore.”
To sustain the strong investment flow, Vietnam needs to advance further up the manufacturing chain and increase the use of local inputs in production.
A shortage of skilled labor could pose a challenge to developing high-tech sectors such as semiconductors, logistics and maritime transport. The country’s infrastructure quality, ability to digitalize, streamline trade processes, and energy supply are also factors.
