Chinese investors flock to Vietnam to wait for TPP
Chinese investors flock to Vietnam to wait for TPP
Three years ago, Chinese businessmen, when asked if they would make investment in Vietnam, all said “no.” However, they have changed their mind.
Vietnam’s TPP membership would bring benefits to China
The 19th negotiation for the Trans Pacific Partnership (TPP) agreement ended in Brunei with no further progress made. However, economists all are certain about Vietnam joining the agreement.
While Vietnamese enterprises still have not got ready for TPP, the neighbor China has drawn up its plan to make money from the Vietnam’s TPP membership.
Bloomberg has reported that Chinese businesses have prepared well for this, which has turned many of them into the new dollar billionaires in China.
One of them is Hong Tianzhu, President of Chinese Texhong Textile. The newswire reported that Texhong Textile’s share prices have increased by 445 percent over the last 12 months, while the asset value of the founder and the biggest shareholder Hong Tianzhu has reached $1 billion.
Chinese textile companies have suffered from the Chinese government’s high cotton price policy which aims to protect cotton growers. The policy has made the cotton price in China higher by 75 percent than in Vietnam.
Texhong Textile has been taking full advantage of the price gap to make money. It buys cotton in Vietnam and sells products in China.
The group in mid-2012 started up the construction of the $300 million fiber factory in Quang Ninh province, the fourth one in Vietnam.
However, taking full advantage of the cotton price gap is not the only thing Texhong Textile strives to. The final “aiming point” of the setting up of its factories in Vietnam is the Vietnam’s TPP membership.
In November 2012, Sunrise Textile and Garment Company in Shengzhou teamed up with a Vietnamese enterprise to setup Thien Nam Sunrise, a textile and dying company capitalized at $24 million.
The Hong Kong’s Crystal Group has recently announced it would invest $425 million in the textile project Pacific Crystal and $120 million in the expanded Tinh Loi garment project, using 70 hectares of land in the Lai Vu Industrial Zone in Hai Duong province.
Dr. Alan Phan, who has deep knowledge about the Chinese market, has noted the regular working visits to Vietnam paid recently by Chinese businessmen. Three years ago, they did not think of making investment in Vietnam, but they have changed their mind. They now think of setting up factories in Vietnam to enjoy benefits from Vietnam’s TPP membership.
The Chinese wave in Vietnam
However, experts believe that TPP is not the only reason that prompts Chinese to flock to Vietnam.
The Long Giang Industrial Zone in Tien Giang province developed by a Chinese enterprise is a typical example of the so called “the Chinese wave in Vietnam.” Of the 14 enterprises which have set up their production bases here, 9 are from China, which operate in different business fields, from fiber to food processing.
The Hong Kong’s EXS investment fund has announced the $37 million investments in the Vietnamese Son Kim Real Estate Company. According to AsiaInvest, two Hong Kong’s investment funds are ready to disburse some $70 million for the Vietnamese enterprises.
According to China Daily, the labor cost increase plus the export demand decrease in China has prompted Chinese producers to move to South East Asian countries, including Vietnam.
vietnamnet
