Viet­nam ri­ots ‘will hurt in­vest­ment from China’

China Daily (Canada) - - BUSINESS - By ZHONG­NAN andWANG JIAN

Anti-China protests in Viet­nam will de­ter Chi­nese in­vest­ment and lead to lo­cal job losses. Many Chi­nese com­pa­nies and traders have ini­ti­ated con­tin­gency plans and stopped trade ac­tiv­i­ties to safeg u a rd em­ploy­ees min­i­mize fi­nan­cial and losses.

Ri­ot­ers at­tacked Viet­nam’s big­gest steel plant overnight as vi­o­lent an­tiChina protests spread and es­ca­lated in the coun­try.

Viet­nam’s In­dus­try and Trade Min­is­ter Bui Quang Vinh told lo­cal news­pa­per Tien Phong that if the vi­o­lence can’t be con­tained, the coun­try’s eco­nomic de­vel­op­ment will be dam­aged be­cause for­eign com­pa­nies will aban­don ideas of in­vest­ing in Viet­nam.

Not only Chi­nese fac­to­ries have been af­fected. Man­u­fac­tur­ing fa­cil­i­ties owned by Ja­panese, South Korean and Euro­pean com­pa­nies have also been dam­aged by mobs. They­may also stop in­vest­ing in Viet­nam as they need a safer en­vi­ron­ment to carry out pro­duc­tion, Bui was quoted as say­ing by the Viet­namese daily news­pa­per.

The news­pa­per quoted Tran Van Hang, chair­man of the Na­tional As­sem­bly’s com­mit­tee for ex­ter­nal re­la­tions, as say­ing that the un­sta­ble sit­u­a­tion in Viet­nam has al­ready caused con­cern among for­eign in­vestors and af­fected their pro­duc­tion in the coun­try.

“The govern­ment’s top pri­or­ity should be how to en­sure healthy eco­nomic growth in 2014,” said Hang.

Even though the Viet­namese econ­omy has de­vel­oped faster than neigh­bor­ing Cam­bo­dia and Laos in re­cent years, the coun­try still needs a large amount of in­vest­ment and tech­ni­cal sup­port from China to im­prove com­mu­ni­ca­tion, power sup­ply and trans­porta­tion net­works.

Liang Xiaodong, di­rec­tor of sales at SAIC-GM-Wul­ing Au­to­mo­bile Co Ltd, a joint ven­ture of SAICMo­tor Corp, Li­uzhou Wul­ing Mo­tors Co andGMChina, said the com­pany has sus­pended ship­ments of ve­hi­cles to Viet­nam amid the tur­moil.

“These changes could make Viet­nam more vul­ner­a­ble to un­ex­pected fi­nan­cial risks. It can­not af­ford hav­ing a wors­en­ing busi­ness en­vi­ron­ment with China as its eco­nomic de­vel­op­ment level is far be­hind Ja­pan or the United States,” said Li Quan, deputy di­rec­tor of the School of In­ter­na­tional Trade and Eco­nom­ics at Pek­ingUniver­sity.

China’s in­vest­ment in Viet­nam in­creased sharply in 2013, with 89 newly li­censed projects and cap­i­tal in­jec­tions into ex­ist­ing 11 projects, bring­ing the to­tal in­vest­ment to more than $2.3 bil­lion. That was up from $371 mil­lion in 2012, data from the Bei­jing­based China Cham­ber of In­ter­na­tional Com­merce show.

Li said com­pa­nies in China’s Pearl River Delta re­gion will no longer con­sider Viet­nam as an ideal des­ti­na­tion, and Cam­bo­dia and Myan­mar are likely to gain at Viet­nam’s ex­pense.

Xiao Yan­lan, a su­per­viser in the com­mu­ni­ca­tions depart­ment of Guang­dong Midea Elec­tric Ap­pli­ances Co Ltd, which has in­vested $25 mil­lion in pro­duc­tion fa­cil­i­ties in Viet­nam, said that Midea is re­view­ing the sit­u­a­tion and will do “what­ever it takes” to avoid risks.

Long Guo­qiang, di­rec­tor­gen­eral of the gen­eral of­fice of the De­vel­op­ment Re­search Cen­ter of the State Coun­cil, said if the un­rest isn’t ad­dressed promptly, it will def­i­nitely af­fect the bi­lat­eral in­vest­ment and trade re­la­tion­ship.

“For any coun­try, a sta­ble po­lit­i­cal en­vi­ron­ment is an im­por­tant com­po­nent of the in­vest­ment en­vi­ron­ment. If Viet­nam still wants to at­tract more for­eign in­vest­ment and de­velop its for­eign trade, the ra­tio­nal choice would be to ap­pease those be­hind the un­rest im­me­di­ately,” Long said. Zheng Yangpeng con­trib­uted to this story. Con­tact the writ­ers at zhong­nan@chi­ and wangjian@chi­

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