Representatives from Vietnam’s footwear and textile industries have expressed concern over the consequences of possible U.S. trade sanctions if Chinese companies begin to export articles such as leather bags through Vietnam.

If the U.S.-China trade war could benefit Vietnam, local economists warn that Vietnam could suffer collateral damage if Chinese businesses use made-in-Vietnam labels to avoid U.S. tariffs. For instance, they cite how in May this year the U.S. applied anti-dumping duties of 199.76% and duties of 256.44% on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate. According to local media reports, it is likely that Chinese businesses would seek to export their goods through Vietnam to the U.S. by setting up factories in the country to manufacture using raw materials from China, or simply by asking a Vietnamese business to adapt the label of origin.

“We propose that the government control this situation by tracing products’ origins and severely penalising violations. Otherwise, the whole industry will have to suffer consequences”, Pham Xuan Hong, Chairman of HCMC Association of Garment, Textile, Embroidery and Knitting, told local media. Diep Thanh Kiet, Vice Chairman, Vietnam Leather, Footwear and Handbag Association (LEFASO), said there is a “very high” possibility that Chinese bags would be exported to the U.S. through Vietnam and that setting up a factory can be easily done with a budget of US$200,000.

Nevertheless, the escalating trade war between the U.S. and China could create opportunities for Vietnamese exporters such as the footwear sector, which could increase their market share in the U.S.. A recent report by Vietnam based Bao Viet Securities (BVSC) says that as the Chinese yuan weakens against the U.S. dollar and the Vietnamese dong, Vietnamese businesses would be able to import garment, leather and other materials at a lower price, resulting in more competitive prices in the U.S.. Also, Vietnam could benefit from more foreign direct investment.

According to Vietnam’s Ministry of Planning and Investment, the U.S. has been Vietnam’s largest trading partner in 2018, generating US$30.2 billion in turnover in the first eight months of the year.

From Retail News