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OM in the News: Made in Vietnam

October 28, 2015
The trans-Pacific Partnership would mostly benefit developing nations like Vietnam and Malaysia

The Trans-Pacific Partnership would mostly benefit developing nations like Vietnam

Massive factories have sprung up in Long An to make goods for Western companies such as Nike, taking advantage of Vietnam’s young workforce and wages that are roughly half those in China. This agricultural province, located near Ho Chi Minh City, now has more than a dozen industrial parks, and is playing host to an increasing amount of manufacturing.

This growth could accelerate if the U.S. and 11 other Pacific Rim nations ratify the Trans-Pacific Partnership agreement, a landmark trade deal concluded earlier this month,”  reports The Wall Street Journal (Oct. 19, 2015). The deal would eliminate certain tariffs between members, mostly benefiting developing nations whose growth depends heavily on exports. Skyrocketing wages and a growing labor shortage in China are heightening Vietnam’s appeal. If the trade deal goes through, Vietnam’s economy would be the single largest beneficiary, because it would gain much greater access to large consumer markets. Money pouring into the Southeast Asian economy could make Vietnam one of the world’s two fastest-growing large economies between now and 2050.

The trade agreement would benefit firms like Avery Dennison Corp., one of the world’s biggest makers of clothing labels and tags. The California company just opened a 300,000 square foot facility in Long An. Inside, sewing machines print tags for Japanese clothing brand Uniqlo, while workers pour red ink into giant machines that print the labels sewn into North Face outdoor-sports clothes. “The skills of Vietnamese workers are increasing exponentially every year,” says Avery Dennison’s VP, “and the country is able to accommodate ever more complex production. What took 30 years in China is taking 10 years in Vietnam to happen. That is why more and more companies are making bets on Vietnam.”

Classroom discussion questions:

  1. Why is the trade deal useful to Vietnam? To the U.S.?
  2. How does this impact  American garment makers?
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