Biz ties with Vietnam complementary

China and Vietnam are highly complementary in their respective industrial chain advantages, and a closer collaboration between the two in international division of labor will help boost the competitiveness and resilience of regional supply chains, experts and company executives said.

The comments came as intermediate goods currently account for nearly 70 percent of the trade volume between China and Vietnam, showcasing the intimate bilateral bond in supply chains, said the General Administration of Customs of China.

Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges, said in areas such as electronic products and clothing, China exports a large amount of raw materials and components to Vietnam for processing, and the latter then exports finished products to the United States, Europe and other markets.

The value chain is crucial for Vietnam's economic development and employment, and also provides a window for Chinese enterprises to explore opportunities in the Southeast Asian country, said Wei.

In the first 11 months, trade of intermediate products between China and Vietnam amounted to 1.01 trillion yuan ($140.7 billion). Specifically, bilateral trade of display modules for pads, audio and video equipment as well as lithium battery products, were all growing at a double-digit rate, data from the General Administration of Customs of China showed on Tuesday.

The data are in line with a broader trend in the Association of Southeast Asian Nations where exporters increasingly rely on components from China rather than other sources, as the latter moves up the value chain, said an HSBC report.

Jeongmin Seong, partner of McKinsey Global Institute, said there are many opportunities for China and Vietnam to complement each other in supply chains.

China boasts more experience in advanced manufacturing, and has highly efficient industrial clusters. As Chinese companies are gradually moving up the value ladder, they can share their experiences with the Vietnamese counterparts. Meanwhile, Vietnam has cost advantages in areas such as labor and logistics, making it an ideal investment destination for Chinese companies that want to go global, experts said.

What is more, research from McKinsey said a new trade triangle involving China, Vietnam and the United States has emerged, highlighting the close links between the three countries despite challenges.

Zheshang Securities also said in a research note that deep bilateral collaboration in supply chains means that Vietnam's exports will drive China's exports.

Seeing the opportunities ahead, Chinese companies are also beefing up investment in Vietnam. Combined registered investment from the Chinese mainland and Hong Kong rose to $8.2 billion in the first 11 months, twice as much as in the same period last year, Reuters reported, citing data from Vietnam's statistics department.

To better facilitate bilateral cooperation in supply chains, Chinese companies are also partnering with their Vietnamese counterparts to launch new services. For instance, Best Vietnam, a unit of Best Inc — a Hangzhou, Zhejiang province-based integrated supply chain and logistics solutions provider — said it will ink an agreement with Viettel, a Vietnamese state-owned enterprise, next week to enhance its cashless delivery ecosystem.

The collaboration synchronizes payment information from Best's management system to Viettel's platform, streamlining transactions for Chinese and Vietnamese businesses.