Vietnam And The Great Supply Chain Realignment

The COVID-19 pandemic is driving a substantial realignment of global supply chains. Governments and companies are assessing whether to keep export-oriented production in China or move it elsewhere. Japan is directly subsidizing companies to move supply chains out of China and is working with the United States and others, including Korea, India, Australia and Vietnam to accelerate this process.

Much of the production is going to Southeast Asia, with Vietnam being a key location of choice. With a 6.5% growth rate in 2019, Vietnam is cost competitive and has an increasingly close relationship with the United States. Through its membership in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), it also has free trade with Canada and Mexico.