The Supply Chain Will Become A Stumbling Block For Vietnam And Kampuchea's "World Factory".

Southeast Asia contains 11 countries, including developed countries, developing countries, and the most impoverished countries in the world. The development is extremely unbalanced. Therefore, many countries have introduced more preferential policies to attract foreign capital to invest in their own countries. Among them, the number of Kampuchea and Vietnam is the best. Are these two countries a paradise for investment in capital eyes?

Frequent strikes in Kampuchea, the relocation of enterprises in the past to maintain

Kampuchea benefited from the overall migration of the manufacturing sector, which can be said to have the greatest benefit. 78% of its total exports were created by the manufacturing industry, and the 78% export volume even accounted for 40% of the total GDP in Kampuchea. However, the workers in Kampuchea are very fond of striking, which makes many bosses who run factories and factories in Kampuchea have no say.

Factories in Kampuchea mainly wear clothing and footwear, and the main source of investment is mainland, Taiwan, Hongkong and South Korea. Clothing and footwear enterprises have long been a pillar industry in Kampuchea. More than 800 thousand people are engaged in related work. Many big brands such as UNIQLO, Adidas, Gap and H&M have built factories in Kampuchea.

As mentioned earlier, these related industries have long been the mainstay of Kampuchea's domestic economy. Kampuchea has to take care of all these factories, not only to create jobs, but also to make the country more tax free.

However, the reality is that strikes are frequent, and every time they compromise with the owners of enterprises, this leads to more and more strikes in Kampuchea.

In July alone, two workers went on strike.

According to reports from local news media in Kampuchea, 280 workers went on strike for 5 days in Phnom Penh this July 31st. Even though the Ministry of labour of Kampuchea came to help with negotiations, there were 200 people who left because they did not meet their requirements.

In July 12th this year, a clothing factory in Kampuchea's dry province appeared thousands of people's strike. They put forward 18 job demands to the management, some of which were totally unreasonable.

Of course, strikes are not the only two such cases in July this year. The number of strikes has been up to 100 times since 2016. The number of strikes has reached more than 100 people. The enterprises involved are from mainland China, Taiwan, Hongkong, Korea, Japan and other regions and countries.

Actually setting up factories in Kampuchea is not easy.

First of all, recruitment is difficult. The society of Kampuchea is different from that of China. There is not so much family and social pressure. There is no need to worry about buying a house or buying a car. A large number of people live in small rooms. Many people simply build a tall house in their hometown. A used motorcycle is enough to cope with daily travel needs.

Secondly, the labor law of Kampuchea has somewhat overstepped the protection of workers. For example, workers fainted in the factory, and the factory needed to bear medical expenses. If a large number of workers collapsed, the factory owner might still be prosecuted by the court. Even during the strike period, the factory still had to pay wages for workers.

We certainly encourage any country to protect the labourers' need for relevant laws, but too unrealistic advance behavior is really not conducive to economic development.

The growth dilemma of Vietnam in the new world factory

According to relevant statistics, in the first quarter of this year, "world factory" attracted more than 10 billion 800 million US dollars of foreign capital, an increase of 86.2% over the same period last year, and is far ahead in Southeast Asia. A large number of foreign enterprises have moved their factories to Vietnam.

However, it has not been a long time. Many foreign enterprises that have just moved here this year will find a cruel reality, that is, labor costs in Vietnam have been rising, and Vietnam has also begun to work hard.

According to statistics, the wages level of workers in Vietnam in the first half of 2019 is 50% higher than that in 2014. The minimum wage standard of Vietnam's Hu Zhiming city is equivalent to 1237 yuan / month this year, and the wage standard of Hu Zhiming is the highest standard in Vietnam. The average monthly salary of Vietnamese workers is between 2200 yuan and 2400 yuan. Most enterprises' judgement of Vietnam's wage level is expected to reach the domestic wage standard in 7 years.

In addition to dealing with the rising wages of workers, the more factories will be faced with embarrassing situations. With a large number of factories moving to Vietnam, the difficulty of recruitment has become a problem faced by these factories. Many factories have to spend extra money on finding the right labor force in remote rural areas.

In fact, due to the increasing number of factories, cheap factories are hard to find anymore. The rent of factory buildings in many Vietnamese industrial areas is not much different from the domestic prices. In some areas, the rents of factories are even higher than those of the domestic ones. The average rental price of factory premises is very high from 3 US dollars to 6 dollars per square meter.

The supply chain of Southeast Asian countries is a stumbling block to their growth into a "world factory".

No country on earth can have a complete industrial system like China. Setting up factories in China means that enterprises can easily find cheap suppliers, because China's supply chain is the most complete and cheapest, but in recent years, other costs in China are increasing, such as labor, factory rent, taxes and so on, so many enterprises have transferred factories to Kampuchea, Vietnam and other countries.

But the factories that moved the past quickly found a problem. They could not find the right suppliers nearby, whether they were raw materials or machinery, so they had to go back to China to import. This part was bound to add some more cost.

A lot of enterprises have good intentions. It is envisaged that factories in Southeast Asian countries can reduce costs and gain more commodity profits. But after turning around, they will finally discover how ridiculous the idea is.