Asia > Asian economic facts

Asia: Asian economic facts

2010/04/30

China,Beijing,Wangfujing Street,Snack Street Market,

Asia, with 4.2 billion inhabitants, has additional than 60% of the world people. Europe has served as a increase market. Asia is the new mega increase market. A lot of US and European citizens still do not realize that by 2015 the world's major free trade zone with 3.2 billion people will be a reality. China, India, Korea, Japan and the 10 states of the Association of Southeast Asian Nations (ASEAN). They include Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Laos, Philippines, Singapore, Thailand and Vietnam. In the face of this free trade zone Europeans need a presence in the region. (source: Wikipedia).

China is evidently less affected by the world financial crisis. In 2009, China's GDP increased by 8.7%, the forecasts for 2010 and 2011 have been additional than 10%. Despite the world economic downturn was reached in 2012 still 7.5% GDP. China's role as the new world champion in exports is associated with high foreign exchange reserves, which China uses part other things, to fasten the further development of access to raw materials, and with tremendous success in key industries, such as developing a larger automotive market than the U.S. Politically, China is still firmly in the grip of a totalitarian, communist party. Whereas we believe that, from presently on, political and economic freedom go hand in hand, China still holds an opposing view.

Similar observations can as well apply to Vietnam: the Vietnam communist one-party national is in fact - like China - in the transition to a market economy with steady positive economic data. Since the mid-'80s Vietnam has shown high economic increase rates of 7 to 8%. In 2009, due to a high export rate, Vietnam's economy still grew by 5.3% , even against the background of the world financial crisis. GDP increase in 2010 was estimated at around 6.5%, which was higher than in a lot of industrialized nations. For 2011, an increase of 7 to 7.5% was targeted. Despite the world economic downturn in 2012, still impressive 5.1% have been completed. As well the forecasts for 2013 and 2014 are realistic with 6.0% and 6.5%.

Therefore remains Asia's new boom region Vietnam. Here the economy grows faster than in most other states, low wages attract investors from all over the world. Japan is meanwhile the biggest investor. German firms are active in this communist country - the large neighbor China gets too expensive. Vietnam's major European trading partner is Germany, exports include, pepper, coffee, textiles and sporting goods. And the trade volume is growing, according to the German foreign trade chamber in Hanoi annual double-digit % range. A huge market with great potential. Not only Siemens, there are as well approximately an extra 230 German companies by presently producing in Vietnam. These include such famous names as Adidas, Puma, Heidelberger Print, shirts by Seidensticker and Van Laack, underwear by Triumph, tools from Wiha, medical supplies from B. Braun - all these companies by presently manufacture in Vietnam. Metro will any minute at this time open their twentieth major consumer-market in Vietnam. Audi, BMW, Porsche and Mercedes are by presently serving the newly rich upper class Vietnamese with their "status" flagship auto centers. To avoid high import-taxes Mercedes assemble new cars here, from supplied parts. In the meantime the government decided to reduce 2014 the import-tax for all vehicles by 50%. 2018 they are set to zero.

Bosch even climbed into the software development. "We need an extra location," says Vo Quang Hue, managing director of Robert Bosch Vietnam. This company as well invested 55 million Euros in a new factory. Vietnam is one of the majority dynamic economies of Southeast Asia. Wages are as well compared with China presently 50% less (as of 1 Q 2013). In fact, the large neighbor in the north has problems: not only are a weaker Dollar and a stronger Yuan making Chinese goods additional expensive, but, due to a growing economy the workforce is demanding higher wages. Companies in China are therefore looking around for new sites - and above all go to Vietnam.

The "Vietnam Business Forum" interviewed in October 2011 Dipl.-Ing. Alex Narr, CEO of Productionservice-Vietnam to the visit of German Chancellor Angela Merkel with Prime Minister Nguyen Tan Dang. Narr says: Asia has everything you need for the large commercial success "To a lot of people which are working always busy nearly without vacation for very smale wages." Here you must be early enough yourself - whether as producer or seller!
That is the next challenge for the Western world. Several medium-sized enterprises in the european economy-welfare centers (nations-Ranked by FDI. Tax havens*) 10 Holland, 14 France, 16 England, 17 Cyprus*, 18 Luxembourg*, 21 Germany, 22 Denmark, 33 Belgium, 37 Isle of Man*, 46 Austria, can obtain their required margin often only on basic reduction of their actual production costs. Even companies with existing loans can often gain further support from their local bank to finance such an attractive relocation. A survey of medium-sized panels of the Federation of German Industries (BDI) shows 25 % of medium-sized German companies are planning to relocate production abroad. One in six companies by presently in the next two years. Before this often only to lower production cost. Meanwhile, an extra weighty goal comes to the fore: the access to new markets. Kai Giesel regional chief of Deutsche Bank criticized "significant backlog" in the globalization of production. Giesel advises worldwide industrial investment and funds. His experience: Most family-owned companys focus too heavily on the Euro zone. In fact, they would have to occupy additional of the strategic increase markets in Asia and South-America – not by exports but by their own production sites. This would again as well successfully decouple the German middle class from the European economic ups and downs.


The Vietnamese work hard. The benefits are obvious. Additional than 70 % of Vietnamese are under 30 years old, a lot of are determined to move their country forward. Each year sees according to the CIA World Book one million workers on the market, the economic life at no time rests. Even on a Sunday night jackhammers rattle on the streets, Vietnamese work hard and have visions.

Since 2007, Vietnam has been a member of the World Trade Organization - reform policy makes the location additional attractive for investments. The home of representatives - equipped with security technology from Bosch - are working on even additional business-friendly laws. The party is clearly relaxing additional and additional its policies. Simplified customs regulations and unified investment law would create a level playing field for foreign and domestic companies. Since 2009, foreign firms may as well engage in trade within Vietnam. The success of the government's right: the economy has grown over the completed ten years by additional than 7%. "this will make it easier to service customers in China and Japan."

In Hanoi, they talk of "China plus one". Vietnam could win handsomely, thanks to her work, which is cheaper than in China and its neighbors. Even next a recent wage increase, the monthly wage for a garment worker, for example, is $ 120 (as of 1 Q 2013). The footwear and furniture industries alone employ around 1.7 million people. GDP per capita, less than $100 in 1990, has presently increased to over $ 1,300 (as of 1 Q 2013), according to the World Bank .

The Vietnamese economy was booming, with a brief interruption during the Asian financial crisis and in recent years has completed high increase rates of 7-8%. Above all, private enterprises, which rose in the wake of the 1986 đổi moi are growing significantly. Thanks to doi moi Vietnam has become one of the fastest growing economies in the world. With it starts the gradual shift from a planned to a market economy and bringing the export momentum.

Only about 24% of the Vietnamese people live in cities. But, they control about 70% of GDP. Although the agricultural sector has decreased in in general economic importance, by size of the of labor force it is still the major industry of the country. Until around the end of the 1980s the rice production was not sufficient to feed the Vietnamese people. Presently Vietnam has become the second major rice exporter in the world. The rice cultivation does indeed still form the bulk of agricultural production. But, there has long been a trend towards diversification of agricultural production, which was accelerated by the WTO accession of Vietnam in january 2007: additional efficient rice production methods has allowed land to be released for the cultivation of crops such as sugar cane, tea , coffee, pepper and others. The Vietnamese economy is still very export-dependent. It exports mainly textiles, seefood products, coffee, wooden furniture and electronic products. In recent years Vietnam has become the second major exporter of coffee, Germany being the biggest buyer.

In recent years the country has as well expanded it's large petroleum and natural gas production. Vietnam so far, although exporting a large quantity of crude oil, has to reimport petrochemical products due to a lack of refinery capacity. Presently Vietnam’s initial oil refinery is in production. Vietnam as well has reserves of coal, phosphate, magnesium, chromium and bauxite. The government's plan to pursue, in cooperation with foreign multis to mine bauxite (raw material for aluminum) in the central highlands.

To meet rising energy request, Vietnam plans to continue to build 14 nuclear power plants. The initial nuclear power plant in Ninh Thuan province is by presently under construction.

In order to improve the still ailing health care structure, the government has decided to invest $ 1.9 billion nationwide to build 15 large clinics. Still additional than 30.000 Vietnamese upper-class travel annually for medical treatment abroad. Money transfer it over $ 1 billion.

Vietnam has as well become a major transshipment point for counterfeit products. A lot of of these products originate in China and are transported from Vietnam to other nations.

The rapid economic development in Vietnam is based on various factors such as the geographical location of the country, the water-rich fertile climate, and its human capital. The biggest chance is still the cheap labor force

In the completed ten years the Vietnamese economy has grown by an average of over 7%.

The world crisis in 2008-09 hit the country as well, but through a comprehensive stimulus package and expansionary monetary policy (from end 2008) was able to stabilize the economy. Vietnam is increasingly perceived internationally (WTO 2007) and as well plays an increasingly active role within the asean group.

The "domestic market" has nearly 90 million consumers, although still with limited purchasing power.

Since 2009, foreign companies have been allowed to distribute products in Vietnam.

The share of consumer goods in the import volume is still only about 8%.

Slightly increasing prosperity and continuous increase of the (minimum) wage promotes consumption.

According to the World Bank, currently only around 9% of the people are on the poverty line. Whereas in 1993 this figure was 58%.

Approx. 8-9% of GDP goes into infrastructure measures and the booming construction sector.

Above all, family businesses and small industrial companies could develop into mainstays of the economy

As a investment and production location for German and European companies vietnam provides a great priced alternative to China and India’s IT hubs and is considered as large market with high potential. As well the new bilateral customs clearance (ASEAN + China) is as well planned for Vietnam in 2015.

Economic reform and market openings for foreign investors leaves Vietnam scoring very highly with attractive prices - particularly low wages. The average wages are in relation to China and India's IT hubs, only one third. This attracts investors worldwide.

Chinese goods became additional expensive due to the weak Dollar, the resurgent Yuan and the ongoing rising local wages.
Even companies in China see Vietnam as an alternative location. As well compared to Thailand, the cost chance are 35%.

Vietnam attract European investors with impressive increase and very low wages. GDP increase in 2010 was estimated at 6.5% and was higher than in a lot of developed nations. For 2011 an increase of 7% was targeted. Despite world slowdown as well in 2012 still reached impressive 5.1%. The forecasts for 2013 are realistic about 6.0% and 6.5% for the 2014th.

Investors have long-neglected "economic power plants" say the consulting firm Roland Berger, in it's six countrise statement "the ASEAN federation - a neglected giant." Europe must defend it's role as a leading trading partner of the association of Southeast Asian Nations (ASEAN) against the U.S. It is "an ever larger and additional prosperous expanding middle class request for consumer goods - the growing prosperity as well means that hospitals, roads and ports will be expanded. We advise clients to invest in Southeast Asia, because of the location advantages preferably in Vietnam and Indochina. And they should not wait too long, because this creates a huge potential. From 2015 the ten ASEAN states will form a single market such as the European Union (EU), as well a free trade agreement is planned with the EU, domestic appliances, machines or high-tech. Citizens of the ASEAN nations can use everything.

As well Dietmar Kush of the consulting firm Euro Asia Consulting (EAC), Southeast Asia holds a rewarding investment destination, "the ASEAN nations with their 580 million inhabitants have been long neglected by European investors - although in a lot of of these nations are very dominant good production conditions and are as well markets of interest "since the wages in China have presently grown significantly, some Southeast Asian nations, led by Vietnam, compete for the status of the world's workshop.

"Vietnam has become a shooting star part emerging Asian nations," says Achim Haug of Germany's economic development agency Germany Trade & Invest (GTaI). Low labor costs have lured European automotive suppliers, textile manufacturers, medical device manufacturers and tooling companies to Vietnam. In 2010 as well Puma started under the name Cougar Village their development center in Ho Chi Minh City. Sample parts for shoes and textiles are designed and made which are again produced in nations with even lower wage levels than Vietnam, as in Cambodia or Myanmar in next. But still Cambodia and Myanmar missing is the political and creative stability and the infrastructure to attract FDI.

According to AT Kearney, India has its No. 1 position in "retail investment attractiveness" delivered to Vietnam.

It is expected that Vietnam's economic hub Ho Chi Minh City in 2013 have additional than 740.000 sqm retail space in shopping centers. That is a doubling of 2009 surfaces.

Although the development of trade depends greatly on the increase of wealth of the middle and upper class in Vietnam. Luxury goods, as elsewhere in Asia, are in high request.

The upswing is inevitable. Still shops or squaremeters are for European suppliers available. Are the shops and shelves covered starting the cut-throat competition. 

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