In coastal provinces with ready access to ports, even unskilled workers now earn $120 a month for a 40-hour workweek, and often considerably more; wages in inland provinces, where transport is costlier, are somewhat lower but also rising fast. While Chinese wages are still less than $1 an hour, factory workers in Vietnam earn as little as $50 a month for a 48-hour workweek, including Saturdays.
Texhong estimates that average labor costs for each textile worker in China will rise 16 percent this year, including increases in benefits costs — on top of a 12 percent increase last year. New regulations are making it harder for companies to avoid paying for benefits, like pensions, further increasing labor costs.
And what's even worse (about China) than all that:
China is also phasing out its practice of charging lower corporate tax rates for foreign-owned companies. By contrast, Vietnam still offers foreign investors a corporate tax rate of zero for the first four years, and half the usual rate of 10 percent for the next four years.
As a result of these manufacturing cost savings in Vietnam:
Foreign direct investment ... over the last three years [has] soared more than eightfold in Vietnam.
A popular saying among Western investors is that Vietnam is the next China. Cambodia, with even lower wages attracting garment manufacturers, is called the next Vietnam.
Here's an eye-catching point:
Vietnam’s biggest selling point for many companies is its political stability. Like China, it has a nominally Communist one-party system that crushes dissent, keeps the military under tight control and changes government policies and leaders slowly.
But, I thought we fought to Vietnam war to bring them freedom and democracy. And so we wouldn't have to fight the commies in San Diego.
“Communism means more stability,” Mr. Shu, the chief financial officer of Texhong, said, voicing a common view among Asian executives who make investment decisions. At least a few American executives agree, although they never say so on the record.
Democracies like those in Thailand and the Philippines have proved more vulnerable to military coups and instability.
While the NYT report fixates on the impact of these trends to prices on products consumed in the U.S., it fails to discuss higher unemployment in the U.S. as a result of out-sourcing, and higher inflation in the U.S. as a result of borrowing to finance the never-ending occupations of Iran and Afghanistan.
