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  • Munly Leong

Trading power shifts from China to ASEAN in trade war



Vietnam is gradually replacing China for apparel with phone and electronics not far behind. American manufactures say "long term we will probably shift everything" with Vietnam and Thailand being the key initial beneficiaries.


Vietnam currently starts off with a lower labour cost base than China did originally while Thailand is already a strong higher value player in automotive and electronics manufacturing with a 650 million strong combined population both as a producer and future market - https://www.forbes.com/sites/vinnielauria/2019/02/19/u-s-china-trade-war-boosts-fast-growing-southeast-asia-2/#568171116f5e


Most investment and other financial assistance in this trend is unfortunately is based on FDI coming from China or other multinationals and is rooted in "resourcing" rather than building up of indigenous ASEAN owned and grown prosperity. It is a repeat in the history of China's own growth story enduring a decade or so of contract manufacturing by better capitalized and marketed western brands before earning enough to reinvest into their own. However in this case, the US still remains the ultimate buyer while the Chinese and other multinational companies remain the "middleman" deployer of capital earning the largest share of the profits and sharing breadcrumbs instead of the bounty with their ASEAN collaborators.


What if the middleman could be cut out completely? what if ASEAN were to be the direct beneficiaries of this new shift especially as a key source of FDI, China finds itself under the crosshairs of the tariffs in the US-China trade war. At ASEAN Nomad Capital, we are aiming for such a scenario. Enabling true ASEAN-US trade, the growth of ASEAN brands and ASEAN owned industry, not a rebranded or resourced future. We hope that we can be the lubricant, if not a light at the end of the tunnel for ASEAN companies to further invest in themselves.

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