Trade and industry links between Vietnam and China’s GBA set to expand even more, experts say
(SONG CHEN / CHINA DAILY)
Economic and trade cooperation between the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and Vietnam will further expand as China deepens exchanges with the Southeast Asian country, contributing to the development of both sides, business leaders and experts said.
Their comments came as China’s Foreign Ministry announced that President Xi Jinping will pay a state visit to Vietnam from Dec 12-13.
Xi, who is also general secretary of the Communist Party of China Central Committee, will travel to Vietnam at the invitation of Nguyen Phu Trong, general secretary of the Communist Party of Vietnam Central Committee, and Vietnamese President Vo Van Thuong, the ministry’s spokesperson Hua Chunying said.
As part of the frequent exchanges between high-level officials of China and Vietnam, Chinese Foreign Minister Wang Yi also visited Vietnam from Dec 1-2.
“As one of the most dynamic regions in China’s foreign trade, the Greater Bay Area plays an important role in trade cooperation between China and Vietnam,” said Tam Yiu-chung, advisory consultant of the Greater Bay Area Importers and Exporters Association.
Located in South China’s Pearl River Delta, the GBA comprises nine cities in Guangdong province and the two special administrative regions of Hong Kong and Macao.
As one of the world’s wealthiest city clusters, the GBA’s combined economy exceeded 13 trillion yuan ($1.8 trillion) in 2022, accounting for about ten percent of China’s total GDP.
Noting that China is Vietnam’s biggest trading partner and Vietnam is China’s biggest trading partner in the Association of Southeast Asian Nations (ASEAN), Tam said the GBA has been key in fostering ties.
“In 2022, the trade between Guangdong province and Vietnam reached $47 billion, accounting for 20.1 percent of the total trade between China and Vietnam,” said Tam, citing data from China Customs.
As for the Hong Kong SAR, its trade with Vietnam also grew significantly at an average annual growth rate of 11.8 percent from 2017 to 2021 and Vietnam has become its seventh largest trading partner, according to the city’s Commerce and Economic Development Bureau.
Noting that the global industrial and supply chains are changing by showing trends toward localization, regionalization, and shortening of chains, Tam said Vietnam is an ideal destination for companies in the GBA seeking to expand in overseas markets and deploy industrial supply chain networks.
Vietnam has been one of the fastest-growing economies in the Asia-Pacific, with its GDP rising by 8 percent in 2022, according to the International Monetary Fund.
“With the transformation of foreign trade structure, companies in the Greater Bay Area are actively adjusting their export markets and making more efforts to expand into markets such as the ASEAN as well as countries and regions along the Belt and Road Initiative (BRI),” said Tam.
The first “Yanzhao Express” China-Vietnam freight train, originating from Shijiazhuang, Hebei province, arrives at Yen Vien Railway Station in Hanoi, Vietnam, on Aug 2, 2023. The journey marked the successful connection of the transportation route. (PHOTO / XINHUA)
Noting that the GBA has been part of the “world factory” for almost 40 years and has developed a very sophisticated and mature supply chain, Jonathan Choi Koon-shum, chairman of the Guangdong-Hong Kong-Macao Bay Area Entrepreneurs Alliance, said the diversification strategy adopted by some companies will enhance cooperation between the region and Vietnam, rather than creating competition.
“Trade between China and Vietnam is increasing while Vietnam is increasing its exports to different countries,” said Choi, noting that different countries have their own advantages. “If we work together, I think it will be beneficial for both sides.”
Choi is also chairman of Sunwah Group, a Hong Kong-based conglomerate that has been investing in Vietnam for over 50 years.
Chinese entities registered over $2.33 billion in investments in Vietnam between January and July this year, ranking third among the country’s foreign investors, Vietnam News Agency reported, citing data from Vietnam’s Ministry of Planning and Investment’s Foreign Investment Agency.
While Chinese companies are showing more interest in investing in Vietnam, Choi said the concept of high-quality development, as emphasized in the BRI, has prompted investors to look beyond trade and manufacturing and focus on the digital and green economy.
Hoping to better connect the business community on both sides, Choi said the GBA entrepreneurs’ alliance has been arranging various activities. In January, it led the first major non-governmental business delegation of more than 70 business leaders from Hong Kong to visit Vietnam after the COVID-19 pandemic.
Choi said the alliance’s offices in Hanoi and Ho Chi Minh City receive delegations from the GBA every week as an increasing number of businesses are interested in the Southeast Asian market.
Meanwhile, he noted that the GBA, with its 86-million-strong population, also makes for an attractive market for Vietnam businesses.
“Economic and trade cooperation between the Greater Bay Area and Vietnam has strong demand, great potential, and good prospects,” said Xu Ningning, executive director of the China-ASEAN Business Council and chairman of the RCEP Industry Cooperation Committee.
Xu said there is an urgent need for China and Vietnam to enhance industrial cooperation as it is critical for the economic growth of both sides and their competitiveness in the global market.
The Regional Comprehensive Economic Partnership, or RCEP, the world’s largest free trade pact to date, also creates a bigger opportunity for bilateral cooperation in economy and trade as it allows the two countries to further open up their markets to each other, said Xu.
Companies in the GBA need to deepen their understanding of Vietnam and come up with targeted action plans to make their cooperation with Vietnamese businesses more pragmatic, he added.
Noting that it is relatively difficult to attract Vietnamese companies to invest in China, Xu said Vietnamese trading companies should first be encouraged to enter the GBA and then use the trade links to drive their investment in other areas in China.
People discuss business at the booth of a Vietnamese company at the 134th session of the China Import and Export Fair in Guangzhou, Guangdong province, on Oct 23, 2023. (PHOTO / XINHUA)
Choi, the GBA entrepreneurs alliance chairman, said one of the key barriers for Vietnamese companies to invest in the GBA is the visa policies, so the alliance has been pushing the Hong Kong government to make visa issuances easier for students, businesspeople and tourists from Vietnam.
In his annual policy address in October, Hong Kong Chief Executive John Lee Ka-chiu proposed relaxing visa policies to enable professionals from Vietnam to be employed in the city.
“Some companies that have been eying Hong Kong to set up their businesses here have told me that the (SAR government’s) move is a kind of turning point and a momentous change that has made them eager to come here,” Pham Binh Dam, consul-general of Vietnam in Hong Kong, said in an earlier interview with China Daily.
Choi said he is also working to bring Vietnamese companies for listing in Hong Kong, which is a major global financial center.
He added that smoother arrangement for land border crossings can promote freer exchange of people and goods, and even encourage the joint construction of new cross-border industrial zones.
Currently, the Shenzhen Shenyue Joint Investment Company is developing the China-Vietnam Economic and Trade Cooperation Zone in Haiphong, Vietnam’s third largest city. It is the first overseas economic and trade cooperation zone of Shenzhen, and a key project of the Guangdong province under the BRI, creating 15,000 jobs in Vietnam.
With an increasing number of foreign companies from China and other countries, the need to train local talents to work in Vietnam has created an education boom in the last decade, said Tuan Q Phan, chief representative of the Representative Office of the University of Hong Kong (HKU) in Vietnam.
Since the representative office was set up in July 2022, Phan said the HKU Business School, in collaboration with Hong Kong-based asset management firm Optimas Capital, has founded a scholarship fund for not only young talented Vietnamese studying in Hong Kong but also the underprivileged through need-based scholarships, one of the first master’s programs of its kind in Vietnam.
“In August 2023, we warmly welcomed six outstanding Vietnamese students who were admitted to various master’s programs at HKU Business School,” said Phan, who is also a professor of marketing, innovation, and information management at HKU Business School.
Phan said the representative office also organized ten company visits and two immersion trips for Hong Kong delegates and postgraduate students, providing them a chance to interact with industry leaders in Vietnam and gain practical knowledge of the emerging market.
This year marks the 15th anniversary of the establishment of the comprehensive strategic cooperative partnership between China and Vietnam.
In talks with Vietnamese President Vo Van Thuong on Dec 1, Chinese Foreign Minister Wang recalled that the leaders of both countries had agreed to cement China-Vietnam friendship and advance high-quality Belt and Road cooperation and Vietnam’s Two Corridors and One Economic Circle plan.
“The BRI, which was proposed ten years ago, has injected new development momentum for the Greater Bay Area and helped reshape its position in the global industrial chain, which has a significant impact on promoting economic and trade relations with Vietnam,” said Tam from the Greater Bay Area Importers and Exporters Association.
He said it is important to promote deeper cooperation between the GBA and Vietnam in the digital economy to develop high-quality development, and new models and forms of trade.
Tam said the association will also explore the possibility of establishing a Greater Bay Area-Vietnam “Silk Road e-commerce” platform to bring high-quality products from Vietnam to the GBA while supporting more companies in the area to expand to the Vietnamese market through trade digitalization.