Vietnam faces high risk of Chinese products bearing made-in-Vietnam labels

Vietnam may face United States tariffs on its products if Chinese goods shipments are allowed to enter the country to disguise their origin due to the ongoing U.S.-China trade conflict, economic experts warned at a seminar today, October 24.

Under the theme “The U.S.-China trade war: Prospects and risks for Vietnamese import-export enterprises,” the seminar was co-organized by the Vietnam International Arbitration Center (VIAC) and the HCMC International Integration Support Center in HCMC to highlight a series of risks, opportunities and suggestions for local authorities and enterprises.

Speaking at the seminar, Nguyen Xuan Thanh from Fulbright University Vietnam said Vietnam was currently the only among the United States’ five major goods exporters to have yet to incur a tariff imposition and could still face U.S. tariffs despite earning little revenue.

Given the ongoing trade war, Thanh pointed out that one of its impacts was that Chinese products would be transported to Vietnam and then shipped on to the United States through a Vietnam-based firm as an intermediary to avoid high U.S. tariffs, suggesting that Vietnam should get these shipments under control to avoid creating conditions that would attract U.S. tariffs on Vietnam’s products.

Thanh warned that many Chinese firms had injected heavy investments into Vietnam so that their products could bear made-in-Vietnam labels, noting this was a trick involving fake foreign direct investment.

Thanh also proposed that authorities such as the customs check and tighten controls to avoid tariffs on Vietnam.

Besides this, Nguyen Sy Thanh from Vietnam National University – Hanoi said that the U.S. had predicted that China would send large shipments of its products to a third country for export stateside, leading the U.S. to issue an anti-tax evasion law. Therefore, third-party countries, including Vietnam, which receive China’s shipments, should prepare a strong explanation of the origins of their goods shipments.

Tran Du Lich, a member of VIAC, said the country would suffer the consequences if enterprises bought China’s potatoes and then dyed them with red soil in Dalat City to turn them into Dalat potatoes.

Lich told the Saigon Times that enterprises should be aware of the danger to avoid harming the country for short-term gains. In addition, authorities should set criteria and standards on the origins of goods to facilitate agencies’ management of the situation, Lich added.

Nguyen Van Can, head of the research and development department at Agtex 28, said textile and garment enterprises in Vietnam, which typically import 60%-70% of their materials from China for production, would be affected if the U.S. slapped tariffs on China’s footwear and textile and garment products.

However, Nguyen Xuan Thanh pointed out that when China’s products were hit with the U.S. tariff, it appeared that Vietnam would gain opportunities in terms of shipments of three groups of goods---wooden goods, leather products exclusive of footwear, and agricultural produce and seafood ---being sent to the U.S. market. In fact, Vietnam is expected to miss out on this export potential because China will export its goods to Asian markets, including Vietnam, instead of shipping to the United States, placing domestic firms under pressure to compete with low-cost Chinese products.

Minh Tam - HCMC