Vietnam Gets Squeezed By COVID-19

Vietnam Gets Squeezed By COVID-19 
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Vietnam has become a major production base for many companies that have been looking for alternatives to production in China, with an ample workforce and positive government support for global businesses, but recently (early July, the country, which has a vaccination rate of ~26.6% has seen a big spike in new cases, limiting travel and logistics, and closing plants during the spike.  There have been a number of commentaries and announcements concern where the outbreaks have been most prominent and what companies were affected, but little definitive data on the extent of the issue has been circulated.  The American Chamber of Commerce in Vietnam[1] has done a number of ‘flash surveys’ to gather some data concerning the status of US and foreign companies operating in Vietnam and at what level of production they are operating.  The latest survey was taken between August 23 and 25, which is close to the peak infection point for this cycle, so it should give some insight into how difficult conditions are for manufacturers in the country.
Survey Results:
Vaccinations have seen a sharp uptick, especially around Ho Chi Minh City, the country’s largest city, where almost 50% of companies polled indicated that almost 50% of staff had received at least one dose of the vaccine, up from 25% in a survey taken 3 weeks ago.

• 13% of those surveyed indicated that their companies had ceased operations or were operating with a skeletal staff, with nearly 50% operating at under 50% of normal capacity.
• 20% of respondents have already shifted some production, with another 16% discussing options.
• While AmCham members and families were worried about the poor and disadvantaged, who were being impacted most severely, 71% expressed ‘concern about quality of care if you or a family member develops serious symptoms.’

 


[1] AmCham Vietnam represents 650 corporations and 2,500 individual business representative. The US is Vietnam’s largest export market

COVID-19 New Cases & Deaths - 1/1/21 to date - Source: WHO

The survey data indicates that over the 20 day period between surveys, those businesses that had seen the least impact from the COVID-19 outbreak (operating at 50% of normal or better) saw things recover, however those that had been most severely affected saw things get worse, with workers hesitant or unable to return.  The government of Vietnam has implemented a “3 on Site” model in July, which involves eating, sleeping, and working without leaving the factory site, however as the outbreak became worse, particularly in the more populous southern provinces, the wisdom of such a policy was questioned and suspended in Ho Chi Minh City where over 3,700 businesses had spent considerable sums to implement the practice.

​While the concerns of businesses over the spread of the virus continues to grow, it seems that the biggest issue right now is a lack of coordination from the government.   Provincial governments do not seem to be operating with a coordinated approach to vaccination programs or rules and regulations concerning protection from the spreading infections.  There does seem to be some improvement from the higher vaccination rate, but low efficiency ports, either for inflowing components or outgoing product are unacceptable for companies, especially those in the CE space where the selling season is limited.  That said, a lack of government coordination seems to be an issue for many countries including the US, so while Idaho remains the state with the lowest vaccination rate in the US (46.4%), that seems to be a voluntary issue, where the 26.6% rate in Vietnam is due to a lack of vaccine and a lack of government coordination.  Welcome to the real world.