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Vietnam cheaper and better, say manufacturers who will stay despite riots

THE anti-China riots that rocked Vietnam's industrial parks have not deterred most large companies' determination to continue using the country as a low-cost manufacturing hub, with business operations starting to resume.

"It's a combination of people who are skilful and a good work force that is diligent and competent, and also wage levels that are competitive compared to the rest of Asia," said a spokesman for Hong Kong-based Yue Yuen Industrial Holdings.

The speed with which production resumed demonstrates the attraction of Vietnam, despite the risks, as manufacturing moves away from China to cheaper sources, reported Reuters.

The unrest, which flared after protests over disputed waters in the South China Sea, had sparked speculation that foreign investors would flee the country, but most say they have no plans to do so.

Vietnam has 200 industrial parks and they have been a major driver of the country's economic growth, accounting for 30 per cent of exports and attracting US$110 billion in foreign direct investment.

Taiwan's Formosa Plastics Group, one of the firms worst hit by the riots, said that work at its steel facility in central Vietnam had partially resumed and it hoped all operations would return to normal soon.

While most companies focused on resuming operations, the riots had dented sentiment among some Taiwan businesses, which bore the brunt of the damage with many of the rioters mistaking Taiwanese firms as owned by mainland Chinese.

"Apart from our factories and facilities being destroyed, the most damage is the sentiment of not only Taiwanese investors and labour, but also their families," said Serena Liu, chairwoman of Taiwanese business association in Vietnam.