Vietnam textile producers are increasingly becoming Chinese satellite companies, as the country’s small-sized textile firms that have been facing difficulties in running their businesses have sold their companies to Chinese enterprises.
This trend is being seen as a dangerous one for Vietnamese textile exports with experts apprehending a situation that would be detrimental to the Vietnamese textile industry.
Owing to strict regulations by the local authorities, it is difficult for the Chinese firms to build a new production base. So in order to avoid such regulations, the Chinese companies have taken over many Vietnam textile companies. There has been a remarkable rise in Mergers and Acquisitions in Vietnamese textile industry.
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According to Thai Tri Dung from the HCM City Economics University, “Their (Chinese) actual goal is to set up a network that can provide workers for their industries. It is reasonable to think that the Chinese would attract skilled workers from Vietnamese enterprises.
“Vietnamese enterprises should think carefully about whether to become satellite companies in Chinese chains,” he also advised.
According to an analyst of the industry, the risk is high and the textiles and apparel being Vietnam’s key industry, it will be difficult if China has complete control over the industry. This would be detrimental to the industry as in theory, ‘Vietnam exports products, but China pockets money.”
