The prolonged US – China trade war is reordering the global supply chain and Vietnam could stand to be a winner for investors, CNBC reported.
As US companies plan to move their manufacturing bases outside China, countries in Southeast Asia could be the biggest beneficiaries, Sandeep Naik, head of India and Southeast Asia at General Atlantic, told CNBC’s “Street Signs ” on Tuesday.
“If you look at certain sectors like auto and chemicals, you see a large outflow of those manufacturing opportunities moving to Vietnam,” Naik was quoted by CNBC as saying, adding that the investor community is closely watching for new investment destinations in the region.
General Atlantic has about US$35 billion assets under management. The company invests in start-ups with high growth potential in four main areas: consumers, financial services, health care and technology.
“We’re looking at Vietnam as a very interesting destination at this point,” Naik said. “With manufacturing moving to Vietnam, with more employment getting created there, people having higher disposable income, that starts a trend of consumption story.”
Analysts previously said Vietnam, which exports phone parts, furniture, automatic data process machines, emerged as the largest beneficiary as trade flows were diverted.
There are new opportunities for financial services too, he added, explaining that the manufacturing firms shifting to Vietnam need credit.
“So credit to the (small and medium enterprise) sector, credit to the mid-sized manufacturing unit, then creates another fillip or a boost to the financial services industry,” Naik said.
He did not mention any specific companies in Vietnam that General Atlantic is currently looking at.
But Naik noted that investors will need to grapple with a lot of local issues and nuances as they learn to operate in the local landscape.
“We need to have people on the ground that will really help us navigate those issues, but if you look at the foreign direct investment that’s happening in Vietnam at this point, you can see that the gates are opening,” he said.
Still, other analysts have cautioned that Vietnam may have other challenges.
Recently, the president and CEO of the US-ASEAN Business Council told CNBC that the labor market in Vietnam is tightening, and investors are now looking to move manufacturing into other Asian countries, like Thailand.
