Is it true that Vietnam has been growing its exports faster than India? What happens to the China manufacturing opportunity?

Vietnam’s exports are just growing but they are growing at an amazing pace. Between 2011 and 2019, Indian exports are at the same level whereas Vietnam’s exports have grown almost 3.5 times and reached India’s level. Vietnam is the real export competition.

We have recently seen a lot of big expectations being built that a chunk of Chinese manufacturing will move to India. That is not entirely unjustified because there is surely an effort by most of the large nations including the US, EU and Japan to diversify their risk.

For example, Japan gives incentives to its companies to shift factories out of China and into India and Bangladesh. The biggest Apple outsourcer, Foxconn, is investing $1 billion in India. But if India needs to get a big chunk of China story, we need to really beat Vietnam.

Vietnam has been the real export story of the last decade. Check this out. Back in 2011, India exported goods worth $302 billion and Vietnam exported $95 billion. By 2019, Indian exports and Vietnamese exports were almost at par at Rs.320 crore.

Remember, this growth happened despite the trade war and all the other excuses that we get to hear. Also, Indian exports mineral oils and gems & Jewelry. These are low technology exports. Nearly 42% of Vietnamese exports are of electrical and electronic equipment.

Vietnam is the world’s second largest manufacturer of mobile phones after China. Additionally, Vietnam also exports textiles and machinery. The moral of the story is that if India really needs to capture a bigger chunk of China business, then focus on Vietnam.