STEVE INSKEEP, BYLINE: We're reporting from China this week and are in Shanghai today. A team of us has been traveling around this enormous coastal region, dozens of cities where people manufacture everything from key chains and stuffies to cars, to products run by artificial intelligence. And as part of our reporting, we are following the money - or to be exact, following the trade - because while China remains the world's factory, some of the business is moving south. This is a big deal. NPR's John Ruwitch is with me here and is just back from Vietnam. Hey there, John.
JOHN RUWITCH, BYLINE: Hey, Steve.
INSKEEP: So what's going on down there?
RUWITCH: Well, a lot of the business is moving south. Actually, there's this manufacturing boom that's happening down there. You know, for years, people have talked about having to have a China plus 1 strategy, which means manufacture in China but also diversify into other countries like Vietnam, like other places in Southeast Asia, so that you're not stuck with a supply chain that's beholden to just one country. And Vietnam is absolutely taking off now.
INSKEEP: Well, let's listen to what you found.
(SOUNDBITE OF VEHICLE RUMBLING)
RUWITCH: Two hours by car from the Vietnamese capital, Hanoi, a fresh crop of factories and construction cranes rises out of green fields.
BRUNO JASPAERT: Three and a half years ago, this was rice paddy. Now you see a four-lane road. And all the factories in this main road that you see were simply not existent.
RUWITCH: Bruno Jaspaert runs the company that's developing this industrial zone near the coast in Quang Ninh Province. The firm, called Deep C - that's the letter C - has been in business in Vietnam since 1997. In its first 21 years of existence, until about 2018, Jaspaert says, it attracted about $1 billion in foreign direct investment.
JASPAERT: From then till now, we managed to collect another seven.
RUWITCH: That's $7 billion over just the past seven or eight years.
JASPAERT: That gives you an idea of how fast it goes. And I need to point out we had two years of COVID in that, and the country was locked up.
RUWITCH: The world's manufacturers have been scrambling to diversify away from China, where U.S. tariffs have raised costs and geopolitics have raised concerns for businesses. Deep C has gone from running one industrial zone in northern Vietnam to five. The factories in them make everything from shower heads to Apple watches.
(SOUNDBITE OF VEHICLE RUMBLING)
RUWITCH: And a lot of it gets shipped to the world's biggest economy, the United States, now Vietnam's top export market.
TED OSIUS: So the economic relationship has taken off. It's surging.
RUWITCH: Ted Osius is a former U.S. ambassador to Vietnam. He now leads the US-ASEAN Business Council. Last week, he was in Hanoi with the council's biggest trade and investment delegation ever to visit Vietnam. It comes 50 years after the end of the Vietnam War and 30 years after the establishment of formal bilateral ties.
OSIUS: There's no country in Southeast Asia that inspires kind of more excitement about opportunity than Vietnam.
RUWITCH: Excitement and some nervousness these days. Vietnam's trade surplus with the U.S. has ballooned, surpassing $123 billion last year, according to official statistics. It's now No. 3 after China and Mexico on the list of countries with which the U.S. has its biggest deficits. Some fear that puts Vietnam in the Trump administration's crosshairs.
OSIUS: So I think it's reasonable to predict that there will be tariffs on Vietnam. And what I'm recommending to the Vietnamese is to be proactive in dealing with this situation.
RUWITCH: Vietnam's minister of industry and trade made a trip to Washington earlier this month, and U.S. trade representative Jamieson Greer told him Vietnam needs to improve the trade balance and open up more. Message received, apparently. The Vietnamese authorities announced cuts to tariffs on several U.S. imports this week. They've flagged possible purchases of U.S. farm goods, gas and defense equipment. Vietnamese airlines plan to buy hundreds of Boeing airplanes. The government says it's preparing to license Elon Musk's Starlink satellite internet network. And last fall, a Vietnamese property company struck a deal to develop a $1.5 billion golf resort in Vietnam with the Trump organization. Deputy Prime Minister and Foreign Minister Bui Thanh Son addressed the US-ASEAN Business Council.
BUI THANH SON: On our part, Vietnam remains committed to creating favorable conditions for business, for foreign business and investors, including those from the U.S.
RUWITCH: The welcome mat does seem to be out. In December, Jensen Huang, CEO of AI chipmaker Nvidia, came to Hanoi. He was treated like a rock star. Prime Minister Pham Minh Chinh personally took him out for beers in the city's old quarter.
UNIDENTIFIED GROUP: (Chanting) Vietnam, Vietnam.
RUWITCH: Today, several large photos of Huang and the PM hang prominently on the walls of the bar.
NGUYEN VAN SAC: (Speaking Vietnamese).
RUWITCH: And Huang's visit to Vietnam is a point of pride, says waiter Nguyen Van Sac. Back at the industrial zone, CEO Bruno Jaspaert says this new era of geopolitical uncertainty and rapid change could actually be a good opportunity here.
JASPAERT: My own personal view is, for Vietnam, it should be positive.
RUWITCH: Positive, he says, if they play their cards right.
INSKEEP: NPR's John Ruwitch is just back from Vietnam. John, loved hearing the sounds of Vietnam there. He's with me in Shanghai. And, John, we were talking there about American firms, European firms moving stuff to Vietnam. But an economist was telling me recently that even Chinese companies are investing in Vietnam. What's going on?
RUWITCH: Yeah, Chinese companies, Japanese companies, Korean companies, anybody exporting to the U.S. exporting out of Asia is looking for opportunities in places like Vietnam.
INSKEEP: We get an idea from your story that one motivation might be to avoid U.S. tariffs if they can, but are there other reasons that Vietnam is attractive?
RUWITCH: Yeah. Vietnam's growth rate is around 7% a year, so it's faster than China. Vietnam sort of has this great relationship with the United States now 30 years after establishing relations. It's a way to hedge geopolitical risk that it might otherwise have in China. The population is also quite young in Vietnam.
INSKEEP: And the Vietnamese themselves seem to be eager to make deals. I did take note of the brand of satellite company they were looking at, Starlink, and also the brand of golf course.
RUWITCH: Right. They talk about the Vietnamese having a bamboo foreign policy, which means they blow with the wind. They'll go whichever direction they need to go. They have friends, they don't have a lot of allies, but they seem to get it done.
INSKEEP: NPR's John Ruwitch. Thanks for your insights.
RUWITCH: You're welcome.
(SOUNDBITE OF GUITARRA AZUL'S "TEARS IN THE RAIN") Transcript provided by NPR, Copyright NPR.
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