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US Trade Representative Micheal Foreman shakes hands with Vietnamese Minister of Industry and Trade Vu Huy Hoang after agreeing to the Trans-Pacific Partnership in Atlanta on Oct. 15

A changing international trade environment with the launch of the Trans-Pacific Partnership (TPP) and ASEAN Economic Community (AEC) is leading many of the world’s top businesses to relocate their production bases to Vietnam.

The Korea Trade-Investment Promotion Agency (KOTRA) published a report titled “Changes in the International Trade Environment and Global Production Bases” on May 26. In it, it analyzed 31 cases of 27 major companies such as Samsung Electronics and Toyota that had either advanced into China, Vietnam, Indonesia, Thailand, Malaysia, or Mexico in the preceding two years or planned to do so within the next two years.

According to the report, 15 of the companies - accounting for nearly half of the cases - had either relocated their production bases to Vietnam or were planning to. With just one company planning to exit Vietnam, the data mean a net influx of 14 companies.

Meanwhile, signs pointed to a production base exodus from the “world’s factory” in China, with a negative net influx of eight companies (three entries, eleven departures).

The most commonly cited reason for relocating was to take advantage of trade agreements, which was mentioned in 23 cases. Changes in the business environment were cited in 12 cases.

Among business environment changes, the most frequently mentioned was “to cut personnel costs,” which was cited in nine cases.

The report also noted a “clear differentiation by country in the businesses relocating, including labor-intensive industries moving to Vietnam and Southeast Asia for the lower personnel costs and trade agreements and cutting-edge and high value-added industries moving to China due to rising personnel costs and government policies for industry advancement.”

Yun Won-sok, head of KOTRA’s business information and trade office, stressed the need to “prepare for the reorganization of the international division of labor that the changing international trade environment will bring to different industries.”

By Lee Soon-hyeok, staff reporter

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