What President Biden's Visit Means for Business and Manufacturing in Vietnam

The commercial and manufacturing landscape has been significantly impacted by President Joe Biden's recent trip to Vietnam. This visit was very important because it strengthened the economic ties between Washington and Hanoi, which will, in my opinion, have a big impact. President Biden’s visit resulted in the official upgrading of diplomatic relations between the two countries to a “comprehensive strategic partnership.” While this may seem symbolic, the move is extremely important. It increases trust and cooperation between the U.S. and Vietnam at a critical time when the world is witnessing political tensions with China, a longtime U.S. economic partner.

The $7.8 billion deal between Boeing and Vietnam Airlines was one of the major achievements of President Biden’s visit. Vietnam Airlines made a strategic decision to purchase 50 Boeing 737 Max aircraft to meet the growing demand for air travel in Southeast Asia. Southeast Asia is one of the fastest-growing aviation regions in the world, according to Brad McMullen, senior vice president of commercial sales and marketing at Boeing. “The 737 MAX is the perfect airplane for Vietnam Airlines to efficiently meet this regional demand.” Companies like Apple and Intel have already increased their presence in Vietnam, turning the country into a hub for supply chain diversification and helping to sustain its remarkable economic growth despite a weakening global economy.

The expanding ties between the U.S. and Vietnam are part of a larger trend of “friend-shoring.” The tactic involves moving supply chains to countries that offer political stability to shield businesses from political upheaval. The need to diversify suppliers and reduce reliance on countries where supply chains may be affected by geopolitical tensions are two reasons why Treasury Secretary Janet Yellen has emphasized the importance of this strategy. Since the U.S.-China trade war began in 2018, businesses of all kinds have looked to other manufacturing locations like Vietnam and India to avoid tariffs. The COVID-19 pandemic has accelerated these changes, forcing businesses to adopt “China Plus One” strategies to reduce their reliance on a single manufacturing base.

In an ever-changing global economy, businesses are constantly looking for ways to reduce their risks. Vietnam has a lot to offer and is emerging as a more affordable alternative to Chinese manufacturing. However, the business community still remains concerned. Despite improvements, there are concerns about the country’s export potential, as its infrastructure still lags behind China’s. As the United States restructures its political and economic ties in the region, this development signals Vietnam’s growing importance as a major global economic player. As the U.S. seeks strategic alliances and foreign policy successes in Asia, deepening relations with Vietnam is undoubtedly a positive step.

Vietnam’s booming industrial sector is fueled by factors such as comparatively lower wages and a young population that provides a strong workforce and consumer base. All of these factors make the country attractive to business. This growth continues to surpass that of many other economies throughout the world, making Vietnam a desirable destination for businesses looking for chances in a difficult economic climate. Vietnam's durability was emphasized by Natixis in a recent research note, which said, "As the rest of Asia underwhelms, Vietnam will still be one of the fastest-growing economies."

In conclusion, President Biden's visit to Vietnam has strengthened the economic relationship between the two nations and created new commercial and manufacturing prospects, resulting in a significant change in the nature of international trade. As the world continues to evolve, Vietnam’s rise as a manufacturing and business hub is a trend worth keeping a close eye on. This partnership demonstrates Vietnam’s strategic importance in U.S. efforts to reduce its dependence on Chinese manufacturing and advance key technologies, particularly chip manufacturing.