Vietnam no longer has cheap wages

The situation in the US-China trade war is still unclear, and shoe giant Baocheng has already deployed in Southeast Asia.

However, Cai Peijun warned: There are no cheap wages in Vietnam.

Most outsiders believe that the garment and shoemaking industries in the textile industry have huge production lines in Southeast Asia. It should have been to enjoy the benefit of avoiding tariffs, but it seems otherwise.

Last month, Nike, Adidas and other international first-tier brands signed a letter to U.S. President Trump. The open letter asks Trump to reconsider imposing a 25% tariff on Chinese-made footwear because once it is imposed, it will be a disaster for the country, companies or consumers.

Cai Peijun explained that many manufacturers are very similar to Baocheng, and their production capacity in Vietnam already accounts for a large proportion. Building a new factory or expanding production lines will cause certain operating pressures. The reason is that cheap labor is no longer available in Vietnam.

Zhou Liping, chairman of Taiwanese textile stock Hou Juyang, also mentioned:

New entrants are moving to Vietnam and existing companies are expanding their factories. Now both forces are competing for jobs. , will only lead to intensified competitive pressure, local labor supply and demand imbalance, and Vietnam is already overheated.

The current minimum wage in Vietnam is about US$140 to US$180 (different by region), plus total insurance premiums and overtime pay Waiting for changes in salary, it is estimated that the average monthly salary is at least US$300. If Baocheng employs 150,000 people in Vietnam, it is equivalent to more than 1.4 billion yuan in personnel expenses per year. In the future, Vietnam’s salary costs will only increase like compound interest. big.

A human resources manager who once worked in the shoe industry revealed that Vietnam’s labor laws stipulate that companies entering must formulate The ladder salary is based on the minimum salary level announced by the government. The salary level at the first level is the minimum salary plus 7%.

From the second level, each additional level increases by 5%, and so on.

For example, assuming that the monthly minimum wage in Vietnam is US$140, the first-level salary is US$149.8, The monthly salary standard for the second level is US$157.3, and the third level is US$165.2. The salary range is based on the employee’s seniority.

In the past ten years, the Vietnamese government has increased the minimum wage by more than 10% every year. When the minimum wage increases, the ladder salary will increase accordingly. “It is equivalent to a salary increase of 15% for all employees.” %, this is a terrible expense.”

Not only that, but potential fees are also a big trap. For example, management pays 2% of the total salary of workers every year. Union dues, the minimum wage and ladder salary increase every year, the total salary scale continues to expand, union dues rise with the tide, and this does not include local social security costs.

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