II-VI and Chopsticks

We woke up bright and early this morning to head over to the Vietnam Singapore Industrial Park, located on the outskirts of Ho Chi Minh City. As we arrived at the park, it was immediately evident to me that it was a more developed area than its surroundings, as evidenced by the cranes making high rise buildings, and the eloquent golf course located right on its grounds. It was interesting how this park even came about, being a joint partnership between Singapore and Vietnam. To provide additional context, this entire relationship would not have been possible without Vietnam opening its country economically with the “Doi Moi” reforms in the 1980s. Increasingly, the Vietnamese government is engaging in these sorts of deals with countries, seeing much foreign investment from the likes of Japan in Korea, as several large infrastructure projects are underway, such as a subway throughout Ho Chi Minh that is being built as a joint effort between Japan and Vietnam. This deals are often a great positive for Vietnam, as they have facilitated the large economic boom that the country is currently experiencing.

In terms of what VSIP actually does, they construct these industrial parks, in several areas of the country. They construct factories, essentially, and countless large corporations rent these factories in order to have efficient production as a result of the inexpensive Vietnamese laborers. The industrial parks offer many things to accompany these manufacturing plants, including housing for workers, recreation areas, restaurants, a large shopping mall, and countless other features, and provide numerous services such as security and an efficient plumbing system to make life as easy as possible for the residents and the workers within VSIP.

Our second sight visit of the day was actually to a manufacturing company, II-VI, located within the VSIP, a coincidence that was quite convenient for our bus driver, I imagine. II-VI faces some challenges with production, particularly in that their workers here in Vietnam are unskilled, and their machines are made for the purpose of making things a specific way, limiting the potential for diversifying the product mix. Although II-VI is headquartered in my lovely home state of Pennsylvania, it chooses to produce in Vietnam because the labor is so cheap and the government also offers them many tax incentives for manufacturing in Vietnam, as it ultimately boosts the Vietnamese economy. The facility produces copious amounts of similar products, optoelectronic components, as the workforce is unskilled, yet highly efficient, and are easily replaceable if such a situation would arise.

It was interesting to learn how large corporations are able to utilize the cheap labor and surprising tax-friendly Vietnam to show large economic benefits for both parties. As I continue to progress through this trip, I am extremely grateful to be able to understand developmental business from a personal level, and I am gathering a much greater understanding of the world economy, particularly in regard to Vietnam’s role in global trade. When I go back to the United States, I will be much more equipped to thrive in a global business environment in that I’ve learned much about cross-border supply chains. As for now, I shall reminisce on the wonderful Japanese food I had for lunch, while looking ahead to the Korean BBQ I soon will be leaving to enjoy.

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