In order to protect its domestic industry, Vietnam’s Ministry of Industry and Trade announced on October 4 that it would apply anti-dumping tariffs between 21.45% and 35.2% on certain furniture of Chinese origin. It would start mid-October and go on for four months.

Reuters reported that imports of tables and chairs from China have increased “significantly,” causing damage to domestic production.

Dumping is the unfair commercial practice of selling a product below its normal price, or even below its production cost, to eliminate any competition and finally take over the market.

This is not the first time that the Vietnam has taken such measures against large Chinese imports. 

In 2020, anti-dumping tariffs between 4.43% and 25.22% were imposed on thin-rolled steel from China, which was seriously affecting the domestic industry.

The Vietnamese government saw its exports to its largest market, the U.S., potentially affected, as several Chinese companies operate in the country with questionable business practices.

The Vietnamese government said it would take action against products of Chinese origin illegally labeled “Made in Vietnam” by exporters seeking to avoid U.S. tariffs on products made in China.

In April, the American Kitchen Cabinet Alliance, a trade group representing U.S. furniture manufacturers, denounced the entry of Chinese furniture into the U.S. as made in Vietnam, Voice of America reported. 

The measures taken by the Vietnamese government seem to follow the U.S. trend of imposing high tariffs on Chinese products.

Before leaving office, President Donald Trump, had named Vietnam as a currency manipulator, which put it at risk of sanctions, similar to those on China. 

Since the beginning of the U.S.-China trade war in 2018, the Trump administration sought to decrease the purchase of Chinese products by implementing anti-dumping and anti-subsidy tariffs.

Between 2018 and 2019, the U.S. imposed tariffs of 25% on Chinese imports worth about $250 billion, which are still in place.

Recall that in China, most companies are strongly linked to the Chinese Communist Party (CCP), which provides them with favorable conditions and subsidies, putting foreign companies at a disadvantage.

In addition, the CCP has been repeatedly criticized for using slave labor in concentration camps, as revealed in the U.N. report on Human Rights in Xinjiang.

This is why several countries see the competition from Chinese products as unfair, and this time, Vietnam has apparently sought measures to curb these imports into its country.

Many Chinese companies have been setting up branches in Vietnam, such as the furniture company HOCA.

In January, HOCA was denounced in the U.S. for evading tariffs. The company was importing furniture, with parts of it, manufactured in China, through its Vietnamese branch, and labeling it as made in Vietnam.

China is Vietnam’s largest trading partner, while the U.S. is its largest export market.

Now, the Vietnamese government seems to be concerned about preserving good relations and export benefits with the United States. And it is very clear that its largest trading partner could apply the same measures it did with China.

Multinationals looking to move away from China 

The “zero-COVID” policy, which has led to lockdowns of entire cities, almost without warning, including large factories. This has caused many companies to look for production alternatives in neighboring countries.

Vietnam has emerged as the most sought-after option, as it offers several advantages such as proximity and a land connection with China, which would allow for easy transportation logistics. 

In addition, it offers skilled and low-cost labor, a stable political environment, and free of COVID restrictions. And the possibility of trading with the U.S. with low or nonexistent taxes and tariffs. 

Several companies have set their sights on Vietnam, and some are already manufacturing technology products.

Intel last year invested $475 million in its largest semiconductor assembly and test center. While Samsung has announced investments of $3.3 billion in the production of semiconductor components.

U.S.-based Synopsys, which specializes in software design for semiconductors, said it will move investment and engineer training to Vietnam.

Adding to this, Google will produce its new Pixel phone in the country. While Microsoft’s Xbox game consoles and Apple’s iPads have already been exported to the United States. 

Thus, while Vietnam is seen by all as a better market, companies in China are beginning to abandon ship, pressured by the fatal consequences of the CCP’s “zero-COVID” measures.

The EU does not seem to be very happy with the COVID measures taken by the Chinese regime. And according to the EU Chamber of Commerce, China is no longer a good place to invest.

Strict COVID measures to enter the country have kept many international employees away. And in the last two years there have been no new EU companies coming to set up businesses.

The EU Chamber of Commerce said that the Chinese regime tends to give more advantages to state-owned companies, and that business is increasingly divided.

With the trade war and geopolitical tensions between the West and the Chinese regime, what is not very clear is how easy it will be to move so many of these foreign companies out of China, since the internal policies of the CCP are not always very clear.

What is certain is that the restrictions on civil liberties imposed by the CCP make it almost impossible for normal life to develop in China, and now it seems to be the turn of large multinational companies whose profits are affected.

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