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Click HERE for Monday's NAFTA quote from President Trump.
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MOVING TO VIETNAM
"Long term, we'll probably shift everything."
Fred Perrotta
November 28, 2018 (publication date)
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Fred Perrotta is the CEO of Tortuga, which makes backpacks and other travel gear in China. He was quoted in a recent Reuters article about the investment consequences of the trade tensions between the United States and China. More about that in a moment but first a brief word about Tortuga and the Tortuga website.
As you would expect, the Tortuga website includes pictures and specifications for the backpacks, duffle bags, and other travel gear the company makes. There is also a bit of philosophy as in this slogan and tagline:
"Location independence is the future."
"Work won't be a place you go, but a thing you do. From anywhere."
As someone who works from very different locations, your editor is not inclined to argue with that sentiment. It is certainly apt for a maker of backpacks and, at least in terms of senior management, it seems a fair description of Tortuga itself. But when it comes to manufacturing facilities, well, that's a different story. Location still matters.
For several years now, China has been the world's leading producer of manufactured goods, accounting for roughly a quarter of global manufacturing output. In the last few years, however, a number of companies that had set up shop in China began to look for other locations. Put differently, that process was underway before America's anti-China tariffs went into effect earlier this year and before the election of Donald Trump in 2016. What is happening now, however, is different. "We are on the cusp of the biggest sourcing disruption that we have seen in a generation," according to Stephen Lamar of the American Footwear and Apparel Association,
As with all disruptions, there are winners and losers. In terms of investment, Thailand, Malaysia, Singapore, and, at the top of the list, Vietnam are frequently described as winners. But even their stories are complicated. Thailand, for example, is getting new investment, but its rubber plantations have been hit hard by the fall off in demand from China, with the price of rubber dropping some 20 percent since June.
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We have no idea whether the 90-day truce agreed to by President Trump and President Xi in Buenos Aires will produce any definite results or whether it will be extended for an additional, perhaps longer, period of time. Even if that happy scenario were to come to pass, our guess is that it will be not months but years before the United States and China work out a new, stable modus vivendi for trade between the two of them. (And even that is optimistic, assuming, as it does, that trade is the big issue between them and that they are both determined to find a solution.)
But, of course, the current trade tension doesn't concern only the world's two largest economies. It affects everyone and especially the countries of the Asia Pacific region, most of which have close economic ties to both. What does this face-off mean for them? That too is a question that will be with us for a while, with an answer or answers that will evolve over time.
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RELATED EVENT - WEDNESDAY, DECEMBER 19, 2018
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On the 19th of December, GBD will host a discussion on the topic:
When Giants Quarrel:
Third Country Reactions to the
U.S.-China Trade Disputes
This event, which is scheduled to run from 9:00 a.m. to 10:30 a.m. that morning, will consider how some of the region's key countries see the changing trade patterns in Asia and the effects they see from the tension between the two largest players. A full announcement, complete with speakers and location, will be published next week.
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Supply Chain Reaction takes you to the Reuters story on these developments. Then article was published on November 28, that is, in advance of the Trump-Xi meeting in Buenos Aires. This report was the source for today's featured quote.
A Casualty, Thailand's Rubber is a link to a South China Morning Post article on this development.
About Tortuga is a link to a page on this company's website.
Global Manufacturing takes you to a Brookings report on global manufacturing. The country breakdown is a few years but still useful.
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Or Other GBD Notices, click below.
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©2018 The Global Business Dialogue, Inc.
1717 Pennsylvania Ave., NW, Suite 1025
Washington, DC 20006
Tel: (202) 463-5074
R. K. Morris, Editor
Joanne Thornton, Associate Editor
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