Once upon a time, Vietnam was the "Southeast Asian miracle" in the eyes of capital, was the most enthusiastic next stop of factory owners after leaving China, was the country "most like China" in foreign media.
But now, this dark horse in Asia is being pushed into the mud by reality, with foreign capital withdrawing, currency depreciation, and soaring inflation. Maybe it will really become "the first country in Asia to fall."
Once blown up by the sky "Vietnam model", now look like a high-rise building built with a bubble, a wind can blow up, the problem is not coming, but has already begun to collapse.
The cracks behind the illusions: Surface prosperity cannot cover up the inherent shortcomings of the economy
Many people say that Vietnam is like China ten years ago, but in fact, it is just like a "shadow of China." From the beginning, Vietnam's rapid economic growth has been like a stimulant, relying on cheap labor and a fierce injection of foreign investment. It is eye-catching on the surface, but it is extremely hollow on the inside.
In the early years, Vietnam was indeed a reserve army of the "world factory" due to the young population and low wages, the factory owners looked at the low cost, loose policy, less tariffs, but the problem is also here, the young people are more right, but Vietnam's education and skills training is long behind, the workers are mostly "temporary thinking", but the most basic assembly work, the upstream of the industry chain can not touch.
Technology has not sedimented, industry has not upgraded, the economy has been supported by "more people and less money", which has nothing to do with the "black horse", as if it was a fast-running donkey.
Looking at foreign investment, the investment of Samsung, Intel, Foxconn and other large factories has actually dragged Vietnam's GDP upwards, and in 2022, foreign investment projects accounted for more than 60 percent of Vietnam's total investment, and foreign-owned enterprises contributed 70 percent of the exports.
But the problem is that these factories are not rooted at all, as soon as the wind blows the grass begins to pack the way, global interest rate hikes, the dollar returns, the United States blink, Vietnam's foreign investment begins to withdraw, where there is something "sustainable development".
In the hardware, the infrastructure problem of Vietnam is not small, port congestion, electricity tension, logistics efficiency is astonishingly low, transportation costs are not high, accounting for the share of GDP of more than 20%, in comparison, China's average logistics costs have long dropped to below 14%, you say you attract foreign investment by low cost, the result of the transportation is so expensive, is it not?
Finally, many people say that Vietnam is actively joining free trade agreements such as CPTPP and RCEP, saying that this is an expression of "internationalization", but don't forget that these agreements bring a lower tax burden, not the same as you have competitiveness.
If you only use preferential policies to attract investment, but don't use these dividends to support local enterprises, then you have just turned yourself into a wage earner in the global industrial chain, and your economic ability to resist risks will naturally be broken with a poke.
The collapse of the storm: capital is drawn, currency is devalued, several dominoes have fallen
If in the past few years, Vietnam could still rely on the "surface red fire" mix, then now, even the disguise can not be covered, really drag Vietnam into the dirt, is the domestic and foreign economic storm.
Starting in 2022, the U.S. Federal Reserve frequently raised interest rates, global capital returned to the U.S., emerging markets were suddenly drained out of blood, Vietnam, this highly dependent on foreign investment, capital, orders, and manpower synchronous loss, the data showed that in 2024 Vietnam's foreign capital flow decreased by 30%, Samsung Electronics has announced its production line in Northern Ning Province, while Intel will turn some of the chip packaging testing business back to the U.S. or move to India.
Along with the withdrawal of foreign investment was a major currency slump, from the second half of 2024, the Vietnamese shield continued to weaken against the dollar, with a depreciation of more than 6% in the year.
Vietnam was originally the net import major country, currency devaluation directly pushed up import costs, gasoline, food price increases, people's days are getting tighter, inflation rate has exploded, in the beginning of 2025 has broken 5%, and the central bank of Vietnam has no way to do, you want to raise interest rates, the economy can not bear, do not raise interest rates, inflation continues to burn money.
The real estate bubble also exploded in this round of financial shock, and between 2019 and 2022, Vietnam’s city housing prices rose, with many housing companies crazy to take land, borrow, and expand on high leverage. As a result, demand has declined sharply from 2023, and housing prices in Hanoi and Ho Chi Minh City have fallen more than 15% from the peak.
Some developers 'capital chains broke, bad loans began to surface, and the risk index of the financial system soared.
The most terrible is the collapse of confidence, capital is profitable, once the market risks are higher than the expectation of earnings, evacuation as fast as the tide, in these two years, many European and Japanese and Korean enterprises began to re-evaluate the investment strategy in Vietnam, some turned to India, some returned to their own country, Vietnam once relyed on the "world factory second choice" to eat, now this snack has not smelled, even the bowl is quickly stolen.
Asia's alarm: From the script of Vietnam, we can see the lifeblood of emerging economies
This wave of crisis in Vietnam, not only has it crashed on its own, but it is more like a alarm clock to the entire Asian emerging markets, its path, with Japan decades ago, like a fingerprint.
In the 1980s, Japan also experienced the glory of the "global manufacturing center", which resulted in the surge of the yen after the Square Agreement, the exports crumbled, the real estate bubble broke, the industrial emptiness, and the economy fell.
Although Vietnam has not experienced the Square Agreement, but its "foreign dependence + export-oriented + real estate bubble" is the same as in Japan, only that Japan had strong scientific and technological reserves and industrial bases, only to slow down, Vietnam has not even this bottom.
Of course, the Vietnam government is not completely flat. In recent years, it has begun to promote emerging industries such as semiconductors, digital economy, and green energy, trying to transform from a "working economy" to an "autonomous economy." But to be honest, these policies are more like "fire brigade" actions and lack systematic reform ideas.
Without a sound education system, R & D system, and policy execution, these transformations are easier than done? Not to mention, which deep-seated issues such as the political system, legal environment, and talent flow are not hindered?
This crisis, for China, is not an unrelated painful thing, when foreign investment from China to Vietnam, because of the cost and policy, now found that Vietnam is "too shallow", many enterprises began to look back at China.
In recent years, China has been driven by industrial upgrading, technological innovation and domestic demand. Although it is also facing external pressure, its overall ability to withstand pressure is much stronger. Chinese representatives have repeatedly emphasized on international occasions that "the domestic cycle is the main body, domestic and international The development pattern of" dual cycles promote each other "is to avoid falling into the trap of unilateral dependence like Vietnam.
The bigger problem is that this "Vietnam-style dilemma" is not an isolated case. From Indonesia to Bangladesh, from the Philippines to Malaysia, many countries are taking a similar path, relying on low cost to attract foreign investment, relying on exports to drive growth, and relying on policies to fight for short-term data, but once the external environment changes, the whole line stalls.
In the future, if Asian emerging economies want to avoid becoming the "second Vietnam," they must reduce their dependence on foreign investment, reduce their dependence on low-end manufacturing, and reduce their enthusiasm for real estate.
At the same time, we must also add, increase investment in education, strengthen infrastructure, and strengthen independent innovation. Regional cooperation, digital transformation, and diversified markets are the next steps to survive.
To put it bluntly, the crisis in Vietnam is a story of "success is also foreign investment, failure is also foreign investment". Economic growth lacking endogenous power is like a kite pulled up by external forces. As soon as the wind stops and the thread breaks, it will fall more hard than anyone else. If emerging markets in Asia want to be truly strong, they rely not on "cheap substitution" but on "value creation".
The story of Vietnam is not yet written, but the previous chapters have been awake enough, either to turn to self-help, or continue to sink, this test, just begun.
References:
36Kr: 2024-10-14, "When Vietnam is no longer a paradise, Chinese home appliance companies are looking for the next highland to go overseas | Zhiliu"
Sina Finance: 2020-03-27, "Can Vietnam replace China?" After investigating the two major economic circles of the North and South, Chinese professors found... "
Ministry of Commerce of the People's Republic of China: 2025-07-07, "In the first half of 2025, Vietnam's import and export of goods increased by 16.1% year-on-year"