"China is no longer a good investment destination for the Korean textile industry. Move your plants to Southeast Asian countries such as Vietnam." That's the advice in a report released Tuesday by KOTRA, the Korea Trade-Investment Promotion Agency.
The report focused on the change in the business environment for the textile industry in Vietnam following the country's entry into the WTO, and how Korean businesses can capitalize on it.
Vietnam and Indonesia have been eyed as alternative investment spots since China's investment environment has been deteriorating, and Korean businesses have been increasing their spending in Vietnam.
Last year, Korean textile companies invested 10 percent less in China while increasing their investments in Vietnam by 54 percent. That's made Vietnam the second-largest investment destination for the Korean textile industry, after China.
"Six companies invested in by Korean textile businesses are included among the top 20 textile exporters in Vietnam," the KOTRA report said. It's no exaggeration to say that the fate of the two textile industries are closely tied together, the report added.
KOTRA attributed the surge in investment in Vietnam's textile industry to cheaper labor costs compared with China, a skilled work force, various incentives for foreign investment and the government's strong will to attract foreign investors.
"A sizable change is expected to take place in the Vietnamese textile industry following Vietnam's entry in the WTO last January. Vietnamese textile exports will grow since the import quota system of the U.S. is abolished. Complaints about dumping by WTO member countries will decline," the report said.
