Unrest in Vietnam shatters investor confidence

Fatal riots in Vietnam have eroded the interest of some Chinese companies in investing in the country, according to a garment industry official.

Some textile companies in Foshan of South China's Guangdong province suspended trips to Vietnam that had been planned to assess the investment environment, said Wu Haoliang, secretary-general of Foshan Textile and Garment Industry Association on Tuesday.

A Foshan-invested textile plant in Ho Chi Minh City was slightly damaged, although no one was injured, he said.

The plant remains in operation, but some local workers stayed home, he said, adding that the impact of the riots on Foshan-invested companies in Vietnam is still under assessment.

The impact of the riots on investor confidence will be major and long-term, Wu said.

Some domestic manufacturers still need to relocate their operations overseas due to rising labor costs at home, but they will take greater care in selecting locations for such a move, Wu said.

At least two Chinese nationals were killed and more than 100 injured in last week's protests against foreign companies in central and southern Vietnam. The injured were flown home aboard chartered flights.

Wang Dongfeng, general manager of Ningbo Zhongzhan International Exhibition Co, said company representatives were in Ho Chi Minh City for a May 15-17 import/export exhibition organized by the Zhejiang Business and Commercial Bureau. But due to the violent situation in Vietnam, the exhibition was not opened.

"Two girls and I had just finished decorating the exhibition in the hall on evening of May 14 when more than 300 Vietnamese cars surrounded the hall, asking Chinese to leave. We were too frightened to go out until some of them broke into the hall, searching for Chinese. Luckily, they did not harm us but tore the advertisements down into pieces," Wang recalled.

Wang said after they returned to their hotel, they stayed inside for three days until they could get plane tickets back to Beijing.

Since the exhibition was aborted before it could open, Wang's company's expenses for the exhibition, about 120,000 yuan ($20,000) cannot be recovered.

"We planned to expand the Vietnamese market with this exhibition. Now that it is so dangerous for Chinese, we decided to give the market up," she said.

Because of the relatively low costs, Guangdong authorities had encouraged businesses to invest there, said Ma Yao, a researcher with market research firm CI Consulting.

Companies in Shenzhen, including Huawei Technologies Co, ZTE Corp and Han's Laser Technology Co, have invested in 22 projects in Vietnam, with a total investment of $420 million.

But the riots there will affect the enthusiasm of Chinese businesses to invest in Vietnam, Ma said.

The worry of Chinese investors will only be eased if the Vietnamese government offers a sufficient guarantee and properly addresses the case, he said.

Meanwhile, Huawei and ZTE, two telecom equipment giants of China, said they have no intention of stranding their employees in Vietnam, Shenzhen Evening News reported on Tuesday.

According to ZTE, the company had transferred the employees in other cities of Vietnam to the capital Hanoi as of last week, but their projects have been operating normally.

Sources from Huawei said the company would not make special arrangements to relocate workers.

TCL Corp, one of China's largest household appliance makers, said on Monday its television factory in Vietnam had not been affected and that the plant had taken security measures to safeguard its personnel and property.

The plant in Vietnam has a capacity to produce 600,000 TV sets a year, accounting for a small portion of the company's total.