A host of Taiwanese companies operating in the leather and footwear sector have made foray into Vietnam to take advantage of landmark free trade agreements (FTAs) that the Southeast Asian nation has signed, the Dau Tu (Investment) newspaper reported.
Under FTAs such as the Trans-Pacific Partnership to which Vietnam is a party, products made in Vietnam will enjoy tax incentives when being shipped to member countries.
Vega Balls Vietnam Company, a subsidiary of Yuan Chi Group, has been the latest Taiwanese leather firm to get a license for a plant to produce sporting goods at a cost of 330 billion dong ($14.7 million) in the first phase, in the northern province of Quang Ninh.
Due to rising orders from major global sports firms, Yuan Chi Group has decided to open a factory in Vietnam, in addition to three in China and two in Thailand.
Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso), was quoted as saying that Taiwanese companies have been investing big in this industry in Vietnam, with the major plants being located in the southern region.
Pou Chen Group, a big contract producer for Nike and Adidas, owns more than ten units in Vietnam, raking in $1.5 billion from exports per year. Its expansion is set to continue in Vietnam.
Feng Tay, another Taiwanese that produces mainly athletic shoes, is upgrading its factory in the southern province of Dong Nai. It has nearly 10 production facilities in the Southeast Asian country.
According to the General Department of Vietnam Customs, the country earned $6.27 billion from exporting footwear and $1.58 billion from handbags, wallets and suitcases in the first half of this year, rising 7.5% and 10.2% year-on-year, respectively.
Of the account, foreign-invested companies accounted for the respective 80.4% and 80.6% of the total.