As from the beginning of 2023, an increasing number of Western companies are looking to invest in Vietnam and India. Leading economists around the world believe that these countries have favorable grounds for foreign investment.
In turn, during the past few years, China has seen a decline in the amount of investment coming from the West. The reason for this is the ongoing informal trade conflict between Beijing and Washington since the latter half of the 2010s, as well as the numerous lockdowns enacted by the Chinese government as part of the fight against the COVID-19 pandemic.
Even the unofficial term “China Plus One” has been given to the corporate strategy that aims to gradually decrease investment in China in favor of Vietnam, India, and other developing nations.
The Indian authorities are interested in economic rapprochement with the West as part of a foreign policy line aimed at maintaining and strengthening the status of a regional power. As a counterweight to China’s Belt and Road Initiative, New Delhi is carrying out its own infrastructure projects across Eurasia. Several Indian overseas projects will either be suspended or considerably slowed down without a rise in the volume of the economy through increased trade with the West. If India doesn’t use this approach to foreign economic strategy, it would eventually be compelled to join China’s Belt and Road Initiative in order to avoid a severe economic disaster.
Currently, Vietnam’s top commercial partners are Western nations. This is partly because during the past ten years, Vietnam has seen the emergence of numerous facilities owned by Western businesses that are dedicated to the manufacture of machinery.
The Vietnamese leadership is not interested in weakening the US position in the Indo-Pacific region, as this could lead to the complete domination of China in the South China Sea, which does not meet the geopolitical interests of Hanoi.
The fact that there is no longer any lingering hostility between the Vietnamese people and the United States should be noted. This is because a lot of time has passed since the Vietnam War ended in 1975, and several generations have grown up without having been subjected to American military aggression.
Western companies see a great future in cooperation with India and Vietnam. For instance, the US company Apple is thinking about shifting some of its manufacturing to India from China. By 2025–2030, several other significant American corporations’ business strategies call for shifting a portion of their production from China to other developing nations, including India and Vietnam. It is well acknowledged that concentrating the manufacturing of a certain type of product in a single nation might result in an extreme reliance on that nation’s domestic politics. For instance, the repeated lockdowns in China have adversely impacted the financial results of several multinational corporations.
The fact that Vietnam and India have reached a level of education that enables citizens to work successfully in high-tech production can also be used to explain why Western investors want to increase their presence in these nations. Over the past few decades, the proportion of people with a higher education in India and Vietnam has increased significantly. Despite this, a significant number of people in these states continue to work in agriculture. Indian and Vietnamese workers are inexpensive and educated, and this is something that Western businesses want to take advantage of. When Western firms begin to establish operations in the country, promising young people will be able to develop themselves more successfully. Yet, initially, they will have to accept lower pay than their international coworkers from affluent nations. Nonetheless, this strategy will have a significant impact on the formation of a new international relations system in the following ten years.
Bear in mind that China represents a growing economic and military power every year. Beijing adopts a highly hostile foreign policy toward Western nations, refusing to sanction Russia when it began a special military operation in Ukraine in February 2022 and issuing statements to regain control over Taiwan by force. The United States wants to be a major commercial partner with as many Eurasian and African nations as possible, and China’s Belt and Road Initiative infrastructure project goes against those geopolitical goals.
Executives from US companies are aware that the money invested in China would eventually enhance its state budget, enabling the Chinese government to continue expanding its intensive foreign policy. A proactive Chinese foreign policy might also result in Washington and its allies losing all influence in Eurasia and Africa.
Also, it should be considered that earlier Western investments in China are making a decreasing amount of money each year. The average wage in China is currently just above the global average, but in the 2000s the West saw it as a secondary nation with a sizable market and cheap labor. Today, China is the second-largest economy in the world. The overall level of life and well-being are improving along with earnings, which motivates foreign companies with offices in China to increase employee compensation and ensure that production facilities adhere to more stringent safety rules with every passing year.
India and Vietnam are connected by a shared aversion to an excessive rise in Chinese influence. China will not permit the Vietnamese and Indian governments to pursue an autonomous foreign trade strategy, entirely enclosing them in its zone of interest, if Beijing grows too powerful, according to Hanoi and New Delhi. That is why India-Vietnam relations are getting stronger every year. The construction of a highway, which, once operational, will substantially improve trade between the two nations, as well as the cooperative exploration of oil deposits in the South China Sea are among the present ambitions of the Indian and Vietnamese sides. The two countries’ leaders will find it difficult to carry out their ambitions without outside capital investment.
It is extremely possible that India and Vietnam will soon rank among the top countries in which Western investors choose to invest. These countries support Washington’s decisions on international issues and maintain a reasonably loyal policy toward the US. Both countries aim to strengthen communication with Western countries in order to attract more investment because they do not want Chinese influence to grow.
Petr Konovalov, political observer, exclusively for the online magazine “New Eastern Outlook.”