- SEA Logistic Partners, a logistic facility developer and operator in Southeast Asia, and GLP, the largest warehouse operator in China, are partnering on a joint venture to invest in and buildout logistics infrastructure in Vietnam, the companies announced Thursday. The companies plan an initial investment of $1.5 billion, according to Nikki Asian Review.
- The project begins with a focus on building in Greater Hanoi and Ho Chi Minh City, and includes plans for three logistics facilities. One of the first clients will be Jusda, the logistics subsidiary of Foxconn Technology Group, according to the press release.
- "With a young and skilled workforce, strategic geographical location and supportive government policies on investment, Vietnam is poised to benefit from further diversification of the global supply chain and manufacturing, which will fuel demand for logistics infrastructure to support operations of local and global companies," Chih Cheung, a founding partner of SLP, said in a statement.
Vietnam has come to be one of the countries that is often included in discussions as companies talk about sourcing from new suppliers outside of China. The trade war and pandemic has resulted in companies looking to diversify operation away from China.
There are pros and cons of sourcing from any location and in Vietnam they are not unique. While Vietnam's labor costs are about a third of what companies expect to pay in China, its infrastructure and labor are nearly at capacity, Dan Krassenstein, the global supply chain director for Procon Pacific, told Supply Chain Dive last year. Procon Pacific shifted 20% of its production to India and Vietnam more than three years ago due to labor costs in China.
The investment by SLP and GLP is a sign that companies are working to build up the infrastructure capacity in the country. But their plans are not just for manufacturing. The companies expect the country's e-commerce industry to also grow.
"Many Vietnamese are digital consumers, spending approximately seven hours a day online," Kent Yang, a founding partner of SLP and former president of GLP China, said in a statement. "These factors and trends have made online shopping more accessible to a larger portion of the population and is driving demand for more efficient and more modern logistic warehouses in the country."