When the Covid-19 pandemic hit Vietnam in 2021, its government struggled to contain the spread of the disease and keep workers employed. They got help from an unlikely source. Scores of international firms lobbied their governments to rush vaccines to the country. Though the United States was a leader in this effort, vaccines also arrived from Japan, China, South Korea and other Southeast Asian countries.
Why this rush to get jabs in the arms of the Vietnamese people? Firms from Japan, South Korea, France, Germany, and the United States had set up shops in Vietnam for the same reasons they often relocate: to secure some combination of cheap labor, energy, raw materials, or land. They needed factories to stay open so that consumer goods like textiles and tennis shoes, as well as computer chips would keep flowing to their intended markets.
The CEOs of ninety different U.S. companies, including Walmart and Target, urged President Joe Biden to accelerate vaccine donations to Vietnam. The investment newsletter, Bloomberg, warned that tangled Vietnamese supply lines were a direct threat to the entire global economy.
An attractive place to do business
Businesses like Nike, Under Armour, and Adidas faced strong economic headwinds from potential factory closures. In 2021, Nike sourced 51% of all its footwear and 30% of its apparel in Vietnam. Upwards of 50% of all clothes sold in the U.S. come from Vietnam. How did it happen that Vietnam became such an attractive place to do business?
Vietnam was a historically poor country with substantial numbers of its population living below the poverty line. Its economy was further devasted by its decades-long efforts to drive out imperial powers, including the Japanese, French, and Americans, and to unify under a communist government.
When the United States exited in 1973, the average per capita income was around $80. Today, the World Bank pegs it at $3800, a remarkable turnaround, even though workers do not share equally in this bonanza. After the war, the International Monetary Fund and the World Bank contributed to the rebuilding of the nation’s infrastructure and integrating it into the world economy. They rightly see Vietnam as one of their “major success stories.” In 2022, Vietnam’s growth far outpaced that of all other Asia countries with a rate of close to 8%.
To achieve continued growth, the Vietnamese Communist Party (VCP) embraced free market principles and at the same time offered up low-waged labor to international investors. In short, they chose the same model China used in its early stage of development and, like China, sacrificed multiple generations of rural peasants to fuel economic growth.
Thus, Vietnamese workers were seamlessly stitched into the fabric of global capitalism. Instead of the country being directly looted by imperial powers, labor power, which gives value to the products produced, was captured and transported via supply chains to the Global North.
Workers who face exploitation in Vietnam have few options. They are prohibited by the government from organizing across an entire industry. And, if they do manage to organize within a factory, they will be represented by the government.
Besides low-waged, non-union labor, one of the most attractive reasons for international corporations to locate in Vietnam are the free trade agreements it has signed. After normalizing diplomatic and economic relations with the United States in 1995, economic growth accelerated. Then, in 2000, Vietnam signed a free-trade agreement with the United States, and in 2007 became a member of the World Trade Organization. Since 2007, Vietnam has signed over ten free-trade agreements with other Southeast Asian countries. What this means is that a company can set up in Vietnam and export into the same markets with which Vietnam has trade agreements. Over the past decade, foreign-owned companies’ exports have risen by 442%. But at what cost to workers?
The Covid-19 pandemic laid bare just how precarious the situation was for most Vietnamese workers. Mrs. Rich and her husband, both 32, had migrated to Ho Chi Minh City from the Mekong Delta to find work. Like many of those leaving rural villages, they had no formal education. Between them they earned about $500 a month and, like many other rural migrants, sent money home to their children and parents. The rest of their wages were spent on the boarding house in which they lived, and the remainder of their money went for food, cooking oil, and gas. At the end of the month, they had little, if anything, left. When the pandemic struck and they both lost their jobs, they were without savings and no support system.
The government was under pressure both from frightened citizens to limit the spread of the virus and to keep factories open. Public loudspeakers, which had been silenced since the end of the war, were pressed back into service, proclaiming, “We are all in this together!”
On July 9, 2021, cities were locked down to prevent the spread of the virus. Some factories closed with the result that thousands lost their jobs. Other factories worked with the government’s support to stay open by instituting the 3 tai cho strategy which required workers to eat, sleep, and work on site. Companies put up tents for workers and provided them with mats and blankets for sleeping. The conditions were harsh, and many workers felt they were working in prison-like conditions. Mr. Mau, who worked for a Korean tire factory complained of the noise from rotating shifts of workers trying to sleep and the quality of the food, which was often just rice with fish sauce.
The choices workers faced were limited. If they wanted their families to eat, they needed to work. Yet so dire were working conditions in factories that when the lockdown ended in the late summer of 2021, Ho Chi Minh City lost close to 1.3 million workers, or 40% of its workforce, who fled back to their hometowns.
Once it was safe to do so, workers slowly trickled back to factories lured by promises of small wage increases. Still, overall, economic conditions had not changed for them.
Low wages and the necessity to work continue to undergird the Vietnamese economy. A web of international finance and corporations like Intel, Samsung, and Nike systematically transfer labor power and its value to their balance sheets and to shareholders. This is simply an old form of imperialism dressed up now in the guise of the free market.
Scott G. McNall is a faculty affiliate at the University of Montana.
Ly Quoc Dang is a researcher at the Mekong Delta Development Research Institute, Can Tho University. Dang conducted the interviews with the workers.
To read more, see Scott G. McNall and Ly Quoc Dang. “Neo-Imperialism and the Precarious Existence of Vietnamese Factory Workers During the Covid-19 Lockdowns in 2021” in Fast Capitalism 2022.
Image: U.S. Department of State via Flickr.