The dark side of FDI in Vietnam (part II)


The dark side of FDI in Vietnam (part I)

The dark side of FDI in Vietnam (part III)

[Reading level: C1 – Advanced]

Conflicts, contradictions – Xung đột, mâu thuẫn

The story of “old” workers at industrial parks being fired, a common occurrence among FDI companies, was a topic hotly debated in National Assembly meetings and in media accounts throughout July 2017.


While the labor ministry suspected that the companies “intentionally dismissed old workers,” the Dong Nai Province People’s Committee reported that “the businesses and workers agreed on the dismissals in the spirit of mutual agreement” and the Vietnam General Confederation of Labor said workers were “forced to quit their jobs due to productivity pressure and high labor standards.”


The workers, of course, have seen it differently, as oppression that ignores their legitimate right to reasonable pay and good working conditions.


In another case handled by the Tan Uyen court earlier this year, the workers claimed that their South Korean employer had demanded that they sign resignation letters instead of firing them. They refused, and took the employer to court.


However, most workers of companies in industrial zones do not have the “luxury” of taking their employers to court, steeped as they are in poverty and dependent on their salaries to feed their families. They quietly endure their employers’ unfair conditions and treatment.


Footwear firms – who foots the bill? – Các doanh nghiệp giày dép – ai là người trả hóa đơn?

The last few decades of the 20th century saw state-owned companies and family businesses dominate Vietnam’s textile and footwear sectors.


However, as the 21st century dawned, the proportion of FDI companies in these sectors began skyrocketing. It was the first significant sign of the coming flow of FDI and of a new era as Vietnam opened up its economy to the world.


The turn of the century was also when Hoa, then just a 17-year-old girl, packed up her belongings and left her home in central Nghe An Province to work for a Taiwanese factory in Saigon.


Nearly two decades have passed, enough time for Hoa’s company to grow into the world’s largest footwear manufacturer, but she has never changed her job.


Having witnessed the risks in the life of a worker, she believes that only staying with a big company would keep her safe.


“As long as the factory and machinery are still here, the owner wouldn’t dare to run away; and seeing that there are lots of workers, they wouldn’t dare to play dirty,” she explained.


In just the Tan Tao Industrial Park, where Hoa works, the number of workers employed by her company has already crossed 90,000 people.


Employees leaving work at Tan Tao Industrial Park in Ho Chi Minh City. – Các nhân viên sau giờ làm  việc tại Khu công nghiệp Tân Tạo, thành phố Hồ Chí Minh.

However, almost everything has changed since Hoa first set foot there. The dormitory rent has more than doubled, and Tan Tao has turned from a marsh into a hub for Ho Chi Minh City’s economic development, attracting nearly 300 businesses.


Hoa’s dormitory room meanwhile is still a 10sq.m room with just one front door and a window. And this space no longer hosts a young, single woman. It is home to her whole family – her husband and their two children.


Life has not gotten any easier for Hoa.


Unable to afford the VND10 million ($430) fees needed for a place at a day boarding school in the area, Hoa had to send her firstborn son to live with his grandparents, where he could attend a school day. The younger one is looked after by a babysitter living nearby for VND2 million a month.


Hoa also had to fork out an extra VND100,000 ($4.3) in monthly rent to move to another dormitory room on higher ground as her old one was getting inundated by sewage water every monsoon season, posing a health risk for her children.


After a while, a garbage dump appeared near the new room and every breeze would bring in stench that would pervade the area, but she no longer plans to move.


Hoa now has greater concerns than her accommodation: the manager has frequently been scolding her for low productivity. She is no longer capable of walking much around the factory or standing for hours next to the production line like she used to do when she was still in 20s.


As arthritis torments her legs, every afternoon Hoa comes home wishing she was still single so she could leave and never return.


She wishes she had another skill, so her entire family could move back to her hometown and be reunited. But after 15 years in a footwear factory, the only skills she has are affixing shoe soles and standing for 8 hours straight.


While the company does provide free training classes for workers in the evening, Hoa is too tired and busy caring for her sickly child to attend them. Furthermore, the classes only teach hairdressing and makeup, both of which are skills that she has no talent for and give her no promising prospects back in her hometown.


How did this happen? – Điều này đã xảy ra như thế nào?

Hoa’s story and that of her company is a prime example of what happens with FDI inflows, in this case, into the textile and footwear sectors from China to Vietnam.


Up until the beginning of the century, this company was still the symbol of the city of Dongguan in Guangdong Province – a major manufacturing hub of China. In 2003, female workers like Hoa became the main characters of “Factory Girls”, an international bestselling book by Leslie T. Chang on migrant worker populations.


As strikes and demonstrations by tens of thousands of workers demanding pay rises soon became a common sight in Dongguan, China ceased to be a cheap labor heaven.


From 2011 to 2017, the average salary of Chinese workers increased by 64 percent, according to Euromonitor.


In a process that has become way too familiar, the manufacturing sector’s capital started flowing to Vietnam. “The new world’s factory” was how international media called Vietnam, to distinguish it from the “old factory” of Guangzhou, Guangdong’s capital city.


The “old factory” on the other hand is now the cradle of the “Made in China 2025” plan. China has successfully absorbed many advanced technologies in recent years, and is now slowly turning away from low-skilled manufacturing in favor of more high-tech fields.


And the scenarios in Dongguan described by Leslie Chang 15 years ago are now being recreated in Tan Tao and Binh Duong: a generation of workers that earn just enough money to survive, and are left with no accumulation once they become “old” by their employers’ standards.


The flow of foreign capital into Vietnam mostly goes to processing and assembly sectors with low value added that only require low-skilled labor. This has caused many problems for many Vietnamese workers, as the low skill requirement means companies do not have to provide more benefits for workers.


“Workers have to live in small, low-quality dormitories with rents that do not follow any standard,” said Associate Professor Nguyen Duc Loc, head of a research project on the welfare of young workers.


“Many workers have to relocate frequently to find accommodation with suitable rents. This not only affects their settling down but also poses a major immigration management issue for the authorities,” he said.


Demanding that businesses help workers settle down is something Hoa has never dared to dream of. She only worries about how long she will be able to keep doing this VND6 million ($257)-a-month job.


The issue of workers losing their jobs at industrial parks when they become “old” has generated social pressures. They find it difficult to find new jobs as they have no financial or skills accumulation, and they can’t return to their hometowns as there are fewer and fewer jobs in the countryside.


Last June, exactly 30 years after Vietnam began receiving foreign investments and the problems they bring, Minister of Labor, Invalids and Social Affairs Dao Ngoc Dung said the government has “agreed to develop a project to organize training and retraining for workers.”






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