Almost overnight, Vietnam went from being the safe haven of sourcing in Asia to erupting into a firestorm of violence. This week, dozens of factories and businesses are reeling after being ransacked by anti-China protestors and reports are emerging of numerous fatalities. This is the most disruptive production stoppage Vietnam has experienced in years and there may yet be more to come. Many foreign companies sourcing in Vietnam are left asking how they could have been blind-sided by such dramatic events and what they can do to anticipate the next outbreak of violence? The answers to these questions can be the difference between protecting your brand, your people and your bottom line or not.
At the baseline, to anticipate labor risk in Vietnam companies must have a regular media monitoring system in place. This should be viewed as a cost of doing business. Why? It offers a leading indicator of labor sentiment and the circumstances that shape workers lives. What does media monitoring entail? Here’s how we approach it. Each week, Cascade Asia’s team in Hanoi issues a global-sourcing-executive-ready summary and analysis of labor relevant issues called the Vietnam Manufacturing Labor Weekly. The report culls Vietnamese and English language media for labor issues and relevant social, political and economic developments that have implications for in-country manufacturing. It includes a rolling analysis of labor risk by our country experts in Vietnam and how that threat level moves week to week.
In this week’s report our team analyzes the anti-China riots and looks at events on the horizon that merit particular attention due to their susceptibility to displays of nationalism. The report also makes a critical point that is worth elaborating upon. That is, the incursion of a Chinese oil rig in territorially disputed waters, though provocative, was not the game changer which triggered the protests across southern Vietnam. Instead, Vietnamese state-controlled media is covering this dispute more closely than previous incidents. Yes, what happens in the South China Sea has important trade implications but, when it comes to the actions of factory workers, the Paracel Islands are only important insofar as they are reported to the Vietnamese public. If information channels are blocked by the state, the risk of public retaliation is dramatically reduced. Foreign manufacturers sourcing in Vietnam should therefore be paying closer attention to the degree to which Vietnam media covers developments in the South China Sea than the developments themselves.
Media monitoring is an imperative piece of the puzzle to understanding the subtle and nuanced moves of the Government of Vietnam, how they impact labor developments and, ultimately, how they impact your business and bottom line. Media monitoring is the starting point; it is not a panacea to the labor risks companies face in Vietnam or elsewhere in the world. To learn more about what else companies should be doing to insulate against labor risk, stay tuned for our upcoming blog post on sourcing executives’ checklist for monitoring social and political developments or read more about Cascade Asia’s Early Warning System.