| Processing trade was taking off engines of many emerging economies in their economic infancy. These countries made use of their low-cost advantages of factors of production of labor force and land, etc. It’s to develop their economy through undertaking foreign trade orders and processing trade. Recalling the history of the world economy, the processing trade has experienced three major transfer activities. Since the1990s, as the third major undertaking country of processing trade diversion, China made full use of advantages of labor and other resource, became the world’s processing trade center and occupied a place in the global industrial chain. Through taking processing trade, Chinese foreign trade gained surprising development and scale of economy expanded quickly. China became the second largest economy in the world. However, after entering the21st century, Chinese production factors’prices of labor, land and other raw materials are rising so that original cost advantages are losing. Coupled with the external factors’ impacts of the international financial crisis and the RMB exchange rate rising, deep-seated contradictions of troubling processing trade become prominent increasingly. Many processing trade enterprises develop difficultily, which leading some companies to try to find new outsourcing regions, expand new markets and transfer enterprises or orders to the surrounding Southeast Asia countries which labor cost is lower. It forms the fourth industrial transfer. Among them, Vietnam with its advantages of rich and cheap labor resources, excellent location, good investment environment and preferential policies attracts the attention of many enterprises and becomes ideal transfer regin of some enterprises.The paper aims at the fourth transfer of processing trade, regards international industrial transfer theories as the basis, compares empirical data of previous three industries transfer activities and sums up their general rules and trends. Both from China and Vietnam, analyse processing trade transfer from China to Vietnam. Firstly, from the perspective of foreign direct investment, research the situation of China’s current outward transfer and Vietnam’s undertaking. Through the analysis of the situation of China’s foreign investment and Vietnam’s attracting foreign investment, notes that China’s current investment in Vietnam is still in the primary stage of the small amount of investment and the low level of overall investment project. There is still much room to grow for Chinese investment in Vietnam. Then, from the perspective of transfer and undertaking and both drivers and constraints analyse of China’s transfer and Vietam’s udertaking of processing trade. It notes that China’s processing trade is affected by internal and external promoting factors of industrial structure upgrading, RMB appreciation, labor cost rising, increased competition between China and Vietnam, international competition and trade friction, while is also affected by limiting factors such as the industrial cluster effect, sunk costs lock-in effect, corporate capabilities and cultural differences’constraints. Vietnam is also affected by internal and external promoting factors such as domestic good investment environment, preferential policies, geographic location, labor cost’s advantage, China-ASEAN Free Trade Area and the need of other countries to avoid trade barriers, while is also limited by some problemssuch as domestic infrastructure supporting, the quality of labor and natural disasters, etc. The analysis revealed that current China and Vietnam have already has some certain conditions of transfer and undertaking. But both countries have also some limitations which influence the full transfer of processing trade. It’s impossible to achieve la rge-scale transfer in a short time. Finally, the paper with the background of the fourth industry transfer put forward suggestions for transformation and upgrading of processing trade in China. |
