WEBVTT - An American Toymaker Struggles to Break Up With China 0:00:02.720 --> 0:00:17.680 Bloomberg Audio Studios, podcasts, radio news. 0:00:20.280 --> 0:00:23.720 On a summer morning, a group of US Americans, Chinese, 0:00:23.800 --> 0:00:27.400 and Vietnamese are packed in a van. We're moving fast 0:00:27.520 --> 0:00:30.640 on a brand new highway that slices through Vietnam's Red 0:00:30.720 --> 0:00:34.200 River Delta. We're on our way to a toy factory, 0:00:34.720 --> 0:00:37.440 but just a few hundred yards away from the factory gate, 0:00:37.720 --> 0:00:41.280 we've come to a dead halt, stem met by an 0:00:41.360 --> 0:00:44.839 unexpected obstacle. Huge puddles. 0:00:46.280 --> 0:00:55.480 Apparently didn't identify the. 0:00:51.640 --> 0:00:54.440 The road leading to the factory gate is pocked marked 0:00:54.440 --> 0:00:58.319 with water filled potholes as big as truck tires. The 0:00:58.360 --> 0:01:00.560 only option is to get out and walk the last 0:01:00.680 --> 0:01:01.400 hundred yards. 0:01:01.760 --> 0:01:07.240 Okay, this is the truth. 0:01:09.800 --> 0:01:13.480 It's barely nine am and it's already ninety degrees. My 0:01:13.560 --> 0:01:15.959 travel companion is ready to face the heat. 0:01:16.920 --> 0:01:19.440 It's hard to dress for these factory tours. I've now 0:01:19.480 --> 0:01:22.040 just basically green an attire of a T shirt and 0:01:22.280 --> 0:01:24.000 some sort of very light white pants. 0:01:24.760 --> 0:01:28.520 I'm here with Alana Woldenberg Ruffman, vice president of marketing 0:01:28.600 --> 0:01:32.440 and product development for Learning Resources, a family run toy 0:01:32.480 --> 0:01:36.400 company just outside of Chicago. She's a mechanical engineer by 0:01:36.400 --> 0:01:39.640 training and helps run the family business alongside her dad, 0:01:40.000 --> 0:01:42.720 CEO Rick Woldenberg, and her two brothers. 0:01:43.040 --> 0:01:45.960 You know, some of my earliest memories with toys would 0:01:45.959 --> 0:01:49.520 be like the Learning Resources cash register, or like the 0:01:49.600 --> 0:01:53.240 Pretend phone, which is a little dated at this point. 0:01:53.280 --> 0:01:54.680 You need the Pretend iPhone. 0:01:55.080 --> 0:01:58.160 The company traces its roots back more than a century 0:01:58.200 --> 0:02:02.040 ago to Lana's great grand father. These days, if you 0:02:02.080 --> 0:02:04.600 have young kids, there's a chance you know their products. 0:02:04.920 --> 0:02:08.480 Botley the coding robot, and Pretend cash registers are hit 0:02:08.639 --> 0:02:09.400 with consumers. 0:02:10.440 --> 0:02:15.880 Hey you see money to Yes, this is the pretendent plane, 0:02:15.919 --> 0:02:18.360 Learning Resources cash registered. 0:02:21.240 --> 0:02:23.880 Most of these toys are made in China and sold 0:02:23.919 --> 0:02:27.840 through major retailers like Target and Walmart. For years, it 0:02:27.960 --> 0:02:32.400 was a winning formula. Efficient Chinese factories produced low cost 0:02:32.440 --> 0:02:40.640 goods and American consumers benefited with affordable prices. But President 0:02:40.680 --> 0:02:43.799 Donald Trump's returned to the White House, an escalation of 0:02:43.840 --> 0:02:46.720 the trade war that began in his first term has 0:02:46.880 --> 0:02:51.480 upended that formula. On April second, Trump announced the steepest 0:02:51.480 --> 0:02:54.679 American tariffs in more than a century, with a ten 0:02:54.720 --> 0:02:59.040 percent minimum tariff and even higher duties on some sixty nations, 0:02:59.480 --> 0:03:03.200 starting with China. 0:03:01.919 --> 0:03:06.680 So if you look at that China first row, China 0:03:07.160 --> 0:03:12.520 sixty seven percent, that's tariffs charged to the USA, including 0:03:13.080 --> 0:03:15.480 currency manipulation and trade barriers. 0:03:15.600 --> 0:03:19.960 For Learning Resources, this was a gut punch. The company 0:03:19.960 --> 0:03:23.560 had already started shifting production out of China during Trump's 0:03:23.600 --> 0:03:26.560 first term, but at the beginning of the year, about 0:03:26.600 --> 0:03:29.760 sixty percent of its toys were still made there. Here's 0:03:29.760 --> 0:03:31.960 Alana at one hundred and forty five percent. 0:03:32.280 --> 0:03:34.640 It's a van on our products. People didn't know what 0:03:34.720 --> 0:03:35.760 was going to happen to our business. 0:03:36.480 --> 0:03:40.400 Within weeks, Learning Resources took the Trump administration to court 0:03:40.800 --> 0:03:44.480 and won. A district judge in Washington, d c. Ruled 0:03:44.480 --> 0:03:47.640 the president's tariffs were illegal, but the Levey stayed in 0:03:47.680 --> 0:03:51.360 place as Trump appealed. Now the case is headed to 0:03:51.400 --> 0:03:54.320 the Supreme Court, with arguments set for next week. 0:03:55.000 --> 0:03:57.240 We're the only private company that brought our own lawsuit. 0:03:57.480 --> 0:04:00.640 We were kind of faced with the decision of die 0:04:00.760 --> 0:04:01.480 or do something. 0:04:02.800 --> 0:04:06.000 While battling it out in court, the company also began 0:04:06.120 --> 0:04:10.120 rebuilding the manufacturing network it has been decades developing. 0:04:11.000 --> 0:04:12.680 We don't know what the teriff rates are going to 0:04:12.720 --> 0:04:15.040 be at any given time, on any given day, and 0:04:15.120 --> 0:04:18.360 so we're proactively out here trying to diversifire our supply 0:04:18.480 --> 0:04:22.000 chain so that we are able to ride the waves. 0:04:22.400 --> 0:04:24.159 At the end of the day, we're just we're betting 0:04:24.200 --> 0:04:26.760 it is highly likely that some products that we move, 0:04:26.920 --> 0:04:28.160 we will have to move again. 0:04:28.760 --> 0:04:32.560 We're following along as Learning Resources is forced to shift 0:04:32.600 --> 0:04:36.360 its supply chain to Vietnam, and as a company tries 0:04:36.440 --> 0:04:40.960 to move forward, it's also confronting a hard truth. China's 0:04:41.040 --> 0:04:45.880 manufacturing infrastructure, built over decades isn't something you can walk 0:04:45.920 --> 0:04:47.400 away from overnight. 0:04:47.839 --> 0:04:50.920 Because China has been manufacturing hub for so long, it 0:04:51.080 --> 0:04:55.560 developed a lot of expertise. That same infrastructure doesn't exist 0:04:55.600 --> 0:05:04.359 anywhere else in the world today. 0:05:04.400 --> 0:05:07.440 This is the big take Asia from Bloomberg News. I'm 0:05:07.440 --> 0:05:11.920 Wanha today on the show. You can move manufacturing out 0:05:11.920 --> 0:05:15.320 of China, but can you really take China out of manufacturing? 0:05:15.839 --> 0:05:18.599 We hit the road with an American toymaker caught in 0:05:18.680 --> 0:05:22.920 the crosshairs of Trump's shifting trade policy and uncover the 0:05:23.040 --> 0:05:42.240 hidden costs of trying to stay one step ahead. Before 0:05:42.279 --> 0:05:45.080 this trip, I hadn't been back to Northern Vietnam since 0:05:45.120 --> 0:05:48.919 the pandemic. I was born in Saigon, when it was 0:05:48.960 --> 0:05:52.920 still the capital of South Vietnam, a country divided by war. 0:05:53.800 --> 0:05:56.680 After the US withdrew in defeat in nineteen seventy five, 0:05:56.960 --> 0:06:00.640 the country was unified under Communist rule, but it was 0:06:00.720 --> 0:06:04.680 left deeply impoverished. Families like mine, who had fought on 0:06:04.760 --> 0:06:09.680 the losing side faced bleak futures. Here's my dad recounting 0:06:09.680 --> 0:06:12.159 the fears that gripped him after the war ended. 0:06:12.600 --> 0:06:16.440 I feel danger. I don't know when they kept me 0:06:16.680 --> 0:06:19.880 put to the yale, and I don't know what they 0:06:19.960 --> 0:06:22.880 can do because I am a soldier. 0:06:23.440 --> 0:06:26.799 My dad fought for South Vietnam against the Communist forces. 0:06:27.440 --> 0:06:29.800 After the war, soldiers like him were sent to re 0:06:29.960 --> 0:06:34.400 education camps and their families were branded as traders. They 0:06:34.400 --> 0:06:38.760 were denied access to jobs, higher education, opportunities to improve 0:06:38.800 --> 0:06:39.560 their lives. 0:06:40.320 --> 0:06:44.040 Then I don't see a future for me. Then how 0:06:44.080 --> 0:06:48.800 about you guy? You know no future. That's the reason 0:06:49.320 --> 0:06:51.400 we tried to escap You know, we need to go 0:06:52.560 --> 0:06:53.279 leave Vietnam. 0:06:53.320 --> 0:06:53.600 We go. 0:06:54.600 --> 0:06:56.880 We fled as boat refugees when I was a child 0:06:57.120 --> 0:07:00.960 and resettled in California. I still remember my parents reading 0:07:01.000 --> 0:07:04.960 letters from relatives back home. My mom reduced to tears 0:07:05.080 --> 0:07:08.320 by the accounts of failed harvests, the lack of medicine, 0:07:08.480 --> 0:07:12.800 and please for financial help. In the late eighties, Vietnam 0:07:12.880 --> 0:07:16.760 began economic reforms, but it wasn't until nineteen ninety four, 0:07:16.880 --> 0:07:19.920 when the US lifted a decades long trade embargo, that 0:07:20.000 --> 0:07:22.320 the country truly opened to global trade. 0:07:22.680 --> 0:07:25.520 A year after Vietnam and the US signed a historic 0:07:25.600 --> 0:07:28.840 trade pact, sales at this garment factory in Hanoi have 0:07:28.920 --> 0:07:30.320 hit record levels. 0:07:30.760 --> 0:07:34.040 Orders in twenty ten, more than thirty years after my 0:07:34.120 --> 0:07:37.560 family left, I was hired as Bloomberg's Vietnam Beer chief 0:07:37.600 --> 0:07:42.160 in Hanoi, where we chronicled the country's growing manufacturing prowess. 0:07:42.600 --> 0:07:46.040 I followed Vietnam's rise since then, but nothing prepared me 0:07:46.240 --> 0:07:48.920 for the pace of change I'm seeing now while look 0:07:49.040 --> 0:07:53.560 all of us, Look how much construction. We're heading to 0:07:53.640 --> 0:07:57.640 a factory called dum Fun. It's tucked inside an industrial 0:07:57.720 --> 0:08:00.640 park in the town of Fully, about an hours drive 0:08:00.760 --> 0:08:03.239 south of Hanoi and roughly one hundred and thirty miles 0:08:03.240 --> 0:08:06.680 from the Chinese border. The industrial zone was approved in 0:08:06.680 --> 0:08:10.560 twenty seventeen, just months after President Trump first took office 0:08:10.880 --> 0:08:15.080 and began threatening China with trade actions. Within two years, 0:08:15.320 --> 0:08:21.000 rice fields were transformed into a sprawling complex of factories Dungfu, 0:08:21.320 --> 0:08:24.760 stretching nearly two football fields. Long was started by a 0:08:24.880 --> 0:08:28.680 Chinese entrepreneur who ran a manufacturing plant in eastern China 0:08:28.800 --> 0:08:29.720 for fifteen years. 0:08:30.320 --> 0:08:33.920 They are tiny, is like kind a big palm in 0:08:33.920 --> 0:08:34.280 the front. 0:08:34.800 --> 0:08:38.640 That's Jimmy Lee, a manager from Longshore. The company makes 0:08:38.679 --> 0:08:41.720 toys in China and is a longtime partner of Learning 0:08:41.720 --> 0:08:45.679 Resources in Vietnam. They're helping to connect the American company 0:08:45.760 --> 0:08:48.960 to factories like this one, with Jimmy often on the 0:08:48.960 --> 0:08:52.760 ground to oversee projects. He's talking about the pond at 0:08:52.800 --> 0:08:56.760 the factory gate. In Chinese culture, having water near the 0:08:56.920 --> 0:09:00.120 entrance is seen as a sign of good luck. And 0:09:00.160 --> 0:09:02.959 if you add a north facing gate even better. 0:09:03.400 --> 0:09:06.320 It seems like they had a yeah, one hundred percent 0:09:06.440 --> 0:09:10.280 north door with a pond in the front. You know, 0:09:10.400 --> 0:09:11.720 it's a It's a typical. 0:09:11.360 --> 0:09:12.120 Full set up. 0:09:12.920 --> 0:09:16.520 Elana and her team are visiting Dumbfung for the first time. 0:09:17.120 --> 0:09:19.600 It's one of a dozen factories they'll visit this week 0:09:19.679 --> 0:09:23.400 to assess production and find ways to control costs that 0:09:23.480 --> 0:09:28.400 are already rising. We begin our tour in the warehouse 0:09:28.600 --> 0:09:32.280 where bags of raw materials, including plastic resin are stacked 0:09:32.400 --> 0:09:33.360 five feet high. 0:09:33.400 --> 0:09:35.120 So one of the things that we've been working through 0:09:35.160 --> 0:09:38.319 with our factories is literally where they get the raw materials. 0:09:38.600 --> 0:09:42.640 That's a big element of controlling the cost. So, like 0:09:42.679 --> 0:09:43.559 this is ABS. 0:09:43.559 --> 0:09:48.200 Alana leans over sacks of glossy plastic pellets, scanning the labels. 0:09:48.679 --> 0:09:52.199 She's inspecting ABS, a common plastic used to make lego 0:09:52.240 --> 0:09:54.560 bricks as well as learning resources toys. 0:09:54.640 --> 0:09:54.840 Yeah. 0:09:54.840 --> 0:09:56.439 So do you know if all the avs comes from 0:09:56.480 --> 0:09:58.199 China for this factory or are they getting it from 0:09:58.200 --> 0:10:02.080 other countries too. 0:10:01.000 --> 0:10:03.800 Out of China also, but plain sauce to be in China. 0:10:03.960 --> 0:10:06.640 Yeah, And as there is a particularly challenging type of plant. 0:10:06.480 --> 0:10:09.360 It turns out only two types of plastic the factory 0:10:09.400 --> 0:10:12.800 needs can be sourced locally in Vietnam. And we soon 0:10:12.880 --> 0:10:16.680 realized the trucks pulling into the factory earlier were loaded 0:10:16.720 --> 0:10:21.280 with raw materials from China, making routine deliveries of imported parts. 0:10:24.440 --> 0:10:27.400 We passed the warehouse and step onto the factory floor, 0:10:27.679 --> 0:10:30.640 stopping in front of an injection molding machine. 0:10:30.920 --> 0:10:34.200 So there's piping in here that's feeding in the plastic 0:10:34.240 --> 0:10:36.600 pullets that we just saw and it's going to melt 0:10:36.640 --> 0:10:40.000 them into a shape of the steelhol. 0:10:40.640 --> 0:10:44.200 The plant is currently making more than fifty learning resources toys, 0:10:44.400 --> 0:10:50.439 with more coming in. One of them is Campfire chat Mellows, 0:10:50.640 --> 0:10:53.640 a product that's being made in Vietnam for the first time. 0:10:54.280 --> 0:10:58.920 It's a storytelling toy designed to spark conversations. Imagine a 0:10:58.960 --> 0:11:02.800 cozy campfire that flickers with led light. There are soft, 0:11:02.840 --> 0:11:07.319 squishy marshmallows called chat mellows, each printed with a unique emoji, 0:11:07.640 --> 0:11:10.720 a magic wand a storm a jigsaw puzzle. 0:11:11.040 --> 0:11:13.319 Once upon time, there is one little boy who is 0:11:13.360 --> 0:11:15.040 playing jigsaw puzzles. 0:11:15.240 --> 0:11:19.559 And then these images are story starters. Kids slide them 0:11:19.559 --> 0:11:22.280 onto sticks and pretend to roast them over the campfire 0:11:22.600 --> 0:11:28.720 while telling stories to each other. At the injection molding machine, 0:11:28.760 --> 0:11:32.600 a robotic steal arm grabs onto squishy marshmallows that have 0:11:32.679 --> 0:11:36.320 emerged from the mold. Elana says that kind of automation 0:11:36.600 --> 0:11:39.560 is actually missing in many of the factories she's visited 0:11:39.640 --> 0:11:40.079 this week. 0:11:40.840 --> 0:11:43.439 The automation is a period, so like you look around 0:11:43.480 --> 0:11:45.480 and there's a lot of people, but there's not as 0:11:45.520 --> 0:11:48.400 many machines covering the same thing that a person might do, 0:11:48.679 --> 0:11:51.120 and so that's gonna bring the cost up a little bit. 0:11:51.880 --> 0:11:56.280 In Vietnam, factories still rely heavily on manual labor because 0:11:56.320 --> 0:12:00.040 advanced machinery like this isn't easy to come by and 0:12:00.880 --> 0:12:04.479 often needs to be imported, likely from China, which dominates 0:12:04.559 --> 0:12:07.920 much of the market for toy manufacturing. And even in 0:12:07.960 --> 0:12:11.480 factories that do have automation like this one, Alana's noticed 0:12:11.520 --> 0:12:13.479 something else that affects productivity. 0:12:13.960 --> 0:12:16.559 So whereas in China, am I in tape one worker 0:12:16.600 --> 0:12:18.960 to worker machine, in Vietnam I will take two workers 0:12:19.160 --> 0:12:21.439 because they don't understand they're not as familiar with the 0:12:21.480 --> 0:12:23.839 machine free it. So that'll take six to twelve months 0:12:23.840 --> 0:12:26.040 for them to really learn it and to get it 0:12:26.080 --> 0:12:29.840 to the same level of automation that exists already in China. 0:12:30.559 --> 0:12:33.800 You know you're trying to squeeze, Jimmy says. This factory 0:12:33.920 --> 0:12:36.640 has about a third more workers than a similar plant 0:12:36.679 --> 0:12:41.079 in China, and unlike Chinese laborers who've worked years or 0:12:41.120 --> 0:12:44.840 even decades at facilities like this, many of these workers 0:12:44.920 --> 0:12:47.599 are new to assembly work. Some of the staff we 0:12:47.640 --> 0:12:50.960 spoke to came off farms and are relatively new to 0:12:51.000 --> 0:12:55.400 assembly lines. That lack of experience, combined with lower automation 0:12:55.840 --> 0:12:59.920 hits productivity. Alana says some vendors report making four pound 0:13:00.120 --> 0:13:02.680 and units a day in China, but only twenty five 0:13:02.760 --> 0:13:07.280 hundred in Vietnam. We follow the Chatmellow's productions through the 0:13:07.280 --> 0:13:11.440 paint department, where workers manually spray red and orange flames 0:13:11.440 --> 0:13:15.720 on the toy, then onto the assembly floor, where hundreds 0:13:15.720 --> 0:13:18.840 of workers in blue company issued polo shirts and caps 0:13:19.200 --> 0:13:23.000 sit at long metal tables. Workers on the line split 0:13:23.040 --> 0:13:27.360 open the plastic logs, insert screws, install battery contacts, and 0:13:27.480 --> 0:13:32.400 solder the electronics board. On the assembly line, a Chinese 0:13:32.480 --> 0:13:35.439 manager is showing a worker how to fit apart together, 0:13:35.800 --> 0:13:44.880 pointing out where to pay extra attention. His instructions and 0:13:45.000 --> 0:13:48.880 mandra are translated into Vietnamese and the workers questions are 0:13:48.880 --> 0:14:02.280 relaid back. This factory has relocated about twenty engineers and 0:14:02.320 --> 0:14:06.080 managers from China to Vietnam, and that's to help bridge 0:14:06.120 --> 0:14:09.240 the gap in experience and technical know how. It's a 0:14:09.280 --> 0:14:13.160 common practice for factories here. Jimmy says, Chinese workers have 0:14:13.280 --> 0:14:17.200 developed specialized skills over decades that are difficult to quickly 0:14:17.240 --> 0:14:18.400 replicate elsewhere. 0:14:18.800 --> 0:14:21.720 Every single Chinese factory moving from here, they will rely 0:14:21.840 --> 0:14:24.680 on their own team to split up. I mean the 0:14:24.760 --> 0:14:29.760 core member of the team WI still Chinese, he posed 0:14:30.040 --> 0:14:31.239 that is with experienced. 0:14:33.920 --> 0:14:37.920 The tariffs also bring another risk Learning Resources has yet 0:14:37.960 --> 0:14:41.720 to calculate. To explain. Alana picks up the chat Mellow. 0:14:41.400 --> 0:14:46.360 Toy the interior. These chips are made introduced in China 0:14:46.400 --> 0:14:50.200 and then imported here. The soldering is done locally. This 0:14:50.320 --> 0:14:53.440 product will need batteries, those will be imported. You cannot 0:14:53.480 --> 0:14:57.120 five batteries locally in Vietnam. The metal is. 0:14:57.160 --> 0:15:02.200 Imported, so a big contrast to China, where more than 0:15:02.240 --> 0:15:05.920 ten thousand companies form an extensive sourcing network for the 0:15:05.920 --> 0:15:10.000 toy industry. Vietnam's toy suppliers are in the hundreds, a 0:15:10.040 --> 0:15:11.560 fraction of what China has. 0:15:12.000 --> 0:15:15.720 So within a city center or geographic area in China 0:15:15.920 --> 0:15:18.560 you can find a plastics flyer, a print supplier, a 0:15:18.600 --> 0:15:22.400 foam supplier, a wood supplier, and so on. So all 0:15:22.480 --> 0:15:27.440 that is available locally. That same infrastructure doesn't exist anywhere 0:15:27.440 --> 0:15:28.440 else in the world. 0:15:28.680 --> 0:15:33.320 Today, all these imported materials could spell trouble for businesses. 0:15:33.960 --> 0:15:37.000 On top of the twenty percent terrace on Vietnam. Trump 0:15:37.080 --> 0:15:40.920 has also slapped a forty percent transshipment rate on goods 0:15:40.920 --> 0:15:44.480 that originate in China but are then exported from Vietnam. 0:15:45.200 --> 0:15:47.840 That extra levy is designed to crack down on companies 0:15:47.880 --> 0:15:51.800 that re route made in China products through Vietnam, adding 0:15:51.840 --> 0:15:56.480 little or sometimes no additional manufacturing. So far, the administration 0:15:56.600 --> 0:16:00.280 hasn't offered any guidance on how these higher duties will 0:16:00.320 --> 0:16:02.680 actually be enforced, So. 0:16:02.600 --> 0:16:05.680 The rules on trendshipment haven't been fully defined yet. So 0:16:05.800 --> 0:16:08.160 these are things that we need to guess on and 0:16:08.360 --> 0:16:11.800 whether componentry which is brought in from other countries might 0:16:11.880 --> 0:16:13.120 impact the terraff raight. 0:16:13.840 --> 0:16:18.920 Elana says all these factors add up more workers, less automation, 0:16:19.400 --> 0:16:24.440 imported components, Chinese engineers. They make manufacturing in Vietnam ten 0:16:24.480 --> 0:16:29.240 to fifteen percent more expensive than in China. Elana says 0:16:29.320 --> 0:16:35.040 the entire process scouting factories, moving molds, prototyping adds up 0:16:35.080 --> 0:16:36.560 to millions of dollars. 0:16:36.960 --> 0:16:37.920 They're not recoverable. 0:16:38.040 --> 0:16:40.000 There's a lot of costs here that aren't recoverable. 0:16:40.160 --> 0:16:42.680 Orders that we've lost, like those will never come back. 0:16:43.400 --> 0:16:47.600 Costs they are being passed to customers like all these things. 0:16:47.360 --> 0:16:50.160 Are irreparable harm. 0:16:50.400 --> 0:16:53.200 And that's part of why we were motivated to bring 0:16:53.200 --> 0:16:55.840 the lawsuit, is because there's a lot of damage being 0:16:55.880 --> 0:16:58.360 done and there's a lot of small medium sized businesses 0:16:58.400 --> 0:17:02.440 who don't have the ability to stand up, and so 0:17:02.560 --> 0:17:05.800 we wanted to stand up on behalf of the thousands 0:17:05.840 --> 0:17:06.960 of companies like our start A. 0:17:07.000 --> 0:17:08.000 Factor Vennez. 0:17:10.760 --> 0:17:14.000 After the break, what does the supply chain shift mean 0:17:14.080 --> 0:17:18.000 for workers on the factory floor, for families in nearby villages, 0:17:18.400 --> 0:17:41.320 and for American consumers back home. The town of Fully, 0:17:41.600 --> 0:17:45.199 about forty miles from Vietnam's capital city of Hanois, sits 0:17:45.280 --> 0:17:48.679 in the Red River Delta. It's in a valley surrounded 0:17:48.720 --> 0:17:53.480 by lush, green, karst limestone mountains, a post guard landscape 0:17:53.680 --> 0:17:56.600 until you get close and see the peaks being quarried 0:17:56.600 --> 0:18:00.400 to build roads and industrial parks. It's a small, off 0:18:00.400 --> 0:18:04.320 the beaten path town that historically attracted mostly locals, but 0:18:04.400 --> 0:18:07.320 during our time there, we bumped into Chinese visitors and 0:18:07.400 --> 0:18:11.840 heard Mandarin at breakfast and at roadside cafes. Most hotels 0:18:11.880 --> 0:18:14.800 were nearly full because most rooms were now being used 0:18:14.800 --> 0:18:17.639 to house Chinese workers. A trend that began in the 0:18:17.680 --> 0:18:23.720 past year. My own family left Vietnam during a time 0:18:23.800 --> 0:18:27.360 of high tensions with China, with the two countries engaged 0:18:27.400 --> 0:18:31.200 in a border war in nineteen seventy nine. Then Vietnam 0:18:31.280 --> 0:18:36.000 harassed ethnic Chinese and questioned their loyalty. It forcibly expelled 0:18:36.000 --> 0:18:39.760 families with Chinese roots who lived along the northern border regions. 0:18:40.600 --> 0:18:43.200 My father's side of the family had immigrated from China 0:18:43.280 --> 0:18:46.560 to southern Vietnam in the early nineteen hundreds, and those 0:18:46.640 --> 0:18:51.360 discriminatory policies after the war pushed out families like ours. 0:18:52.160 --> 0:18:56.520 And we're by the Obo and we modify the bowl 0:18:56.680 --> 0:18:58.520 running on the ocean. 0:18:59.640 --> 0:19:02.720 In summer of nineteen seventy nine, my father and his 0:19:02.760 --> 0:19:06.720 brothers retrofitted a riverboat to make it seaworthy, and my 0:19:06.800 --> 0:19:11.000 grandfather navigated our way through the South China Sea. All 0:19:11.080 --> 0:19:13.719 three hundred of the people who fled on our overloaded 0:19:13.720 --> 0:19:15.200 boat were ethnic Chinese. 0:19:15.720 --> 0:19:18.920 And we take a chance fifty to fifty, you know, fifty, 0:19:19.880 --> 0:19:23.520 diet fifty, you know a lie, No, fifty to fifty. 0:19:25.119 --> 0:19:27.800 Through the years, my dad has talked about that difficult 0:19:27.800 --> 0:19:30.560 decision to risk all of our lives on the sea 0:19:30.880 --> 0:19:33.720 because he and my grandfather couldn't see a way for 0:19:33.760 --> 0:19:37.360 his children to have hopeful futures in our homeland. Because 0:19:37.400 --> 0:19:41.560 of our ancestry, we brave storms and pirate attacks to 0:19:41.600 --> 0:19:46.200 become refugees in far away countries. Countless others didn't survive 0:19:46.280 --> 0:19:51.520 the journey. In Vietnam, that dark chapter is all but forgotten. 0:19:52.160 --> 0:19:55.840 The relations between China and Vietnam still have points of contention. 0:19:56.359 --> 0:20:00.800 They're entwined economically, Chinese investors are brave more than ever, 0:20:01.320 --> 0:20:05.119 and Chinese capital funds nearly thirty percent of all new projects. 0:20:09.400 --> 0:20:11.840 Just a few hundred yards from the dum Fund plant, 0:20:12.080 --> 0:20:15.399 we stop at a roadside eatery right across from the 0:20:15.440 --> 0:20:24.200 site of new factories under construction. Winty Twin is seventy 0:20:24.200 --> 0:20:26.840 eight years old. She's just finished lunch and is chatting 0:20:26.880 --> 0:20:27.439 with her neighbor. 0:20:30.560 --> 0:20:33.879 This is my hometown. These will rice fields all the 0:20:33.880 --> 0:20:34.600 way to the river. 0:20:36.960 --> 0:20:41.440 Long before the factories arrived. Generations of families here, including 0:20:41.480 --> 0:20:46.840 the winds, worked the land rice, wheat, cassava. In Vietnam, 0:20:47.119 --> 0:20:51.119 land is sacred. After babies are born, their umbilical cords 0:20:51.160 --> 0:20:53.760 are buried in the fields to ask the land to 0:20:53.800 --> 0:20:57.240 protect them, and when they die, they're often buried in 0:20:57.280 --> 0:20:59.359 the same rice fields where they toiled. 0:21:01.280 --> 0:21:06.919 Who all of this area used to be in my 0:21:07.040 --> 0:21:13.120 family's fields, all the way out to there. We have farmers. 0:21:13.760 --> 0:21:19.520 What do we do without our fields? 0:21:23.600 --> 0:21:26.520 In twenty thirteen, the government requisitioned the land to make 0:21:26.560 --> 0:21:30.239 way for industrial development. Duyen and her neighbors say they 0:21:30.240 --> 0:21:33.800 were forced to sell their ancestral farms and compensated about 0:21:33.840 --> 0:21:36.960 ten thousand dollars, a price they deemed to both. 0:21:39.840 --> 0:21:44.119 They reclaimed the land, so we had to sell. No 0:21:44.119 --> 0:21:48.960 one wanted to sell, but we had no choice. You 0:21:48.960 --> 0:21:51.600 couldn't refuse. Come, Come what is. 0:21:53.520 --> 0:21:57.040 In the end, Duyn's family brought a small plot across 0:21:57.040 --> 0:22:00.919 the street from the construction site. They paid nearly seven 0:22:01.000 --> 0:22:05.440 times the government's compensation price per square meter. They built 0:22:05.480 --> 0:22:08.960 a house and opened a small cafe serving construction workers, 0:22:09.640 --> 0:22:13.400 but she worries it won't last. That workers will eat 0:22:13.400 --> 0:22:19.280 at the factory canteens once construction ends. During our visit, 0:22:19.560 --> 0:22:23.480 the air hung heavy with dust. Duyn and her neighbors 0:22:23.600 --> 0:22:27.240 worry about pollution, both in the air and from the factories, 0:22:27.400 --> 0:22:31.639 given the breakneck pace of development. Still, she acknowledges the 0:22:31.720 --> 0:22:36.160 factories have open doors. Her daughter in law, once a farmer, 0:22:36.400 --> 0:22:38.879 now earns nearly three hundred dollars a month at the 0:22:38.920 --> 0:22:43.480 dum Fun factory making toys for learning resources. Her husband 0:22:43.480 --> 0:22:46.880 weilds at construction sites. Together, they've saved enough to send 0:22:46.920 --> 0:22:51.600 their son, Luin's grandson to study automotive engineering in South Korea. 0:22:52.280 --> 0:22:55.680 It's a future, she says, made possible by factory work. 0:23:01.080 --> 0:23:04.320 That hope for a better future also lies a few 0:23:04.359 --> 0:23:08.879 miles away at the Hannam Vocational School. Here, students as 0:23:08.920 --> 0:23:12.840 young as fifteen are training to become machine operators and engineers. 0:23:13.640 --> 0:23:17.880 The school says nearly all graduates land factory jobs. Global 0:23:17.920 --> 0:23:22.560 companies like LG, Hyundai and Samsung send trainers and donate equipment. 0:23:24.320 --> 0:23:27.359 And what thought, I have a movie through you. 0:23:27.720 --> 0:23:31.159 Sixteen year old Duncom is a returning student at the school. 0:23:31.640 --> 0:23:35.200 Gum says he loves tinkering with electronics and he's eager 0:23:35.280 --> 0:23:36.200 to find a factory job. 0:23:36.240 --> 0:23:38.080 Am I garden. 0:23:37.920 --> 0:23:40.400 Factories have a lot of equipment and machines, so they 0:23:40.400 --> 0:23:41.760 need people to fix and maintain them. 0:23:42.200 --> 0:23:44.520 That's why I chose to study industrial electricity. 0:23:44.680 --> 0:23:45.800 Fixed machines at the planks. 0:23:49.119 --> 0:23:52.639 Gaum says a university education might not lead to a 0:23:52.720 --> 0:23:55.679 career right away, but he's certain he can have his 0:23:55.840 --> 0:24:00.520 choice of factory jobs. My conversation with his confident teenager, 0:24:00.800 --> 0:24:04.480 upbeat about his future, left an impression on me. After 0:24:04.520 --> 0:24:07.760 a week in Vietnam, it's clear that optimism runs deep, 0:24:08.200 --> 0:24:12.000 centered around the factories and foreign investors pouring capital into 0:24:12.000 --> 0:24:15.439 the region. The country's leaders are highly attuned to the 0:24:15.520 --> 0:24:20.480 shifting geopolitical wins and are bent on maintaining growth. The US, 0:24:20.760 --> 0:24:24.720 once a wartime enemy turned trading partner, now seems like 0:24:24.760 --> 0:24:28.719 a fickle friend with its high tariffs, so Vietnam's counting 0:24:28.720 --> 0:24:33.160 on foreign investors to help ride it out. Before heading home, 0:24:33.280 --> 0:24:36.080 I asked Alana for her final thoughts after a week 0:24:36.200 --> 0:24:39.520 of crisscrossing the country and visiting a dozen factories. 0:24:40.040 --> 0:24:43.000 Vietnam certainly has potential. The products that we saw made 0:24:43.040 --> 0:24:47.600 here are very high quality. They're certainly expertise here, and 0:24:47.920 --> 0:24:51.000 it's growing and changing rapidly. I think some of the 0:24:51.040 --> 0:24:53.840 hang ups though, or that there's not as much capacity, 0:24:53.960 --> 0:24:56.879 so there's just physically not as much manufacturing space here 0:24:56.880 --> 0:24:59.760 as there is in China. And then Additionally, you can't 0:24:59.760 --> 0:25:01.719 get a lot of the raw materials locally, and so 0:25:01.760 --> 0:25:02.879 that is driving cost. 0:25:04.800 --> 0:25:09.360 For now, Learning Resources is placing its bets on Vietnam, 0:25:09.880 --> 0:25:14.080 but tariffs are adding pressure. The company has already raised 0:25:14.119 --> 0:25:16.840 prices of its toys by an average of six percent 0:25:17.359 --> 0:25:20.800 the bare minimum to cover the costs, and Alana says 0:25:20.960 --> 0:25:24.560 more hikes are on the way if Trump imposes additional tariffs. 0:25:25.800 --> 0:25:30.040