WEBVTT - The American Toymaker Caught in Trump’s Trade War 0:00:00.160 --> 0:00:03.640 This holiday season, families around the US are grappling with 0:00:03.680 --> 0:00:08.840 stubborn inflation and higher prices on virtually everything, including holiday gifts. 0:00:09.560 --> 0:00:13.200 President Trump's tariff policies have hit a broad range of industries, 0:00:13.400 --> 0:00:18.280 including toymakers. But earlier this year, one Chicago based toymaker 0:00:18.360 --> 0:00:23.040 with manufacturers in China decided to hit back with a lawsuit, 0:00:23.680 --> 0:00:26.360 and that case has found its way to the Supreme Court. 0:00:27.360 --> 0:00:30.040 Arguments in the case started on November fifth, and the 0:00:30.080 --> 0:00:33.680 Supreme Court's decision, when it comes down, could support or 0:00:33.800 --> 0:00:37.920 upend a key piece of the Trump Administration's legal justification 0:00:38.240 --> 0:00:41.160 for many of the tariffs. In the meantime, the Big 0:00:41.200 --> 0:00:44.520 Take Asia team has been tracking this story closely. We've 0:00:44.560 --> 0:00:47.879 reported out how the tariffs have impacted learning resources on 0:00:48.040 --> 0:00:52.080 the ground in Illinois. Wears headquartered in China, were produced 0:00:52.120 --> 0:00:55.600 toys for decades in Vietnam, were setting up a new 0:00:55.640 --> 0:00:59.240 manufacturing hub, and back to the US to small town 0:00:59.320 --> 0:01:02.240 Indiana to meet a family that can't afford to buy 0:01:02.560 --> 0:01:05.959 from this American toy company. Over the next few days, 0:01:06.000 --> 0:01:08.680 we'll bring you our reporting on this high stakes lawsuit, 0:01:09.120 --> 0:01:12.880 the company's battle to hedge tariff risks, and consumer frustration 0:01:13.319 --> 0:01:16.560 with rising prices. 0:01:17.640 --> 0:01:32.600 Bloomberg Audio Studios, podcasts, radio news. 0:01:35.200 --> 0:01:38.640 On a summer morning, a group of US Americans, Chinese, 0:01:38.720 --> 0:01:42.319 and Vietnamese are packed in a van. We're moving fast 0:01:42.440 --> 0:01:45.560 on a brand new highway that slices through Vietnam's Red 0:01:45.640 --> 0:01:49.080 River Delta. We're on our way to a toy factory, 0:01:49.640 --> 0:01:52.360 but just a few hundred yards away from the factory gate, 0:01:52.640 --> 0:01:56.200 we've come to a dead halt stem meet by an 0:01:56.280 --> 0:01:59.400 unexpected obstacle. Huge puddles. 0:02:01.240 --> 0:02:03.720 Apparently didn't identify the that's. 0:02:06.560 --> 0:02:09.359 The road leading to the factory gate is pocked marked 0:02:09.400 --> 0:02:13.240 with water filled potholes as big as truck tires. The 0:02:13.280 --> 0:02:15.480 only option is to get out and walk the last 0:02:15.600 --> 0:02:16.320 hundred yards. 0:02:16.639 --> 0:02:22.160 Okay, just this theory. 0:02:24.720 --> 0:02:28.400 It's barely nine am and it's already ninety degrees. My 0:02:28.480 --> 0:02:30.880 travel companion is ready to face the heat. 0:02:31.840 --> 0:02:34.240 It's hard to dress for these factory tours. I've now 0:02:34.400 --> 0:02:36.799 just basically green and a tire of a t shirt 0:02:36.840 --> 0:02:38.920 and some sort of very light white pants. 0:02:39.680 --> 0:02:43.440 I'm here with Alana Woldenberg Ruffman, vice president of marketing 0:02:43.520 --> 0:02:47.360 and product development for Learning Resources, a family run toy 0:02:47.400 --> 0:02:51.320 company just outside of Chicago. She's a mechanical engineer by 0:02:51.320 --> 0:02:54.560 training and helps run the family business alongside her dad, 0:02:54.919 --> 0:02:57.639 CEO Rick Woldenberg, and her two brothers. 0:02:57.960 --> 0:03:00.200 You know, some of my earliest memories with toy as 0:03:00.600 --> 0:03:04.280 would be like the Learning Resources cash register, or like 0:03:04.360 --> 0:03:08.160 the Pretend phone, which is a little dated at this point. 0:03:08.200 --> 0:03:09.600 You need the Pretend iPhone. 0:03:10.000 --> 0:03:13.079 The company traces its roots back more than a century 0:03:13.120 --> 0:03:17.080 ago to Lana's great grandfather. These days, if you have 0:03:17.120 --> 0:03:20.280 young kids, there's a chance you know their products. Botley 0:03:20.280 --> 0:03:24.520 the coding robot, and Pretend cash registers are hit with consumers. 0:03:25.360 --> 0:03:30.800 Hey do you see money? Yes, this is the pretendent plane, 0:03:30.840 --> 0:03:33.320 Learning Resources cash registered. 0:03:36.160 --> 0:03:38.800 Most of these toys are made in China and sold 0:03:38.840 --> 0:03:42.800 through major retailers like Target and Walmart. For years, it 0:03:42.880 --> 0:03:47.320 was a winning formula. Efficient Chinese factories produced low cost 0:03:47.360 --> 0:03:55.560 goods and American consumers benefited with affordable prices. But President 0:03:55.600 --> 0:03:58.760 Donald Trump's returned to the White House, an escalation of 0:03:58.760 --> 0:04:01.320 the trade war that he began in his first term 0:04:01.440 --> 0:04:05.880 has upended that formula. On April second, Trump announced the 0:04:05.920 --> 0:04:09.360 steepest American tariffs in more than a century, with a 0:04:09.400 --> 0:04:12.960 ten percent minimum tariff and even higher duties on some 0:04:13.000 --> 0:04:16.720 sixty nations, starting with China. 0:04:16.839 --> 0:04:21.600 So if you look at that China first row, China 0:04:22.080 --> 0:04:27.440 sixty seven percent, that's tariffs charged to the USA, including 0:04:28.000 --> 0:04:30.400 currency manipulation and trade barriers. 0:04:30.520 --> 0:04:34.839 For Learning Resources, this was a gut punch. The company 0:04:34.880 --> 0:04:38.480 had already started shifting production out of China during Trump's 0:04:38.520 --> 0:04:41.480 first term, but at the beginning of the year, about 0:04:41.520 --> 0:04:44.679 sixty percent of its toys were still made there. Here's 0:04:44.680 --> 0:04:46.880 Alana at one hundred and forty five percent. 0:04:47.200 --> 0:04:49.560 It's a van on our products. People didn't know what 0:04:49.640 --> 0:04:50.680 was going to happen to our business. 0:04:51.400 --> 0:04:55.320 Within weeks, Learning Resources took the Trump administration to court 0:04:55.720 --> 0:04:59.360 and won. A district judge in Washington, d C. Ruled 0:04:59.400 --> 0:05:02.560 the presidences to were illegal, but the levee stayed in 0:05:02.600 --> 0:05:06.279 place as Trump appealed. Now the case is headed to 0:05:06.320 --> 0:05:09.240 the Supreme Court, with arguments set for next week. 0:05:09.920 --> 0:05:12.160 We're the only private company that brought our own lawsuit. 0:05:12.400 --> 0:05:15.520 We were kind of faced with the decision of die 0:05:15.680 --> 0:05:16.440 or do something. 0:05:17.720 --> 0:05:20.919 While battling it out in court, the company also began 0:05:21.040 --> 0:05:25.040 rebuilding the manufacturing network it has spent decades developing. 0:05:25.920 --> 0:05:27.599 We don't know what the tariff rates are going to 0:05:27.640 --> 0:05:29.960 be at any given time on any given day, and 0:05:30.040 --> 0:05:33.279 so we're proactively out here trying to diversifire our supply 0:05:33.400 --> 0:05:36.920 chain so that we are able to ride the waves. 0:05:37.320 --> 0:05:39.080 At the end of the day, We're just we're betting 0:05:39.120 --> 0:05:41.680 it is highly likely that some products that we move, 0:05:41.839 --> 0:05:43.080 we will have to move again. 0:05:43.680 --> 0:05:47.480 We're following along as Learning Resources is forced to shift 0:05:47.520 --> 0:05:51.279 its supply chain to Vietnam, and as the company tries 0:05:51.360 --> 0:05:55.920 to move forward, it's also confronting a hard truth. China's 0:05:55.960 --> 0:06:00.560 manufacturing infrastructure, built over decades isn't some thing you can 0:06:00.600 --> 0:06:02.320 walk away from overnight. 0:06:02.760 --> 0:06:05.840 Because China has been manufacturing hub for so long, it 0:06:06.000 --> 0:06:10.480 developed a lot of expertise. That same infrastructure doesn't exist 0:06:10.520 --> 0:06:14.440 anywhere else in the world today. 0:06:19.320 --> 0:06:22.360 This is the big take Asia from Bloomberg News. I'm 0:06:22.360 --> 0:06:26.839 Wanha today on the show. You can move manufacturing out 0:06:26.839 --> 0:06:30.240 of China, but can you really take China out of manufacturing? 0:06:30.760 --> 0:06:33.520 We hit the road with an American toymaker caught in 0:06:33.600 --> 0:06:37.840 the crosshairs of Trump's shifting trade policy and uncover the 0:06:37.960 --> 0:06:57.159 hidden costs of trying to stay one step ahead. Before 0:06:57.200 --> 0:06:59.960 this trip, I hadn't been back to northern Vietnam since 0:07:00.080 --> 0:07:03.839 the pandemic. I was born in Saigon when it was 0:07:03.880 --> 0:07:07.840 still the capital of South Vietnam, a country divided by war. 0:07:08.720 --> 0:07:11.600 After the US withdrew in defeat in nineteen seventy five, 0:07:11.880 --> 0:07:15.560 the country was unified under Communist rule, but it was 0:07:15.640 --> 0:07:19.600 left deeply impoverished. Families like mine, who had fought on 0:07:19.680 --> 0:07:24.600 the losing side faced bleak futures. Here's my dad recounting 0:07:24.600 --> 0:07:27.080 the fears that gripped him after the war ended. 0:07:27.520 --> 0:07:31.360 I feel danger. I don't know when they kept me 0:07:31.600 --> 0:07:34.760 put to the yale, and I don't know what it 0:07:34.880 --> 0:07:37.800 can do because I am a soldier. 0:07:38.360 --> 0:07:41.720 My dad fought for South Vietnam against the Communist forces. 0:07:42.360 --> 0:07:44.720 After the war, soldiers like him were sent to re 0:07:44.880 --> 0:07:49.320 education camps and their families were branded as traders. They 0:07:49.320 --> 0:07:53.680 were denied access to jobs, higher education, opportunities to improve 0:07:53.720 --> 0:07:54.520 their lives. 0:07:55.240 --> 0:07:58.960 Then I don't see a future for me. Then how 0:07:58.960 --> 0:08:03.720 about you, guy? You know no future. That's the reason 0:08:04.240 --> 0:08:08.200 we tried to escape. You know, weder to go leave Vietnam, 0:08:08.240 --> 0:08:08.560 we go. 0:08:09.520 --> 0:08:11.800 We fled as boat refugees. When I was a child, 0:08:12.040 --> 0:08:15.600 and we settled in California. I still remember my parents 0:08:15.600 --> 0:08:19.400 reading letters from relatives back home. My mom reduced to 0:08:19.480 --> 0:08:23.240 tears by the accounts of failed harvests, the lack of medicine, 0:08:23.400 --> 0:08:27.720 and please for financial help. In the late eighties, Vietnam 0:08:27.800 --> 0:08:31.680 began economic reforms, but it wasn't until nineteen ninety four, 0:08:31.800 --> 0:08:34.840 when the US lifted a decades long trade embargo, that 0:08:34.920 --> 0:08:37.240 the country truly opened to global trade. 0:08:37.600 --> 0:08:40.439 A year after Vietnam and the US signed a historic 0:08:40.520 --> 0:08:43.760 trade pact, sales at this garment factory in Hanoi have 0:08:43.840 --> 0:08:45.240 hit record levels. 0:08:45.679 --> 0:08:48.960 Orders in twenty ten, more than thirty years after my 0:08:49.040 --> 0:08:52.480 family left, I was hired as Bloomberg's Vietnam Beer chief 0:08:52.480 --> 0:08:57.200 in Hanoi, where we chronicled the country's growing manufacturing prowess. 0:08:57.520 --> 0:09:00.959 I followed Vietnam's rise since then, but nothing prepared me 0:09:01.160 --> 0:09:03.800 for the pace of change I'm seeing now while look 0:09:03.960 --> 0:09:08.480 all of us is how much construction. We're heading to 0:09:08.559 --> 0:09:12.559 a factory called dum Fun. It's tucked inside an industrial 0:09:12.640 --> 0:09:15.560 park in the town of Fuli, about an hour's drive 0:09:15.679 --> 0:09:18.160 south of Hanoi and roughly one hundred and thirty miles 0:09:18.160 --> 0:09:21.600 from the Chinese border. The industrial zone was approved in 0:09:21.600 --> 0:09:25.480 twenty seventeen, just months after President Trump first took office 0:09:25.800 --> 0:09:30.000 and began threatening China with trade actions. Within two years, 0:09:30.240 --> 0:09:34.559 rice fields were transformed into a sprawling complex of factories 0:09:35.400 --> 0:09:39.400 dum Fun stretching nearly two football fields. Long was started 0:09:39.480 --> 0:09:42.800 by a Chinese entrepreneur who ran a manufacturing plant in 0:09:42.840 --> 0:09:44.640 eastern China for fifteen years. 0:09:45.240 --> 0:09:49.200 They are tiny, like got a big palm in the front. 0:09:49.720 --> 0:09:53.560 That's Jimmy Lee, a manager from Longshore. The company makes 0:09:53.600 --> 0:09:56.640 toys in China and is a longtime partner of Learning 0:09:56.679 --> 0:10:00.640 Resources in Vietnam. They're helping to connect the America Company 0:10:00.679 --> 0:10:03.880 to factories like this one, with Jimmy often on the 0:10:03.880 --> 0:10:07.679 ground to oversee projects. He's talking about the pond at 0:10:07.720 --> 0:10:11.680 the factory gate. In Chinese culture, having water near the 0:10:11.840 --> 0:10:15.040 entrance is seen as a sign of good luck, and 0:10:15.080 --> 0:10:17.880 if you add a north facing gate even better. 0:10:18.320 --> 0:10:21.240 It seems like they had a yeah, one hundred percent 0:10:21.360 --> 0:10:24.160 north door with a pond in the front. 0:10:25.000 --> 0:10:27.040 You know, it's a typical set up. 0:10:27.840 --> 0:10:31.439 Elana and her team are visiting Dumbfung for the first time. 0:10:32.040 --> 0:10:34.520 It's one of a dozen factories they'll visit this week 0:10:34.600 --> 0:10:38.320 to assess production and find ways to control costs that 0:10:38.400 --> 0:10:43.360 are already rising. We begin our tour in the warehouse, 0:10:43.520 --> 0:10:47.240 where bags of raw materials, including plastic resin, are stacked 0:10:47.320 --> 0:10:48.280 five feet high. 0:10:48.320 --> 0:10:50.040 So one of the things that we've been working through 0:10:50.080 --> 0:10:53.239 with our factories is literally where they get the raw materials. 0:10:53.520 --> 0:10:57.560 That's a big element of controlling the cost. So, like 0:10:57.600 --> 0:10:58.439 this is ABS. 0:10:58.480 --> 0:11:03.120 Alana leans over sack of glossy plastic pellets, scanning the labels. 0:11:03.640 --> 0:11:07.120 She's inspecting ABS, a common plastic used to make legel 0:11:07.160 --> 0:11:09.480 bricks as well as learning resources toys. 0:11:09.559 --> 0:11:11.200 Yeah, so do you know if all the ABS comes 0:11:11.200 --> 0:11:12.959 from China for those factory or are they getting it 0:11:12.960 --> 0:11:14.120 from other countries too? 0:11:14.600 --> 0:11:17.440 I think the import out of China also, but plain 0:11:17.600 --> 0:11:18.720 sauce to be in China. 0:11:18.880 --> 0:11:21.360 Yeah, and ABS is a particularly challenging type of plant. 0:11:21.400 --> 0:11:24.280 It turns out only two types of plastic the factory 0:11:24.320 --> 0:11:27.719 needs can be sourced locally in Vietnam, and we soon 0:11:27.800 --> 0:11:31.600 realized the trucks pulling into the factory earlier were loaded 0:11:31.640 --> 0:11:36.200 with raw materials from China, making routine deliveries of imported parts. 0:11:39.360 --> 0:11:42.320 We passed the warehouse and step onto the factory floor, 0:11:42.600 --> 0:11:45.559 stopping in front of an injection molding machine. 0:11:45.840 --> 0:11:49.120 So there's piping in here that's feeding in the plastic 0:11:49.160 --> 0:11:51.520 pellets that we just saw, and it's going to melt 0:11:51.559 --> 0:11:54.480 them into a shape of the steel mold. 0:11:55.559 --> 0:11:59.120 The plant is currently making more than fifty learning resources toys, 0:11:59.320 --> 0:12:05.400 with more come in. One of them is Campfire chat Mellows, 0:12:05.559 --> 0:12:08.560 a product that's being made in Vietnam for the first time. 0:12:09.200 --> 0:12:13.840 It's a storytelling toy designed to spark conversations. Imagine a 0:12:13.880 --> 0:12:17.720 cozy campfire that flickers with led light. There are soft, 0:12:17.760 --> 0:12:22.239 squishy marshmallows called chat mellows, each printed with a unique emoji, 0:12:22.559 --> 0:12:25.640 a magic wand a storm a jigsaw puzzle. 0:12:25.960 --> 0:12:28.280 Once upon time, there is one little boy who is 0:12:28.280 --> 0:12:29.960 playing jigsaw puzzles. 0:12:30.160 --> 0:12:34.480 And then these images are story starters. Kids slide them 0:12:34.480 --> 0:12:37.199 onto sticks and pretend to roast them over the campfire 0:12:37.520 --> 0:12:43.640 while telling stories to each other. At the injection molding machine, 0:12:43.679 --> 0:12:47.520 a robotic steal arm grabs onto squishy marshmallows that have 0:12:47.600 --> 0:12:51.240 emerged from the mold. Elana says that kind of automation 0:12:51.520 --> 0:12:54.480 is actually missing in many of the factories she's visited 0:12:54.559 --> 0:12:55.000 this week. 0:12:55.760 --> 0:12:58.360 The automation is a period, so like you look around 0:12:58.400 --> 0:13:00.720 and there's a lot of people, is not as many 0:13:00.760 --> 0:13:03.360 machines covering the same thing that a person might do, 0:13:03.600 --> 0:13:06.080 and so that's gonna bring the cost up a little bit. 0:13:06.800 --> 0:13:11.199 In Vietnam, factories still rely heavily on manual labor because 0:13:11.240 --> 0:13:14.640 advanced machinery like this isn't easy to come by. It's 0:13:14.679 --> 0:13:18.400 expensive and often needs to be imported, likely from China, 0:13:18.559 --> 0:13:22.439 which dominates much of the market for toy manufacturing. And 0:13:22.480 --> 0:13:25.320 even in factories that do have automation like this one, 0:13:25.520 --> 0:13:28.440 Alanas noticed something else that affects productivity. 0:13:28.880 --> 0:13:31.480 So whereas in China, am I in tape one worker 0:13:31.520 --> 0:13:33.880 to worker machine, in Vietnam it will take two workers 0:13:34.080 --> 0:13:36.400 because they don't understand they're not as familiar with the 0:13:36.440 --> 0:13:38.760 machine for it, so that'll take six to twelve months 0:13:38.760 --> 0:13:41.000 for them to really learn it and to get it 0:13:41.000 --> 0:13:44.760 to the same level of automation that exists already in China. 0:13:45.480 --> 0:13:48.760 You know you're trying to squeeze, Jimmy says. This factory 0:13:48.840 --> 0:13:51.560 has about a third more workers than a similar plant 0:13:51.600 --> 0:13:56.000 in China, and unlike Chinese laborers who've worked years or 0:13:56.040 --> 0:13:59.680 even decades at facilities like this, many of these workers 0:13:59.720 --> 0:14:02.520 aren't new to assembly work. Some of the staff we 0:14:02.559 --> 0:14:05.880 spoke to came off farms and are relatively new to 0:14:05.920 --> 0:14:10.319 assembly lines. That lack of experience, combined with lower automation, 0:14:10.760 --> 0:14:15.120 hits productivity. Alana says some vendors report making four thousand 0:14:15.200 --> 0:14:18.040 units a day in China, but only twenty five hundred 0:14:18.080 --> 0:14:22.920 in Vietnam. We follow the Chatmello's productions through the paint department, 0:14:23.160 --> 0:14:26.840 where workers manually spray red and orange flames on the toy, 0:14:28.160 --> 0:14:31.280 then onto the assembly floor, where hundreds of workers in 0:14:31.360 --> 0:14:34.880 blue company issued polo shirts and caps sit at long 0:14:34.960 --> 0:14:39.120 metal tables. Workers on the line split open the plastic logs, 0:14:39.360 --> 0:14:43.720 insert screws, install battery contacts, and solder the electronics board. 0:14:45.880 --> 0:14:48.400 On the assembly line, a Chinese manager is showing a 0:14:48.440 --> 0:14:51.520 worker how to fit apart together, pointing out where to 0:14:51.520 --> 0:15:01.520 pay extra attention. His instructions in and are translated into 0:15:01.600 --> 0:15:14.280 Vietnamese and the workers questions are relaid back Yo. This 0:15:14.440 --> 0:15:18.360 factory has relocated about twenty engineers and managers from China 0:15:18.480 --> 0:15:21.520 to Vietnam, and that's to help bridge the gap in 0:15:21.680 --> 0:15:25.040 experience and technical know how. It's a common practice for 0:15:25.120 --> 0:15:29.720 factories here. Jimmy says, Chinese workers have developed specialized skills 0:15:29.760 --> 0:15:33.320 over decades that are difficult to quickly replicate elsewhere. 0:15:33.720 --> 0:15:36.640 Every single Chinese factory moving from here, they will rely 0:15:36.760 --> 0:15:39.600 on their own team to split up. I mean the 0:15:39.680 --> 0:15:45.320 core member of Platino still Chinese. He posed that is 0:15:45.400 --> 0:15:46.120 with experience. 0:15:48.840 --> 0:15:52.840 The tariffs also bring another risk Learning Resources has yet 0:15:52.880 --> 0:15:56.320 to calculate. To explain, Alana picks up the chat Mellow 0:15:56.320 --> 0:15:57.840 toy the interior. 0:15:58.080 --> 0:16:02.240 These chips are made introduced in China and then imported here. 0:16:02.720 --> 0:16:06.560 The soldering is done locally. This product will need batteries. 0:16:07.000 --> 0:16:10.080 Those will be imported. You cannot five batteries lobally in Vietnam. 0:16:10.640 --> 0:16:14.000 The metal is imported, so all. 0:16:13.880 --> 0:16:16.920 These different That's a big contrast to China, where more 0:16:17.000 --> 0:16:20.720 than ten thousand companies form an extensive sourcing network for 0:16:20.760 --> 0:16:24.600 the toy industry. Vietnam's toy suppliers are in the hundreds, 0:16:24.760 --> 0:16:26.480 a fraction of what China has. 0:16:26.920 --> 0:16:30.640 So within a city center or geographic area in China, 0:16:30.840 --> 0:16:33.480 you can find a plastic splier, a print supplier, a 0:16:33.520 --> 0:16:37.320 foam supplier, a wood supplier, and so on. So all 0:16:37.400 --> 0:16:42.360 that is available locally. That same infrastructure doesn't exist anywhere 0:16:42.360 --> 0:16:43.960 else in the world today. 0:16:44.480 --> 0:16:49.000 All these imported materials could spell trouble for businesses. On 0:16:49.040 --> 0:16:52.160 top of the twenty percent terrace in Vietnam, Trump has 0:16:52.200 --> 0:16:55.920 also slapped a forty percent transshipment rate on goods that 0:16:56.000 --> 0:17:00.240 originate in China but are then exported from Vietnam. That 0:17:00.320 --> 0:17:02.960 extra levy is designed to crack down on companies that 0:17:03.120 --> 0:17:07.280 reroute made in China products through Vietnam, adding little or 0:17:07.280 --> 0:17:12.240 sometimes no additional manufacturing. So far, the administration hasn't offered 0:17:12.280 --> 0:17:16.480 any guidance on how these higher duties will actually be enforced. 0:17:17.359 --> 0:17:20.280 So the rules on trendshipment haven't been fully defined yet. 0:17:20.520 --> 0:17:22.440 So these are things that we need to guess on 0:17:22.920 --> 0:17:26.240 and whether componentry which is brought in from other countries 0:17:26.480 --> 0:17:28.040 might impact the terraffraight. 0:17:28.760 --> 0:17:33.840 Elana says. All these factors add up more workers, less automation, 0:17:34.320 --> 0:17:39.359 imported components, Chinese engineers. They make manufacturing in Vietnam ten 0:17:39.400 --> 0:17:44.120 to fifteen percent more expensive than in China. Elana says, 0:17:44.240 --> 0:17:49.960 the entire process scouting factories, moving molds, prototyping adds up 0:17:50.000 --> 0:17:51.480 to millions of dollars. 0:17:51.880 --> 0:17:54.119 They're not recoverable. There's a lot of costs here that 0:17:54.160 --> 0:17:54.920 aren't recoverable. 0:17:55.080 --> 0:17:57.600 Orders that we've lost, like those will never come back, 0:17:58.320 --> 0:18:02.000 Costs that are being passed to customer, like all these 0:18:02.040 --> 0:18:02.600 things are. 0:18:04.000 --> 0:18:04.640 Irreparable. 0:18:04.680 --> 0:18:07.919 Heart And that's part of why we were motivated to 0:18:07.920 --> 0:18:10.520 bring the lawsuit, is because there's a lot of damage 0:18:10.560 --> 0:18:12.760 being done and there's a lot of small medium sized 0:18:12.800 --> 0:18:17.120 businesses who don't have the ability to stand up, and 0:18:17.200 --> 0:18:20.240 so we wanted to stand up on behalf of the 0:18:20.320 --> 0:18:21.920 thousands of companies like our store. 0:18:21.760 --> 0:18:22.880 Impactor Venus. 0:18:25.680 --> 0:18:28.920 After the break, what does the supply chain shift mean 0:18:29.000 --> 0:18:32.880 for workers on the factory floor, for families in nearby villages, 0:18:33.320 --> 0:18:56.240 and for American consumers back home. The town of Fully, 0:18:56.520 --> 0:19:00.320 about forty miles from Vietnam's capital city of hanois in 0:19:00.359 --> 0:19:04.600 the Red River Delta. It's in a valley surrounded by lush, green, 0:19:04.760 --> 0:19:09.160 karst limestone mountains, a post guard landscape until you get 0:19:09.200 --> 0:19:12.440 close and see the peaks being quarried to build roads 0:19:12.560 --> 0:19:15.960 and industrial parks. It's a small, off the beaten path 0:19:16.040 --> 0:19:20.280 town that historically attracted mostly locals, but during our time there, 0:19:20.400 --> 0:19:23.800 we bumped into Chinese visitors and heard Mandarin at breakfast 0:19:23.800 --> 0:19:28.159 and at roadside cafes. Most hotels were nearly fooled because 0:19:28.200 --> 0:19:31.080 most rooms were now being used to house Chinese workers, 0:19:31.520 --> 0:19:36.560 a trend that began in the past year. My own 0:19:36.640 --> 0:19:40.359 family left Vietnam during a time of high tensions with China, 0:19:40.920 --> 0:19:43.359 with the two countries engaged in a border war in 0:19:43.440 --> 0:19:48.400 nineteen seventy nine. Then Vietnam harassed ethnic Chinese and questioned 0:19:48.440 --> 0:19:52.720 their loyalty. It forcibly expelled families with Chinese roots who 0:19:52.800 --> 0:19:56.240 lived along the northern border regions. My father's side of 0:19:56.280 --> 0:19:59.320 the family had immigrated from China to southern Vietnam in 0:19:59.320 --> 0:20:03.679 the early nineties hundreds, and those discriminatory policies after the 0:20:03.720 --> 0:20:06.840 war pushed out families like ours. 0:20:07.080 --> 0:20:12.480 And we're buy the old bow and we modify the boat, running, 0:20:12.520 --> 0:20:13.440 you know, on the ocean. 0:20:14.640 --> 0:20:17.439 In the summer of nineteen seventy nine, my father and 0:20:17.480 --> 0:20:20.800 his brothers retrofitted a river boat to make it seaworthy, 0:20:21.400 --> 0:20:24.840 and my grandfather navigated our way through the South China Sea. 0:20:25.760 --> 0:20:27.959 All three hundred of the people who fled on our 0:20:28.040 --> 0:20:30.119 overloaded boat were ethnic Chinese. 0:20:30.640 --> 0:20:33.320 And we take a chance. Fifty to fifty, you know, 0:20:33.440 --> 0:20:39.800 fifty diet fifty, you know, a lie, No, fifty to fifty. 0:20:40.040 --> 0:20:42.720 Through the years My dad has talked about that difficult 0:20:42.720 --> 0:20:45.480 decision to risk all of our lives on the sea 0:20:45.800 --> 0:20:48.639 because he and my grandfather couldn't see a way for 0:20:48.680 --> 0:20:52.280 his children to have hopeful futures in our homeland. Because 0:20:52.320 --> 0:20:56.479 of our ancestry, we brave storms and pirate attacks to 0:20:56.520 --> 0:21:01.120 become refugees in far away countries. Countless other didn't survive 0:21:01.200 --> 0:21:06.440 the journey. In Vietnam, that dark chapter is all but forgotten. 0:21:07.080 --> 0:21:10.760 The relations between China and Vietnam still have points of contention. 0:21:11.280 --> 0:21:15.720 They're entwined economically, Chinese investors are embraced more than ever, 0:21:16.240 --> 0:21:20.000 and Chinese capital funds nearly thirty percent of all new projects. 0:21:24.320 --> 0:21:26.760 Just a few hundred yards from the Dumb Fund plant, 0:21:27.000 --> 0:21:30.320 we stop at a roadside eatery right across from the 0:21:30.359 --> 0:21:39.119 site of new factories under construction. Windy Twin is seventy 0:21:39.119 --> 0:21:41.760 eight years old. She's just finished lunch and is chatting 0:21:41.800 --> 0:21:42.359 with her neighbor. 0:21:45.480 --> 0:21:48.800 This is my hometown. These will rice views all the 0:21:48.800 --> 0:21:49.520 way to the river. 0:21:51.880 --> 0:21:56.360 Long before the factories arrived. Generations of families here, including 0:21:56.400 --> 0:22:01.760 the Winds, worked the land rice wheat tsava in Vietnam. 0:22:02.040 --> 0:22:06.040 Land is sacred after babies are born, their umbilical courts 0:22:06.080 --> 0:22:08.679 are buried in the fields to ask the land to 0:22:08.720 --> 0:22:12.159 protect them, and when they die, they're often buried in 0:22:12.200 --> 0:22:14.320 the same rice fields where they toiled. 0:22:19.840 --> 0:22:23.480 All of this area used to be in my family's fields, 0:22:24.200 --> 0:22:28.840 all the way out to there. We are farmers. What 0:22:28.840 --> 0:22:36.399 do we do without our fields? 0:22:38.520 --> 0:22:41.440 In twenty thirteen, the government requisitioned the land to make 0:22:41.480 --> 0:22:45.159 way for industrial development. Duyen and her neighbors say they 0:22:45.160 --> 0:22:48.720 were forced to sell their ancestral farms and compensated about 0:22:48.760 --> 0:22:51.920 ten thousand dollars, a price they deemed to both. 0:22:54.760 --> 0:22:59.040 They reclaimed the land, so we had to sell. No 0:22:59.080 --> 0:23:03.879 one wanted to sell, but we had no choice. You 0:23:03.880 --> 0:23:04.720 couldn't refuse. 0:23:05.480 --> 0:23:06.920 Come what is our lack? 0:23:08.480 --> 0:23:11.959 In the end, Duyn's family bought a small plot across 0:23:11.960 --> 0:23:15.840 the street from the construction site. They paid nearly seven 0:23:15.920 --> 0:23:20.359 times the government's compensation price per square meter. They built 0:23:20.400 --> 0:23:23.880 a house and opened a small cafe serving construction workers, 0:23:24.560 --> 0:23:28.320 but she worries it won't last that workers will eat 0:23:28.320 --> 0:23:34.200 at the factory canteens once construction ends. During our visit, 0:23:34.480 --> 0:23:38.400 the air hung heavy with dust. Duyn and her neighbors 0:23:38.520 --> 0:23:42.160 worry about pollution. Both in the air and from the factories. 0:23:42.320 --> 0:23:46.560 Given the breakneck pace of development, still she acknowledges the 0:23:46.640 --> 0:23:51.080 factories have open doors. Her daughter in law, once a farmer, 0:23:51.320 --> 0:23:53.800 now earns nearly three hundred dollars a month at the 0:23:53.840 --> 0:23:58.720 Dumbfun factory making toys for learning resources. Her husband weilds 0:23:58.720 --> 0:24:02.200 at construction sites. Together, they've saved enough to send their son, 0:24:02.520 --> 0:24:07.360 Lunn's grandson, to study automotive engineering in South Korea. It's 0:24:07.400 --> 0:24:14.800 a future, she says, made possible by factory work. That 0:24:16.280 --> 0:24:19.560 hope for a better future also lies a few miles 0:24:19.600 --> 0:24:24.040 away at the Hannam Vocational School. Here, students as young 0:24:24.080 --> 0:24:27.760 as fifteen are training to become machine operators and engineers. 0:24:28.560 --> 0:24:32.800 The school says nearly all graduates land factory jobs. Global 0:24:32.840 --> 0:24:37.360 companies like LG, Hyundai and Samsung send trainers and donate. 0:24:37.040 --> 0:24:42.280 Equipment, And what thought, I have a movie through you. 0:24:42.640 --> 0:24:46.080 Sixteen year old Duncom is a returning student at the school. 0:24:46.560 --> 0:24:50.119 Gum says he loves tinkering with electronics, and he's eager 0:24:50.200 --> 0:24:50.959 to find a factory. 0:24:51.160 --> 0:24:52.600 Am I Garden. 0:24:52.840 --> 0:24:55.320 Factories have a lot of equipment and machines, so they 0:24:55.320 --> 0:24:56.679 need people to fix and maintain them. 0:24:57.119 --> 0:24:59.560 That's why I chose to study industrial electricity to. 0:24:59.560 --> 0:24:59.840 Fix ma. 0:25:04.040 --> 0:25:07.560 GM says a university education might not lead to a 0:25:07.640 --> 0:25:10.600 career right away, but he's certain he can have his 0:25:10.760 --> 0:25:15.400 choice of factory jobs. My conversation with his confident teenager, 0:25:15.720 --> 0:25:19.400 upbeat about his future, left an impression on me. After 0:25:19.440 --> 0:25:22.640 a week in Vietnam, it's clear that optimism runs deep, 0:25:23.119 --> 0:25:26.920 centered around the factories and foreign investors pouring capital into 0:25:26.920 --> 0:25:30.359 the region. The country's leaders are highly attuned to the 0:25:30.440 --> 0:25:35.399 shifting geopolitical wins and are bent on maintaining growth. The US, 0:25:35.680 --> 0:25:39.639 once a wartime enemy turned trading partner, now seems like 0:25:39.680 --> 0:25:43.639