October 28, 2025 • 27 mins
The US-China tariff war has upended global manufacturing, forcing companies like Chicago-based Learning Resources to fundamentally change how and where its products are made.
On today’s Big Take Asia podcast, K. Oanh Ha heads to Vietnam, where the toymaker has begun shifting the production of its popular children’s toys. We examine how the company is managing its complex shift from China – where its toys have been made for decades – what the factory boom means for communities on the ground in Vietnam and how all of this will impact consumers.
Further listening: The American Toymaker Suing Trump Over Destructive Tariffs
Xi’s Top Bargaining Chip Is a Trade War Game Changer
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:20):
On a summer morning, a group of US Americans, Chinese,
and Vietnamese are packed in a van. We're moving fast
on a brand new highway that slices through Vietnam's Red
River Delta. We're on our way to a toy factory,
but just a few hundred yards away from the factory gate,
we've come to a dead halt, stem met by an
(00:41):
unexpected obstacle. Huge puddles.
Speaker 3 (00:46):
Apparently didn't identify the.
Speaker 2 (00:51):
The road leading to the factory gate is pocked marked
with water filled potholes as big as truck tires. The
only option is to get out and walk the last
hundred yards.
Speaker 3 (01:01):
Okay, this is the truth.
Speaker 2 (01:09):
It's barely nine am and it's already ninety degrees. My
travel companion is ready to face the heat.
Speaker 3 (01:16):
It's hard to dress for these factory tours. I've now
just basically green an attire of a T shirt and
some sort of very light white pants.
Speaker 2 (01:24):
I'm here with Alana Woldenberg Ruffman, vice president of marketing
and product development for Learning Resources, a family run toy
company just outside of Chicago. She's a mechanical engineer by
training and helps run the family business alongside her dad,
CEO Rick Woldenberg, and her two brothers.
Speaker 3 (01:43):
You know, some of my earliest memories with toys would
be like the Learning Resources cash register, or like the
Pretend phone, which is a little dated at this point.
You need the Pretend iPhone.
Speaker 2 (01:55):
The company traces its roots back more than a century
ago to Lana's great grand father. These days, if you
have young kids, there's a chance you know their products.
Botley the coding robot, and Pretend cash registers are hit
with consumers.
Speaker 4 (02:10):
Hey you see money to Yes, this is the pretendent plane,
Learning Resources cash registered.
Speaker 2 (02:21):
Most of these toys are made in China and sold
through major retailers like Target and Walmart. For years, it
was a winning formula. Efficient Chinese factories produced low cost
goods and American consumers benefited with affordable prices. But President
Donald Trump's returned to the White House, an escalation of
(02:43):
the trade war that began in his first term has
upended that formula. On April second, Trump announced the steepest
American tariffs in more than a century, with a ten
percent minimum tariff and even higher duties on some sixty nations,
starting with China.
Speaker 5 (03:01):
So if you look at that China first row, China
sixty seven percent, that's tariffs charged to the USA, including
currency manipulation and trade barriers.
Speaker 2 (03:15):
For Learning Resources, this was a gut punch. The company
had already started shifting production out of China during Trump's
first term, but at the beginning of the year, about
sixty percent of its toys were still made there. Here's
Alana at one hundred and forty five percent.
Speaker 3 (03:32):
It's a van on our products. People didn't know what
was going to happen to our business.
Speaker 2 (03:36):
Within weeks, Learning Resources took the Trump administration to court
and won. A district judge in Washington, d c. Ruled
the president's tariffs were illegal, but the Levey stayed in
place as Trump appealed. Now the case is headed to
the Supreme Court, with arguments set for next week.
Speaker 3 (03:55):
We're the only private company that brought our own lawsuit.
We were kind of faced with the decision of die
or do something.
Speaker 2 (04:02):
While battling it out in court, the company also began
rebuilding the manufacturing network it has been decades developing.
Speaker 3 (04:11):
We don't know what the teriff rates are going to
be at any given time, on any given day, and
so we're proactively out here trying to diversifire our supply
chain so that we are able to ride the waves.
At the end of the day, we're just we're betting
it is highly likely that some products that we move,
we will have to move again.
Speaker 2 (04:28):
We're following along as Learning Resources is forced to shift
its supply chain to Vietnam, and as a company tries
to move forward, it's also confronting a hard truth. China's
manufacturing infrastructure, built over decades isn't something you can walk
away from overnight.
Speaker 3 (04:47):
Because China has been manufacturing hub for so long, it
developed a lot of expertise. That same infrastructure doesn't exist
anywhere else in the world today.
Speaker 2 (05:04):
This is the big take Asia from Bloomberg News. I'm
Wanha today on the show. You can move manufacturing out
of China, but can you really take China out of manufacturing?
We hit the road with an American toymaker caught in
the crosshairs of Trump's shifting trade policy and uncover the
hidden costs of trying to stay one step ahead. Before
(05:42):
this trip, I hadn't been back to Northern Vietnam since
the pandemic. I was born in Saigon, when it was
still the capital of South Vietnam, a country divided by war.
After the US withdrew in defeat in nineteen seventy five,
the country was unified under Communist rule, but it was
left deeply impoverished. Families like mine, who had fought on
(06:04):
the losing side faced bleak futures. Here's my dad recounting
the fears that gripped him after the war ended.
Speaker 6 (06:12):
I feel danger. I don't know when they kept me
put to the yale, and I don't know what they
can do because I am a soldier.
Speaker 2 (06:23):
My dad fought for South Vietnam against the Communist forces.
After the war, soldiers like him were sent to re
education camps and their families were branded as traders. They
were denied access to jobs, higher education, opportunities to improve
their lives.
Speaker 6 (06:40):
Then I don't see a future for me. Then how
about you guy? You know no future. That's the reason
we tried to escap You know, we need to go
leave Vietnam.
Speaker 3 (06:53):
We go.
Speaker 2 (06:54):
We fled as boat refugees when I was a child
and resettled in California. I still remember my parents reading
letters from relatives back home. My mom reduced to tears
by the accounts of failed harvests, the lack of medicine,
and please for financial help. In the late eighties, Vietnam
began economic reforms, but it wasn't until nineteen ninety four,
(07:16):
when the US lifted a decades long trade embargo, that
the country truly opened to global trade.
Speaker 5 (07:22):
A year after Vietnam and the US signed a historic
trade pact, sales at this garment factory in Hanoi have
hit record levels.
Speaker 2 (07:30):
Orders in twenty ten, more than thirty years after my
family left, I was hired as Bloomberg's Vietnam Beer chief
in Hanoi, where we chronicled the country's growing manufacturing prowess.
I followed Vietnam's rise since then, but nothing prepared me
for the pace of change I'm seeing now while look
all of us, Look how much construction. We're heading to
(07:53):
a factory called dum Fun. It's tucked inside an industrial
park in the town of Fully, about an hours drive
south of Hanoi and roughly one hundred and thirty miles
from the Chinese border. The industrial zone was approved in
twenty seventeen, just months after President Trump first took office
and began threatening China with trade actions. Within two years,
(08:15):
rice fields were transformed into a sprawling complex of factories Dungfu,
stretching nearly two football fields. Long was started by a
Chinese entrepreneur who ran a manufacturing plant in eastern China
for fifteen years.
Speaker 7 (08:30):
They are tiny, is like kind a big palm in
the front.
Speaker 2 (08:34):
That's Jimmy Lee, a manager from Longshore. The company makes
toys in China and is a longtime partner of Learning
Resources in Vietnam. They're helping to connect the American company
to factories like this one, with Jimmy often on the
ground to oversee projects. He's talking about the pond at
the factory gate. In Chinese culture, having water near the
(08:56):
entrance is seen as a sign of good luck. And
if you add a north facing gate even better.
Speaker 8 (09:03):
It seems like they had a yeah, one hundred percent
north door with a pond in the front. You know,
it's a It's a typical.
Speaker 7 (09:11):
Full set up.
Speaker 2 (09:12):
Elana and her team are visiting Dumbfung for the first time.
It's one of a dozen factories they'll visit this week
to assess production and find ways to control costs that
are already rising. We begin our tour in the warehouse
where bags of raw materials, including plastic resin are stacked
five feet high.
Speaker 3 (09:33):
So one of the things that we've been working through
with our factories is literally where they get the raw materials.
That's a big element of controlling the cost. So, like
this is ABS.
Speaker 2 (09:43):
Alana leans over sacks of glossy plastic pellets, scanning the labels.
She's inspecting ABS, a common plastic used to make lego
bricks as well as learning resources toys.
Speaker 1 (09:54):
Yeah.
Speaker 3 (09:54):
So do you know if all the avs comes from
China for this factory or are they getting it from
other countries too.
Speaker 8 (10:01):
Out of China also, but plain sauce to be in China.
Speaker 3 (10:03):
Yeah, And as there is a particularly challenging type of plant.
Speaker 2 (10:06):
It turns out only two types of plastic the factory
needs can be sourced locally in Vietnam. And we soon
realized the trucks pulling into the factory earlier were loaded
with raw materials from China, making routine deliveries of imported parts.
We passed the warehouse and step onto the factory floor,
(10:27):
stopping in front of an injection molding machine.
Speaker 3 (10:30):
So there's piping in here that's feeding in the plastic
pullets that we just saw and it's going to melt
them into a shape of the steelhol.
Speaker 2 (10:40):
The plant is currently making more than fifty learning resources toys,
with more coming in. One of them is Campfire chat Mellows,
a product that's being made in Vietnam for the first time.
It's a storytelling toy designed to spark conversations. Imagine a
cozy campfire that flickers with led light. There are soft,
(11:02):
squishy marshmallows called chat mellows, each printed with a unique emoji,
a magic wand a storm a jigsaw puzzle.
Speaker 3 (11:11):
Once upon time, there is one little boy who is
playing jigsaw puzzles.
Speaker 2 (11:15):
And then these images are story starters. Kids slide them
onto sticks and pretend to roast them over the campfire
while telling stories to each other. At the injection molding machine,
a robotic steal arm grabs onto squishy marshmallows that have
emerged from the mold. Elana says that kind of automation
(11:36):
is actually missing in many of the factories she's visited
this week.
Speaker 3 (11:40):
The automation is a period, so like you look around
and there's a lot of people, but there's not as
many machines covering the same thing that a person might do,
and so that's gonna bring the cost up a little bit.
Speaker 2 (11:51):
In Vietnam, factories still rely heavily on manual labor because
advanced machinery like this isn't easy to come by and
often needs to be imported, likely from China, which dominates
much of the market for toy manufacturing. And even in
factories that do have automation like this one, Alana's noticed
something else that affects productivity.
Speaker 3 (12:13):
So whereas in China, am I in tape one worker
to worker machine, in Vietnam I will take two workers
because they don't understand they're not as familiar with the
machine free it. So that'll take six to twelve months
for them to really learn it and to get it
to the same level of automation that exists already in China.
Speaker 2 (12:30):
You know you're trying to squeeze, Jimmy says. This factory
has about a third more workers than a similar plant
in China, and unlike Chinese laborers who've worked years or
even decades at facilities like this, many of these workers
are new to assembly work. Some of the staff we
spoke to came off farms and are relatively new to
(12:51):
assembly lines. That lack of experience, combined with lower automation
hits productivity. Alana says some vendors report making four pound
and units a day in China, but only twenty five
hundred in Vietnam. We follow the Chatmellow's productions through the
paint department, where workers manually spray red and orange flames
(13:11):
on the toy, then onto the assembly floor, where hundreds
of workers in blue company issued polo shirts and caps
sit at long metal tables. Workers on the line split
open the plastic logs, insert screws, install battery contacts, and
solder the electronics board. On the assembly line, a Chinese
(13:32):
manager is showing a worker how to fit apart together,
pointing out where to pay extra attention. His instructions and
mandra are translated into Vietnamese and the workers questions are
relaid back. This factory has relocated about twenty engineers and
(14:02):
managers from China to Vietnam, and that's to help bridge
the gap in experience and technical know how. It's a
common practice for factories here. Jimmy says, Chinese workers have
developed specialized skills over decades that are difficult to quickly
replicate elsewhere.
Speaker 8 (14:18):
Every single Chinese factory moving from here, they will rely
on their own team to split up. I mean the
core member of the team WI still Chinese, he posed
that is with experienced.
Speaker 2 (14:33):
The tariffs also bring another risk Learning Resources has yet
to calculate. To explain. Alana picks up the chat Mellow.
Speaker 3 (14:41):
Toy the interior. These chips are made introduced in China
and then imported here. The soldering is done locally. This
product will need batteries, those will be imported. You cannot
five batteries locally in Vietnam. The metal is.
Speaker 2 (14:57):
Imported, so a big contrast to China, where more than
ten thousand companies form an extensive sourcing network for the
toy industry. Vietnam's toy suppliers are in the hundreds, a
fraction of what China has.
Speaker 3 (15:12):
So within a city center or geographic area in China
you can find a plastics flyer, a print supplier, a
foam supplier, a wood supplier, and so on. So all
that is available locally. That same infrastructure doesn't exist anywhere
else in the world.
Speaker 2 (15:28):
Today, all these imported materials could spell trouble for businesses.
On top of the twenty percent terrace on Vietnam. Trump
has also slapped a forty percent transshipment rate on goods
that originate in China but are then exported from Vietnam.
That extra levy is designed to crack down on companies
that re route made in China products through Vietnam, adding
(15:51):
little or sometimes no additional manufacturing. So far, the administration
hasn't offered any guidance on how these higher duties will
actually be enforced, So.
Speaker 3 (16:02):
The rules on trendshipment haven't been fully defined yet. So
these are things that we need to guess on and
whether componentry which is brought in from other countries might
impact the terraff raight.
Speaker 2 (16:13):
Elana says all these factors add up more workers, less automation,
imported components, Chinese engineers. They make manufacturing in Vietnam ten
to fifteen percent more expensive than in China. Elana says
the entire process scouting factories, moving molds, prototyping adds up
(16:35):
to millions of dollars.
Speaker 3 (16:36):
They're not recoverable.
Speaker 2 (16:38):
There's a lot of costs here that aren't recoverable.
Speaker 3 (16:40):
Orders that we've lost, like those will never come back.
Costs they are being passed to customers like all these things.
Speaker 4 (16:47):
Are irreparable harm.
Speaker 3 (16:50):
And that's part of why we were motivated to bring
the lawsuit, is because there's a lot of damage being
done and there's a lot of small medium sized businesses
who don't have the ability to stand up, and so
we wanted to stand up on behalf of the thousands
of companies like our start A.
Speaker 8 (17:07):
Factor Vennez.
Speaker 2 (17:10):
After the break, what does the supply chain shift mean
for workers on the factory floor, for families in nearby villages,
and for American consumers back home. The town of Fully,
(17:41):
about forty miles from Vietnam's capital city of Hanois, sits
in the Red River Delta. It's in a valley surrounded
by lush, green, karst limestone mountains, a post guard landscape
until you get close and see the peaks being quarried
to build roads and industrial parks. It's a small, off
the beaten path town that historically attracted mostly locals, but
(18:04):
during our time there, we bumped into Chinese visitors and
heard Mandarin at breakfast and at roadside cafes. Most hotels
were nearly full because most rooms were now being used
to house Chinese workers. A trend that began in the
past year. My own family left Vietnam during a time
of high tensions with China, with the two countries engaged
(18:27):
in a border war in nineteen seventy nine. Then Vietnam
harassed ethnic Chinese and questioned their loyalty. It forcibly expelled
families with Chinese roots who lived along the northern border regions.
My father's side of the family had immigrated from China
to southern Vietnam in the early nineteen hundreds, and those
discriminatory policies after the war pushed out families like ours.
Speaker 6 (18:52):
And we're by the Obo and we modify the bowl
running on the ocean.
Speaker 2 (18:59):
In summer of nineteen seventy nine, my father and his
brothers retrofitted a riverboat to make it seaworthy, and my
grandfather navigated our way through the South China Sea. All
three hundred of the people who fled on our overloaded
boat were ethnic Chinese.
Speaker 6 (19:15):
And we take a chance fifty to fifty, you know, fifty,
diet fifty, you know a lie, No, fifty to fifty.
Speaker 2 (19:25):
Through the years, my dad has talked about that difficult
decision to risk all of our lives on the sea
because he and my grandfather couldn't see a way for
his children to have hopeful futures in our homeland. Because
of our ancestry, we brave storms and pirate attacks to
become refugees in far away countries. Countless others didn't survive
(19:46):
the journey. In Vietnam, that dark chapter is all but forgotten.
The relations between China and Vietnam still have points of contention.
They're entwined economically, Chinese investors are brave more than ever,
and Chinese capital funds nearly thirty percent of all new projects.
(20:09):
Just a few hundred yards from the dum Fund plant,
we stop at a roadside eatery right across from the
site of new factories under construction. Winty Twin is seventy
eight years old. She's just finished lunch and is chatting
with her neighbor.
Speaker 7 (20:30):
This is my hometown. These will rice fields all the
way to the river.
Speaker 2 (20:36):
Long before the factories arrived. Generations of families here, including
the winds, worked the land rice, wheat, cassava. In Vietnam,
land is sacred. After babies are born, their umbilical cords
are buried in the fields to ask the land to
protect them, and when they die, they're often buried in
(20:57):
the same rice fields where they toiled.
Speaker 7 (21:01):
Who all of this area used to be in my
family's fields, all the way out to there. We have farmers.
What do we do without our fields?
Speaker 2 (21:23):
In twenty thirteen, the government requisitioned the land to make
way for industrial development. Duyen and her neighbors say they
were forced to sell their ancestral farms and compensated about
ten thousand dollars, a price they deemed to both.
Speaker 7 (21:39):
They reclaimed the land, so we had to sell. No
one wanted to sell, but we had no choice. You
couldn't refuse. Come, Come what is.
Speaker 2 (21:53):
In the end, Duyn's family brought a small plot across
the street from the construction site. They paid nearly seven
times the government's compensation price per square meter. They built
a house and opened a small cafe serving construction workers,
but she worries it won't last. That workers will eat
at the factory canteens once construction ends. During our visit,
(22:19):
the air hung heavy with dust. Duyn and her neighbors
worry about pollution, both in the air and from the factories,
given the breakneck pace of development. Still, she acknowledges the
factories have open doors. Her daughter in law, once a farmer,
now earns nearly three hundred dollars a month at the
dum Fun factory making toys for learning resources. Her husband
(22:43):
weilds at construction sites. Together, they've saved enough to send
their son, Luin's grandson to study automotive engineering in South Korea.
It's a future, she says, made possible by factory work.
That hope for a better future also lies a few
(23:04):
miles away at the Hannam Vocational School. Here, students as
young as fifteen are training to become machine operators and engineers.
The school says nearly all graduates land factory jobs. Global
companies like LG, Hyundai and Samsung send trainers and donate equipment.
Speaker 3 (23:24):
And what thought, I have a movie through you.
Speaker 2 (23:27):
Sixteen year old Duncom is a returning student at the school.
Gum says he loves tinkering with electronics and he's eager
to find a factory job.
Speaker 3 (23:36):
Am I garden.
Speaker 8 (23:37):
Factories have a lot of equipment and machines, so they
need people to fix and maintain them.
Speaker 1 (23:42):
That's why I chose to study industrial electricity.
Speaker 6 (23:44):
Fixed machines at the planks.
Speaker 2 (23:49):
Gaum says a university education might not lead to a
career right away, but he's certain he can have his
choice of factory jobs. My conversation with his confident teenager,
upbeat about his future, left an impression on me. After
a week in Vietnam, it's clear that optimism runs deep,
centered around the factories and foreign investors pouring capital into
(24:12):
the region. The country's leaders are highly attuned to the
shifting geopolitical wins and are bent on maintaining growth. The US,
once a wartime enemy turned trading partner, now seems like
a fickle friend with its high tariffs, so Vietnam's counting
on foreign investors to help ride it out. Before heading home,
(24:33):
I asked Alana for her final thoughts after a week
of crisscrossing the country and visiting a dozen factories.
Speaker 3 (24:40):
Vietnam certainly has potential. The products that we saw made
here are very high quality. They're certainly expertise here, and
it's growing and changing rapidly. I think some of the
hang ups though, or that there's not as much capacity,
so there's just physically not as much manufacturing space here
as there is in China. And then Additionally, you can't
get a lot of the raw materials locally, and so
(25:01):
that is driving cost.
Speaker 2 (25:04):
For now, Learning Resources is placing its bets on Vietnam,
but tariffs are adding pressure. The company has already raised
prices of its toys by an average of six percent
the bare minimum to cover the costs, and Alana says
more hikes are on the way if Trump imposes additional tariffs.
(25:25):
But the biggest cost isn't on any invoice. Because of
the tariffs, Learning Resources had to cut its product development
budget in half. That meant shelving over one hundred new products,
including an entire line of educational toys for classrooms.
Speaker 3 (25:42):
That whole range had to go on hold because it
was too big and too complex. It was going to
take too many resources, and we just couldn't justify it
given all the other things I had to do. So
that's one that just personally for me, that makes me
very sad because it's a product that teachers have been
asking us to do for years.
Speaker 2 (26:00):
Elana says consumers will pay for the tariffs twice in
higher prices and in toys from the industry with a
little less magic because instead of investing in innovation toy
makers are syncing their budgets into tariffs and supply.
Speaker 3 (26:15):
Chains, theser costs that have led to us slashing budgets
and pulling back on investments that we were going to make.
We are hiring less people, We're coming out with fewer
products for the consumers.
Speaker 4 (26:30):
This is just going to mean higher prices and less choice.
Speaker 2 (26:44):
This is the big take, Asia from Bloomberg News. I'm wanha.
This is the first episode in an ongoing series on
how one American toy maker is grappling with record high tariffs.
Join us as the journey continues. If you like the episode,
sure to subscribe at Bloomberg dot com, slash podcast offer,
leave a review, and even better, tell a friend It
(27:06):
really makes a difference. Thanks for listening, See you next time.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:20):
On a summer morning, a group of US Americans, Chinese,
and Vietnamese are packed in a van. We're moving fast
on a brand new highway that slices through Vietnam's Red
River Delta. We're on our way to a toy factory,
but just a few hundred yards away from the factory gate,
we've come to a dead halt, stem met by an
(00:41):
unexpected obstacle. Huge puddles.
Speaker 3 (00:46):
Apparently didn't identify the.
Speaker 2 (00:51):
The road leading to the factory gate is pocked marked
with water filled potholes as big as truck tires. The
only option is to get out and walk the last
hundred yards.
Speaker 3 (01:01):
Okay, this is the truth.
Speaker 2 (01:09):
It's barely nine am and it's already ninety degrees. My
travel companion is ready to face the heat.
Speaker 3 (01:16):
It's hard to dress for these factory tours. I've now
just basically green an attire of a T shirt and
some sort of very light white pants.
Speaker 2 (01:24):
I'm here with Alana Woldenberg Ruffman, vice president of marketing
and product development for Learning Resources, a family run toy
company just outside of Chicago. She's a mechanical engineer by
training and helps run the family business alongside her dad,
CEO Rick Woldenberg, and her two brothers.
Speaker 3 (01:43):
You know, some of my earliest memories with toys would
be like the Learning Resources cash register, or like the
Pretend phone, which is a little dated at this point.
You need the Pretend iPhone.
Speaker 2 (01:55):
The company traces its roots back more than a century
ago to Lana's great grand father. These days, if you
have young kids, there's a chance you know their products.
Botley the coding robot, and Pretend cash registers are hit
with consumers.
Speaker 4 (02:10):
Hey you see money to Yes, this is the pretendent plane,
Learning Resources cash registered.
Speaker 2 (02:21):
Most of these toys are made in China and sold
through major retailers like Target and Walmart. For years, it
was a winning formula. Efficient Chinese factories produced low cost
goods and American consumers benefited with affordable prices. But President
Donald Trump's returned to the White House, an escalation of
(02:43):
the trade war that began in his first term has
upended that formula. On April second, Trump announced the steepest
American tariffs in more than a century, with a ten
percent minimum tariff and even higher duties on some sixty nations,
starting with China.
Speaker 5 (03:01):
So if you look at that China first row, China
sixty seven percent, that's tariffs charged to the USA, including
currency manipulation and trade barriers.
Speaker 2 (03:15):
For Learning Resources, this was a gut punch. The company
had already started shifting production out of China during Trump's
first term, but at the beginning of the year, about
sixty percent of its toys were still made there. Here's
Alana at one hundred and forty five percent.
Speaker 3 (03:32):
It's a van on our products. People didn't know what
was going to happen to our business.
Speaker 2 (03:36):
Within weeks, Learning Resources took the Trump administration to court
and won. A district judge in Washington, d c. Ruled
the president's tariffs were illegal, but the Levey stayed in
place as Trump appealed. Now the case is headed to
the Supreme Court, with arguments set for next week.
Speaker 3 (03:55):
We're the only private company that brought our own lawsuit.
We were kind of faced with the decision of die
or do something.
Speaker 2 (04:02):
While battling it out in court, the company also began
rebuilding the manufacturing network it has been decades developing.
Speaker 3 (04:11):
We don't know what the teriff rates are going to
be at any given time, on any given day, and
so we're proactively out here trying to diversifire our supply
chain so that we are able to ride the waves.
At the end of the day, we're just we're betting
it is highly likely that some products that we move,
we will have to move again.
Speaker 2 (04:28):
We're following along as Learning Resources is forced to shift
its supply chain to Vietnam, and as a company tries
to move forward, it's also confronting a hard truth. China's
manufacturing infrastructure, built over decades isn't something you can walk
away from overnight.
Speaker 3 (04:47):
Because China has been manufacturing hub for so long, it
developed a lot of expertise. That same infrastructure doesn't exist
anywhere else in the world today.
Speaker 2 (05:04):
This is the big take Asia from Bloomberg News. I'm
Wanha today on the show. You can move manufacturing out
of China, but can you really take China out of manufacturing?
We hit the road with an American toymaker caught in
the crosshairs of Trump's shifting trade policy and uncover the
hidden costs of trying to stay one step ahead. Before
(05:42):
this trip, I hadn't been back to Northern Vietnam since
the pandemic. I was born in Saigon, when it was
still the capital of South Vietnam, a country divided by war.
After the US withdrew in defeat in nineteen seventy five,
the country was unified under Communist rule, but it was
left deeply impoverished. Families like mine, who had fought on
(06:04):
the losing side faced bleak futures. Here's my dad recounting
the fears that gripped him after the war ended.
Speaker 6 (06:12):
I feel danger. I don't know when they kept me
put to the yale, and I don't know what they
can do because I am a soldier.
Speaker 2 (06:23):
My dad fought for South Vietnam against the Communist forces.
After the war, soldiers like him were sent to re
education camps and their families were branded as traders. They
were denied access to jobs, higher education, opportunities to improve
their lives.
Speaker 6 (06:40):
Then I don't see a future for me. Then how
about you guy? You know no future. That's the reason
we tried to escap You know, we need to go
leave Vietnam.
Speaker 3 (06:53):
We go.
Speaker 2 (06:54):
We fled as boat refugees when I was a child
and resettled in California. I still remember my parents reading
letters from relatives back home. My mom reduced to tears
by the accounts of failed harvests, the lack of medicine,
and please for financial help. In the late eighties, Vietnam
began economic reforms, but it wasn't until nineteen ninety four,
(07:16):
when the US lifted a decades long trade embargo, that
the country truly opened to global trade.
Speaker 5 (07:22):
A year after Vietnam and the US signed a historic
trade pact, sales at this garment factory in Hanoi have
hit record levels.
Speaker 2 (07:30):
Orders in twenty ten, more than thirty years after my
family left, I was hired as Bloomberg's Vietnam Beer chief
in Hanoi, where we chronicled the country's growing manufacturing prowess.
I followed Vietnam's rise since then, but nothing prepared me
for the pace of change I'm seeing now while look
all of us, Look how much construction. We're heading to
(07:53):
a factory called dum Fun. It's tucked inside an industrial
park in the town of Fully, about an hours drive
south of Hanoi and roughly one hundred and thirty miles
from the Chinese border. The industrial zone was approved in
twenty seventeen, just months after President Trump first took office
and began threatening China with trade actions. Within two years,
(08:15):
rice fields were transformed into a sprawling complex of factories Dungfu,
stretching nearly two football fields. Long was started by a
Chinese entrepreneur who ran a manufacturing plant in eastern China
for fifteen years.
Speaker 7 (08:30):
They are tiny, is like kind a big palm in
the front.
Speaker 2 (08:34):
That's Jimmy Lee, a manager from Longshore. The company makes
toys in China and is a longtime partner of Learning
Resources in Vietnam. They're helping to connect the American company
to factories like this one, with Jimmy often on the
ground to oversee projects. He's talking about the pond at
the factory gate. In Chinese culture, having water near the
(08:56):
entrance is seen as a sign of good luck. And
if you add a north facing gate even better.
Speaker 8 (09:03):
It seems like they had a yeah, one hundred percent
north door with a pond in the front. You know,
it's a It's a typical.
Speaker 7 (09:11):
Full set up.
Speaker 2 (09:12):
Elana and her team are visiting Dumbfung for the first time.
It's one of a dozen factories they'll visit this week
to assess production and find ways to control costs that
are already rising. We begin our tour in the warehouse
where bags of raw materials, including plastic resin are stacked
five feet high.
Speaker 3 (09:33):
So one of the things that we've been working through
with our factories is literally where they get the raw materials.
That's a big element of controlling the cost. So, like
this is ABS.
Speaker 2 (09:43):
Alana leans over sacks of glossy plastic pellets, scanning the labels.
She's inspecting ABS, a common plastic used to make lego
bricks as well as learning resources toys.
Speaker 1 (09:54):
Yeah.
Speaker 3 (09:54):
So do you know if all the avs comes from
China for this factory or are they getting it from
other countries too.
Speaker 8 (10:01):
Out of China also, but plain sauce to be in China.
Speaker 3 (10:03):
Yeah, And as there is a particularly challenging type of plant.
Speaker 2 (10:06):
It turns out only two types of plastic the factory
needs can be sourced locally in Vietnam. And we soon
realized the trucks pulling into the factory earlier were loaded
with raw materials from China, making routine deliveries of imported parts.
We passed the warehouse and step onto the factory floor,
(10:27):
stopping in front of an injection molding machine.
Speaker 3 (10:30):
So there's piping in here that's feeding in the plastic
pullets that we just saw and it's going to melt
them into a shape of the steelhol.
Speaker 2 (10:40):
The plant is currently making more than fifty learning resources toys,
with more coming in. One of them is Campfire chat Mellows,
a product that's being made in Vietnam for the first time.
It's a storytelling toy designed to spark conversations. Imagine a
cozy campfire that flickers with led light. There are soft,
(11:02):
squishy marshmallows called chat mellows, each printed with a unique emoji,
a magic wand a storm a jigsaw puzzle.
Speaker 3 (11:11):
Once upon time, there is one little boy who is
playing jigsaw puzzles.
Speaker 2 (11:15):
And then these images are story starters. Kids slide them
onto sticks and pretend to roast them over the campfire
while telling stories to each other. At the injection molding machine,
a robotic steal arm grabs onto squishy marshmallows that have
emerged from the mold. Elana says that kind of automation
(11:36):
is actually missing in many of the factories she's visited
this week.
Speaker 3 (11:40):
The automation is a period, so like you look around
and there's a lot of people, but there's not as
many machines covering the same thing that a person might do,
and so that's gonna bring the cost up a little bit.
Speaker 2 (11:51):
In Vietnam, factories still rely heavily on manual labor because
advanced machinery like this isn't easy to come by and
often needs to be imported, likely from China, which dominates
much of the market for toy manufacturing. And even in
factories that do have automation like this one, Alana's noticed
something else that affects productivity.
Speaker 3 (12:13):
So whereas in China, am I in tape one worker
to worker machine, in Vietnam I will take two workers
because they don't understand they're not as familiar with the
machine free it. So that'll take six to twelve months
for them to really learn it and to get it
to the same level of automation that exists already in China.
Speaker 2 (12:30):
You know you're trying to squeeze, Jimmy says. This factory
has about a third more workers than a similar plant
in China, and unlike Chinese laborers who've worked years or
even decades at facilities like this, many of these workers
are new to assembly work. Some of the staff we
spoke to came off farms and are relatively new to
(12:51):
assembly lines. That lack of experience, combined with lower automation
hits productivity. Alana says some vendors report making four pound
and units a day in China, but only twenty five
hundred in Vietnam. We follow the Chatmellow's productions through the
paint department, where workers manually spray red and orange flames
(13:11):
on the toy, then onto the assembly floor, where hundreds
of workers in blue company issued polo shirts and caps
sit at long metal tables. Workers on the line split
open the plastic logs, insert screws, install battery contacts, and
solder the electronics board. On the assembly line, a Chinese
(13:32):
manager is showing a worker how to fit apart together,
pointing out where to pay extra attention. His instructions and
mandra are translated into Vietnamese and the workers questions are
relaid back. This factory has relocated about twenty engineers and
(14:02):
managers from China to Vietnam, and that's to help bridge
the gap in experience and technical know how. It's a
common practice for factories here. Jimmy says, Chinese workers have
developed specialized skills over decades that are difficult to quickly
replicate elsewhere.
Speaker 8 (14:18):
Every single Chinese factory moving from here, they will rely
on their own team to split up. I mean the
core member of the team WI still Chinese, he posed
that is with experienced.
Speaker 2 (14:33):
The tariffs also bring another risk Learning Resources has yet
to calculate. To explain. Alana picks up the chat Mellow.
Speaker 3 (14:41):
Toy the interior. These chips are made introduced in China
and then imported here. The soldering is done locally. This
product will need batteries, those will be imported. You cannot
five batteries locally in Vietnam. The metal is.
Speaker 2 (14:57):
Imported, so a big contrast to China, where more than
ten thousand companies form an extensive sourcing network for the
toy industry. Vietnam's toy suppliers are in the hundreds, a
fraction of what China has.
Speaker 3 (15:12):
So within a city center or geographic area in China
you can find a plastics flyer, a print supplier, a
foam supplier, a wood supplier, and so on. So all
that is available locally. That same infrastructure doesn't exist anywhere
else in the world.
Speaker 2 (15:28):
Today, all these imported materials could spell trouble for businesses.
On top of the twenty percent terrace on Vietnam. Trump
has also slapped a forty percent transshipment rate on goods
that originate in China but are then exported from Vietnam.
That extra levy is designed to crack down on companies
that re route made in China products through Vietnam, adding
(15:51):
little or sometimes no additional manufacturing. So far, the administration
hasn't offered any guidance on how these higher duties will
actually be enforced, So.
Speaker 3 (16:02):
The rules on trendshipment haven't been fully defined yet. So
these are things that we need to guess on and
whether componentry which is brought in from other countries might
impact the terraff raight.
Speaker 2 (16:13):
Elana says all these factors add up more workers, less automation,
imported components, Chinese engineers. They make manufacturing in Vietnam ten
to fifteen percent more expensive than in China. Elana says
the entire process scouting factories, moving molds, prototyping adds up
(16:35):
to millions of dollars.
Speaker 3 (16:36):
They're not recoverable.
Speaker 2 (16:38):
There's a lot of costs here that aren't recoverable.
Speaker 3 (16:40):
Orders that we've lost, like those will never come back.
Costs they are being passed to customers like all these things.
Speaker 4 (16:47):
Are irreparable harm.
Speaker 3 (16:50):
And that's part of why we were motivated to bring
the lawsuit, is because there's a lot of damage being
done and there's a lot of small medium sized businesses
who don't have the ability to stand up, and so
we wanted to stand up on behalf of the thousands
of companies like our start A.
Speaker 8 (17:07):
Factor Vennez.
Speaker 2 (17:10):
After the break, what does the supply chain shift mean
for workers on the factory floor, for families in nearby villages,
and for American consumers back home. The town of Fully,
(17:41):
about forty miles from Vietnam's capital city of Hanois, sits
in the Red River Delta. It's in a valley surrounded
by lush, green, karst limestone mountains, a post guard landscape
until you get close and see the peaks being quarried
to build roads and industrial parks. It's a small, off
the beaten path town that historically attracted mostly locals, but
(18:04):
during our time there, we bumped into Chinese visitors and
heard Mandarin at breakfast and at roadside cafes. Most hotels
were nearly full because most rooms were now being used
to house Chinese workers. A trend that began in the
past year. My own family left Vietnam during a time
of high tensions with China, with the two countries engaged
(18:27):
in a border war in nineteen seventy nine. Then Vietnam
harassed ethnic Chinese and questioned their loyalty. It forcibly expelled
families with Chinese roots who lived along the northern border regions.
My father's side of the family had immigrated from China
to southern Vietnam in the early nineteen hundreds, and those
discriminatory policies after the war pushed out families like ours.
Speaker 6 (18:52):
And we're by the Obo and we modify the bowl
running on the ocean.
Speaker 2 (18:59):
In summer of nineteen seventy nine, my father and his
brothers retrofitted a riverboat to make it seaworthy, and my
grandfather navigated our way through the South China Sea. All
three hundred of the people who fled on our overloaded
boat were ethnic Chinese.
Speaker 6 (19:15):
And we take a chance fifty to fifty, you know, fifty,
diet fifty, you know a lie, No, fifty to fifty.
Speaker 2 (19:25):
Through the years, my dad has talked about that difficult
decision to risk all of our lives on the sea
because he and my grandfather couldn't see a way for
his children to have hopeful futures in our homeland. Because
of our ancestry, we brave storms and pirate attacks to
become refugees in far away countries. Countless others didn't survive
(19:46):
the journey. In Vietnam, that dark chapter is all but forgotten.
The relations between China and Vietnam still have points of contention.
They're entwined economically, Chinese investors are brave more than ever,
and Chinese capital funds nearly thirty percent of all new projects.
(20:09):
Just a few hundred yards from the dum Fund plant,
we stop at a roadside eatery right across from the
site of new factories under construction. Winty Twin is seventy
eight years old. She's just finished lunch and is chatting
with her neighbor.
Speaker 7 (20:30):
This is my hometown. These will rice fields all the
way to the river.
Speaker 2 (20:36):
Long before the factories arrived. Generations of families here, including
the winds, worked the land rice, wheat, cassava. In Vietnam,
land is sacred. After babies are born, their umbilical cords
are buried in the fields to ask the land to
protect them, and when they die, they're often buried in
(20:57):
the same rice fields where they toiled.
Speaker 7 (21:01):
Who all of this area used to be in my
family's fields, all the way out to there. We have farmers.
What do we do without our fields?
Speaker 2 (21:23):
In twenty thirteen, the government requisitioned the land to make
way for industrial development. Duyen and her neighbors say they
were forced to sell their ancestral farms and compensated about
ten thousand dollars, a price they deemed to both.
Speaker 7 (21:39):
They reclaimed the land, so we had to sell. No
one wanted to sell, but we had no choice. You
couldn't refuse. Come, Come what is.
Speaker 2 (21:53):
In the end, Duyn's family brought a small plot across
the street from the construction site. They paid nearly seven
times the government's compensation price per square meter. They built
a house and opened a small cafe serving construction workers,
but she worries it won't last. That workers will eat
at the factory canteens once construction ends. During our visit,
(22:19):
the air hung heavy with dust. Duyn and her neighbors
worry about pollution, both in the air and from the factories,
given the breakneck pace of development. Still, she acknowledges the
factories have open doors. Her daughter in law, once a farmer,
now earns nearly three hundred dollars a month at the
dum Fun factory making toys for learning resources. Her husband
(22:43):
weilds at construction sites. Together, they've saved enough to send
their son, Luin's grandson to study automotive engineering in South Korea.
It's a future, she says, made possible by factory work.
That hope for a better future also lies a few
(23:04):
miles away at the Hannam Vocational School. Here, students as
young as fifteen are training to become machine operators and engineers.
The school says nearly all graduates land factory jobs. Global
companies like LG, Hyundai and Samsung send trainers and donate equipment.
Speaker 3 (23:24):
And what thought, I have a movie through you.
Speaker 2 (23:27):
Sixteen year old Duncom is a returning student at the school.
Gum says he loves tinkering with electronics and he's eager
to find a factory job.
Speaker 3 (23:36):
Am I garden.
Speaker 8 (23:37):
Factories have a lot of equipment and machines, so they
need people to fix and maintain them.
Speaker 1 (23:42):
That's why I chose to study industrial electricity.
Speaker 6 (23:44):
Fixed machines at the planks.
Speaker 2 (23:49):
Gaum says a university education might not lead to a
career right away, but he's certain he can have his
choice of factory jobs. My conversation with his confident teenager,
upbeat about his future, left an impression on me. After
a week in Vietnam, it's clear that optimism runs deep,
centered around the factories and foreign investors pouring capital into
(24:12):
the region. The country's leaders are highly attuned to the
shifting geopolitical wins and are bent on maintaining growth. The US,
once a wartime enemy turned trading partner, now seems like
a fickle friend with its high tariffs, so Vietnam's counting
on foreign investors to help ride it out. Before heading home,
(24:33):
I asked Alana for her final thoughts after a week
of crisscrossing the country and visiting a dozen factories.
Speaker 3 (24:40):
Vietnam certainly has potential. The products that we saw made
here are very high quality. They're certainly expertise here, and
it's growing and changing rapidly. I think some of the
hang ups though, or that there's not as much capacity,
so there's just physically not as much manufacturing space here
as there is in China. And then Additionally, you can't
get a lot of the raw materials locally, and so
(25:01):
that is driving cost.
Speaker 2 (25:04):
For now, Learning Resources is placing its bets on Vietnam,
but tariffs are adding pressure. The company has already raised
prices of its toys by an average of six percent
the bare minimum to cover the costs, and Alana says
more hikes are on the way if Trump imposes additional tariffs.
(25:25):
But the biggest cost isn't on any invoice. Because of
the tariffs, Learning Resources had to cut its product development
budget in half. That meant shelving over one hundred new products,
including an entire line of educational toys for classrooms.
Speaker 3 (25:42):
That whole range had to go on hold because it
was too big and too complex. It was going to
take too many resources, and we just couldn't justify it
given all the other things I had to do. So
that's one that just personally for me, that makes me
very sad because it's a product that teachers have been
asking us to do for years.
Speaker 2 (26:00):
Elana says consumers will pay for the tariffs twice in
higher prices and in toys from the industry with a
little less magic because instead of investing in innovation toy
makers are syncing their budgets into tariffs and supply.
Speaker 3 (26:15):
Chains, theser costs that have led to us slashing budgets
and pulling back on investments that we were going to make.
We are hiring less people, We're coming out with fewer
products for the consumers.
Speaker 4 (26:30):
This is just going to mean higher prices and less choice.
Speaker 2 (26:44):
This is the big take, Asia from Bloomberg News. I'm wanha.
This is the first episode in an ongoing series on
how one American toy maker is grappling with record high tariffs.
Join us as the journey continues. If you like the episode,
sure to subscribe at Bloomberg dot com, slash podcast offer,
leave a review, and even better, tell a friend It
(27:06):
really makes a difference. Thanks for listening, See you next time.
Hosts And Creators
Sarah Holder
Saleha Mohsin
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