Vietnamese protestors set fire to 15 foreign-owned factories in response to China’s decision to drill in a part of the South China Sea that both countries lay claim to, report Ho Binh Minh and Manuel Mogato for Reuters. While the protestors were targeting Chinese factories, Taiwanese and South Korean factories were also damaged. No casualties have been reported so far.

Vietnamese protest china

Protests halt production for some international suppliers

The protests apparently started out peacefully, but then became more aggressive as the numbers swelled. The two industrial complexes in Binh Duong and Dong Nai provinces were hit by thousands of protestors, overwhelming police who were on the scene.

Yue Yuen, which supplies major footwear brands including Adidas and Nike Inc (NYSE:NKE), and Li & Fung, which supplies retailers including Wal-Mart Stores, Inc. (NYSE:WMT) and Kohl’s Corporation (NYSE:KSS), have both temporarily halted production in Vietnam until the situation is back under control, even though neither company suffered any damages. Initial estimates put the damage to the factories at a few hundred thousand dollars, but thousands of workers are now without work, which will have further effects on the local economy.

Tension centered on South China Sea claims

China claims essentially the entire South China Sea, hugging the coast lines of Vietnam, Brunei, the Philippines, and Indonesia, but of course not everyone recognizes the claim. Vietnam claims the Paracel Islands, not far from the location of China’s oil rig, and both countries have ships near the rig in a sort of standoff that threatens to turn into something worse. China has demanded that Vietnam get the protestors under control and work harder to protect Chinese property in Vietnam, but didn’t recognize the connection to its movements in the South China Sea in official comments. Relations between the two countries are souring with no sign turning around.

“I fear a dark chapter in Sino-Vietnamese relations is now being written,” said Ian Storey, a senior fellow at the Institute of Southeast Asian Studies. “And because China wants to keep that oil rig in place into August, these protests could just be the first pages.”

China has also been working on a project, possibly an airstrip, near the Johnson South Reef in a move that is thought to have more political than military significance as China works to establish the validity of its claim on the South China Sea and the significant gas and oil reserves that come with it.