Manufacturing Opportunities in Vietnam Are On The Rise
Vietnam has been a new favorite hub for manufacturing since the trade war broke out between China and the United States. CPTPP ratification, the signing of the EU-Vietnam FTA, and the Regional Comprehensive Economic Partnership (RCEP) looking to be signed a few more weeks away, Made in Vietnam has not been as positive as today. I have talked to a few factory owners, who were struggled 2 years ago and now are expanding their production line.
Of particular interest to investors has been the continuing growth of Vietnam’s domestic consumer market, and this growth is expected to continue for some time to come – domestic consumption is predicted to increase at a rate of 20 percent per year. With a population of over 96 million (2018) and Southeast Asia’s fastest-growing middle class, Vietnam clearly represents an important market. Manufacturers are enjoying both domestic and export growth.
In addition to that, low labor cost in Vietnam, which are 50 percent of those in China and around 40 percent of those reported in Thailand and the Philippines, based on 2015 figure, workforce growing annually, Vietnamese workers are considered as inexpensive, young, and increasingly, leading to factories poping up constantly. However, we also see yearly rising property rental prices, unwilling over time employees, not so international trade minded office and under developed infrastructure, slowing down the growth.
There, comes the Chinese manufacturing investment, who comes alone with fund, machinery, know how skill and management team. Interesting enough, while US is busy moving the orders from China to Vietnam, to avoid heavy import duty, the Chinese factories are also busy looking at investing factories in Vietnam, to get their orders back! Stories about garment manufacturing factories and textile factories moving their whole factory to Vietnam are happening everyday and more Chinese kids are showing up at HCMC international schools.
Majority of these investment goes to traditional export industry such as textile, shoes, furniture, high technology manufacturing, while other smaller market as benefiting as well. When working with Vietnamese owned factories, which may take you more than 1 week to get partial quotation, these factories are easier to work with for export market, and it is definitely great news for Sourcing Consultant Company like us, having more choices, giving faster turn around time and wider product offers.
Today, in addition to our traditional sourcing options, China Direct Factories, Yiwu Market, Guangzhou Market, Indonesia manufacturers, our choices in Vietnam is also growing, so as this country’s economic. Let’s try to bring these to benefit your business!
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