China’s Manufacturing Sector: The Rising Attraction of Vietnam

Hanoi, Vietnam

Vietnam has become a significant destination for multinational corporations and investors seeking alternatives to China’s manufacturing prowess. Over the past decade, Vietnam has become a prime destination for manufacturing investments, with multinational corporations like Samsung, Intel, and Foxconn recognizing its potential. However, Vietnam faces challenges such as infrastructure gaps in rural areas, ensuring a consistent supply of skilled labour, and balancing environmental concerns with industrial growth.

The country’s manufacturing sector’s rise as a global attraction reflects its favourable conditions and the evolving landscape of international business. As companies diversify their supply chains, Vietnam’s strategic location, competitive labour market, and pro-business environment are expected to keep it in the spotlight. However, challenges will need to be addressed, and Vietnam must continue investing in infrastructure, education, and sustainability to secure its position as a global manufacturing powerhouse.

The Changing Landscape

China, the world’s manufacturing hub, faces rising labour costs, trade tensions, and concerns about over-dependence. Companies are diversifying their production bases, with Vietnam emerging due to its strategic location, skilled labour force, and pro-business policies, addressing these challenges.

Skilled Labor Force and Competitive Wages

Vietnam’s labour force, with over 97 million people, is abundant and affordable, attracting new manufacturing projects and encouraging existing ones to expand. The young, rapidly growing workforce is bolstered by a strong work ethic and adaptability to new technologies. Labour costs in Vietnam are lower than in China, making production more competitive, attracting new manufacturing projects and encouraging existing operations to expand.

Strategic Location

Vietnam’s strategic location near China makes it an attractive destination for companies seeking to diversify their supply chains, reducing shipping times and costs. The country’s robust infrastructure, including ports and transportation networks, has facilitated goods movement within the country and to global markets. The North-South Expressway, a major highway, has further enhanced connectivity.

Pro-Business Policies

Vietnam has implemented pro-business policies to attract foreign investment and strengthen its manufacturing sector. The government has created special economic zones, streamlined administrative processes, and offered tax incentives. Vietnam has also signed free trade agreements like the CPTPP and EVFTA, making it an attractive destination for manufacturers seeking global market access.

Technology and Innovation

Vietnam is investing in technology and innovation to meet modern manufacturing needs. With a growing ecosystem of research and development centres and technology parks, the country is becoming a viable destination for high-tech manufacturing, attracting industries beyond traditional sectors.

Changing LandscapeChinaChina Manufacturing Sector:China's Manufacturing Sector: The Rising Attraction of VietnamCPTPPECFTAManufacturing SectorPro-Business PoliciesSkilled Labor Force and Competitive WagesStrategic LocationTechnology and InnovationVietnam