Vietnam is quickly becoming a major player in global manufacturing, thanks to the “China+1” strategy, where companies are moving operations out of China to diversify their supply chains. This shift is positioning Vietnam as a top destination for businesses looking to relocate. As global economies recover, Vietnam’s import and export sector is expected to thrive. Key industries driving this growth include electronics, textiles, pharmaceuticals, coffee, and e-commerce, with Vietnam becoming a strategic hub for international trade.
Vietnam's Emerging Manufacturing Profile in Asia-Pacific
As costs rise in China, many businesses are turning to Vietnam as a cost-effective alternative. The number of orders moving from China to Vietnam has surged in recent years. For example, China’s Pearl River Delta, once a global manufacturing powerhouse, has become too expensive, leading companies to seek lower-cost options in Vietnam.
Vietnam’s location in Southeast Asia, coupled with its competitive manufacturing costs, makes it an ideal base for businesses targeting ASEAN markets. In 2023, the manufacturing sector accounted for nearly 20% of Vietnam’s GDP, with the government aiming to increase this to 25% by 2025.
The Role of Free Trade Agreements (FTAs)
Vietnam’s strategic advantage also lies in its network of Free Trade Agreements (FTAs), which are making the country more open to international trade. Agreements like the RCEP, EVFTA, and UKVFTA have enhanced Vietnam’s market access, reduced costs, and simplified customs procedures. These agreements help Vietnam benefit from trade tensions between China and the US.
Additionally, Vietnam’s labor costs remain significantly lower than other countries in the region, such as China and Thailand, making it a competitive option for manufacturers. In 2024, the country’s minimum wage ranges from US$140 to US$202 per month, helping businesses keep production costs low.
Vietnam’s Economic Growth and Trade Partners
Vietnam’s economy has shown strong growth across various sectors, with domestic consumption expected to rise by 20% annually. The US remains Vietnam’s largest export market, followed by China, South Korea, and Japan.
Top Export Markets for Vietnam in 2023:
- USA: US$96.99 billion
- China: US$60.71 billion
- South Korea: US$23.45 billion
- Japan: US$23.29 billion
Top Import Sources for Vietnam in 2023:
- China: US$110.63 billion
- South Korea: US$52.47 billion
- Japan: US$21.63 billion
Key Export Industries in Vietnam
- Electronics: Vietnam is a leading exporter of electronics, with companies like Samsung and LG Electronics making significant investments. Electronics have overtaken coffee, textiles, and rice as Vietnam’s top export item.
- Textiles: The textile industry remains a key sector, with Vietnam surpassing China in textile exports to the US in 2024. The country is now one of the largest textile exporters in the world.
- Pharmaceuticals: The pharmaceutical market is expected to reach US$16.1 billion by 2026, driven by a growing demand for healthcare and government support for the sector.
- Coffee: Vietnam is the world’s second-largest coffee exporter, with plans to shift from raw beans to processed coffee to increase its value.
- E-commerce: With a fast-growing digital economy, Vietnam is quickly becoming one of Southeast Asia’s top e-commerce markets.
For businesses looking to tap into Vietnam’s growing market, sourcing agents and Asia-based agents can help navigate the country’s competitive landscape. These agents offer valuable local expertise, helping businesses find suppliers, manage logistics, and handle regulations.
Vietnam’s status as a global manufacturing hub is set to continue expanding, with growing opportunities in electronics, textiles, pharmaceuticals, and more. By partnering with a reliable sourcing agent, businesses can leverage Vietnam’s cost-effective manufacturing options and access lucrative global markets.
As the global economy recovers, Vietnam’s importance in international trade will only continue to increase. For companies looking to relocate or expand operations in Asia, Vietnam offers both a cost-effective manufacturing base and access to regional markets. Partnering with experienced sourcing agents or business consultants can help navigate the local market, ensuring businesses take full advantage of the opportunities Vietnam has to offer. With its combination of low production costs, skilled workforce, and favorable business environment, Vietnam is poised to remain a top destination for business growth and trade in the coming years.