With the current trade war between China and the U.S. occuring, many American companies are slowly migrating from China to Vietnam. Equally important, Vietnam is a signatory to several important trade agreements with other regions. Chief of these is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union Vietnam Free Trade Agreement. Many U.S. companies are turning to Vietnam for their manufacturing needs. Why is Vietnam manufacturing so popular? It has to do with both cost and quality.
Why Manufacture in Vietnam?
Vietnam represents a low-cost, high-quality environment for many of the world’s largest manufacturers. It is also well-positioned geographically to serve as an export hub to other Southeast Asian countries, the U.S., and Europe.
Vietnam’s popularity among manufacturers is that Vietnamese workers have excellent hand-assembly skills. These high craft standards result in high-quality products, with defects being a rarity. Combining high-quality products and low manufacturing costs leads many companies to move their manufacturing from China to Vietnam.
Do Vietnam’s Costs Compare?
One of the prime appeals of manufacturing in Vietnam is the country’s low labor costs. According to Statista, estimates for Vietnam’s manufacturing labor costs were $2.99 (USD) per hour. This cost is currently lower compared to Mexico and China. And consequently, this is what’s driving many manufacturing industries to relocate to Vietnam. However, this may not be the solution for every US company. Before making any transition, research, negotiations, and configuring cost-effectiveness, location, and processes will be necessary.
What Are Vietnam’s Key Industries?
Vietnam manufacturing has long been an essential player in the textile industry, with more than 6,000 textile manufacturers employing close to 2.5 million workers. China is still a more extensive manufacturing hub. The country is also a key manufacturer for other industries, including electronics.
According to oec.world, Vietnam’s number-one export is broadcasting equipment with an export value of $42 billion. Telephones are number two, at $21.4 billion. The country’s other top exports are integrated circuits ($19.8 billion), footwear ($8.9 billion), and machinery ($7.6 billion). Other important manufacturing industries include furniture, luggage, and wood products.
What Companies are Currently Outsourcing to Vietnam?
Canon, HP, Intel, LG Electronics, Nokia, and Samsung all use Vietnam for manufacturing. (Canon, HP, Intel, LG Electronics, Nokia, and Samsung all use Vietnam for manufacturing in the technology field. (Samsung, for example, uses Vietnam for a third of its manufactured output.) Other companies that manufacture goods in Vietnam include Adidas, Ashley Furniture, IKEA, J. Crew, Nike, and West Elm.
The bottom line is that more and more companies worldwide are manufacturing their products in Vietnamese factories. They get high-quality products at a low manufacturing cost that benefits their bottom line and provides quality products for their consumers.
Vietnam Manufacturing with ITI
Are you considering changing your manufacturing venue? Our offshore experience currently includes China, Vietnam, and South Korea, and additional countries are under consideration. Our “No manufacturing defects” guarantee and 45+ years of experience will help you get on track with successful and profitable offshore manufacturing. Or, if you’re just now beginning to consider offshore manufacturing, take a quick poll to see if your product is right for it.