Vietnam has quickly become a popular sourcing destination for e-commerce brands, thanks to its skilled workforce, affordable labor, and expertise in key industries. Exports have surged, with a 15.4% increase in the first nine months of 2024 compared to last year. The country’s main export markets include the United States, China, South Korea, Japan, and Hong Kong, showing how it’s becoming an important player in global trade.
In this guide, we’ll explore why Vietnam is a strong sourcing option, look at the country’s key industry clusters, highlight some challenges to consider, and offer practical tips to help you make the most of sourcing from Vietnam.
Why Source from Vietnam?
Vietnam’s rapid rise as a global manufacturing hub is no accident. Here are some of the top reasons why Vietnam is an attractive sourcing destination:
Affordable Labor Costs: Labor costs in Vietnam are significantly lower than in neighboring countries, making it ideal for brands aiming to reduce production costs without compromising on quality. The average hourly wage in Vietnam is about half of that in China, according to Statista, allowing brands to keep costs low.
Skilled Workforce: Vietnam’s workforce is highly skilled, especially in sectors like textiles, electronics, and furniture, where many factories employ workers with years of experience in manufacturing and quality control. This skill base enables brands to source high-quality products and maintain standards.
Trade Agreements: Vietnam has established numerous favorable trade agreements, such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which reduce tariffs on exports. This helps make Vietnamese products more competitive in international markets.
Sustainability Initiatives: Vietnam has made strides in eco-friendly practices, aligning with the values of brands focused on sustainable sourcing. Many factories participate in programs like Better Work Vietnam, focusing on labor standards and environmental practices, which can be appealing for brands that prioritize ethical sourcing.
Comparison between India, Vietnam and China
Vietnam Industry Clusters by Product Category
Vietnam’s manufacturing industry is strategically distributed, with each region specializing in different product categories. This specialization allows brands to work with experienced suppliers suited to their specific needs. Here’s a detailed look at each major product category and the brands with a manufacturing presence in these regions.
Textiles and Apparel
Key Locations: Ho Chi Minh City, Binh Duong, Dong Nai
Vietnam’s textile industry is among the world’s largest, attracting brands due to its quality and affordability. Vietnam’s garment factories produce everything from sportswear to high fashion, making it a one-stop shop for apparel.
Brands with Presence:
Nike and Adidas: Both brands manufacture sportswear in southern Vietnam, especially in Ho Chi Minh City and Dong Nai, where skilled workers and efficient processes are abundant.
H&M and Zara: Fast fashion brands like H&M and Zara work with Vietnamese factories capable of producing clothing quickly to keep up with rapidly changing fashion trends.
Uniqlo: The Japanese retailer partners with factories in Ho Chi Minh City, benefiting from the craftsmanship and attention to detail in Ho Chi Minh City’s factories.
Furniture
Key Locations: Binh Duong, Dong Nai, Ho Chi Minh City
Vietnam is a leading exporter of wooden and rattan furniture, with manufacturers known for sustainable practices and craftsmanship. The furniture industry has attracted global brands due to its eco-friendly materials and skilled artisans.
Brands with Presence:
IKEA: The Swedish giant works with factories in Binh Duong, focusing on affordable and sustainable furniture.
Ashley Furniture: This U.S.-based brand sources its wooden and upholstered furniture from Vietnam, leveraging the country’s skilled workforce and competitive pricing.
West Elm: Known for its handmade, eco-friendly furniture, West Elm works with factories in Binh Duong that specialize in sustainable materials and unique designs.
Footwear
Key Locations: Dong Nai, Ho Chi Minh City, Tay Ninh
Vietnam is the world’s second-largest exporter of footwear, making it a prime location for athletic and fashion shoe brands. Footwear factories in Vietnam are known for producing high-quality, durable products.
Brands with Presence:
Nike: One of Nike’s largest production hubs is in Vietnam, particularly in Dong Nai, where millions of pairs of shoes are manufactured each year.
Adidas: The German sportswear giant also has a strong manufacturing presence, sourcing both apparel and footwear from Vietnamese factories.
New Balance: This brand recently expanded its sourcing network to include Vietnam, focusing on performance and lifestyle footwear.
Electronics
Key Locations: Hanoi, Bac Ninh, Thai Nguyen
Vietnam’s electronics sector has grown rapidly in recent years, particularly in the northern provinces, making it a leading source of electronics components and finished products.
Brands with Presence:
Samsung: The South Korean giant has large production facilities in Bac Ninh and Thai Nguyen, where it produces smartphones, tablets, and other devices for global distribution.
LG: LG manufactures a variety of home appliances and electronics in Hai Phong, supplying products for the domestic and international markets.
Panasonic: This Japanese brand produces energy-efficient home appliances in its Hanoi factory, focusing on sustainability.
High-Tech and Semiconductors
Key Locations: Bac Ninh, Thai Nguyen, Ho Chi Minh City
Vietnam has emerged as a promising destination for high-tech and semiconductor manufacturing, thanks to its stable political environment, skilled labor, and competitive costs. Major players in the technology and semiconductor industries have set up facilities in Vietnam, taking advantage of the country’s advanced infrastructure in this sector.
Brands with Presence:
Intel: Intel’s factory in Ho Chi Minh City is one of its largest assembly and test sites globally. The facility plays a crucial role in producing and testing Intel’s processors, contributing to the global semiconductor supply chain.
Samsung: Samsung’s complex in Bac Ninh and Thai Nguyen includes semiconductor manufacturing, especially for mobile devices. This investment has helped Vietnam become one of Samsung’s key production bases outside South Korea.
Amkor Technology: A leading semiconductor packaging and test services company, Amkor has recently expanded its operations to Vietnam. The company’s new plant in Bac Ninh is expected to further boost Vietnam’s capabilities in semiconductor packaging and testing.
Cement
Key Locations: Ha Nam, Ninh Binh, Thanh Hoa
Vietnam is one of the largest cement producers in Southeast Asia, with major cement factories in the northern and central regions due to the abundance of limestone.
Brands with Presence:
VICEM: Vietnam Cement Corporation (VICEM) operates large cement factories in Ha Nam and Ninh Binh, producing for both domestic and international construction markets.
Holcim: The Swiss cement giant produces cement from southern Vietnam, focusing on high-quality materials for infrastructure projects.
Metals
Key Locations: Hai Phong, Ba Ria-Vung Tau, Dong Nai
The metals industry in Vietnam supports various sectors, from construction to automotive manufacturing. Vietnamese metal producers are known for high-quality steel and aluminum.
Brands with Presence:
Hoa Phat Group: Vietnam’s largest steel manufacturer, operating in Hai Phong and Ba Ria-Vung Tau to produce steel for domestic and export markets.
POSCO: The South Korean steel producer operates facilities in Ba Ria-Vung Tau, providing high-quality steel for construction and manufacturing.
NS BlueScope: A joint venture that produces building materials, with factories in Ba Ria-Vung Tau serving the Southeast Asian market.
Automobiles
Key Locations: Hai Phong, Ho Chi Minh City, Vinh Phuc
Vietnam’s automotive industry is still emerging but has attracted both local and international manufacturers producing vehicles for domestic and international markets.
Brands with Presence:
VinFast: Vietnam’s first homegrown car manufacturer, producing electric cars and motorcycles at a large facility in Hai Phong.
Toyota: Toyota operates a factory in Vinh Phuc, primarily serving the domestic automotive market.
Honda: Known for motorcycles and cars, Honda manufactures vehicles in a facility near Ho Chi Minh City.
Agriculture and Food Processing
Key Locations: Mekong Delta, Ho Chi Minh City, Lam Dong
Vietnam is one of the world’s largest exporters of agricultural products like rice, coffee, seafood, and spices. The fertile Mekong Delta is especially important for agricultural exports.
Brands with Presence:
Nestlé: The global food giant sources coffee beans from Vietnam’s Central Highlands, one of the largest coffee-producing regions in the world.
Cargill: This American agricultural company partners with Vietnamese farmers, supporting local communities while sourcing agricultural products.
Vinamilk: Vietnam’s leading dairy producer, known for its milk and yogurt products, with a growing export market.
Vietnam's Key Manufacturing Regions Map
Conclusion
Vietnam’s well-developed industry clusters make it an attractive sourcing destination for a wide range of products, from textiles to electronics, furniture to agriculture, and even emerging sectors like renewable energy and healthcare. With its competitive labor costs, skilled workforce, and commitment to sustainability, Vietnam has a unique set of advantages for brands seeking quality products.
Understanding the regional strengths, industry clusters, and potential challenges can help e-commerce brands effectively source from Vietnam. By using reliable platforms like SourceReady, planning around seasonal cycles, and ensuring clear communication with suppliers, you can successfully navigate Vietnam’s manufacturing landscape and elevate your brand in a competitive market.
FAQ
1. Why should I consider sourcing from Vietnam instead of other countries?
Vietnam offers competitive labor costs, a skilled workforce, and a diverse range of manufacturing capabilities, particularly in textiles, electronics, furniture, and agriculture. Additionally, Vietnam has favorable trade agreements with regions like the EU and countries in the CPTPP, which can reduce tariffs and lower import costs.
2. How do I handle shipping and logistics when sourcing from Vietnam?
Vietnam has well-connected ports in major cities like Ho Chi Minh City and Hai Phong, making it easy to export goods. For shipping, air freight is faster but more expensive, while sea freight is more cost-effective for large orders. You may also want to work with a third-party logistics provider (3PL) to manage transportation from the factory to your distribution center.
3. What are the best times of year to place orders from Vietnam?
It’s best to avoid placing large orders around the Tet holiday (Vietnamese New Year) in January or February, as many factories close for up to two weeks. Additionally, check with suppliers about other local holidays that might impact production schedules.
