The top sourcing destination for diversifying beyond or away from China, Vietnam saw its popularity among Western buyers grow by leaps and bounds over the past few years – a “China + 1” sourcing strategy in response to the increased costs of doing business in the PRC. International buyers of all sizes employed this strategy to diversify risk by not having all their production “eggs” in one “China basket”.
Table of Contents
- Disadvantages of Manufacturing in Vietnam
- Tips on How to Source Products in Vietnam
- Websites to Find Vietnamese Products and Suppliers
- Tips on Getting Your Products Manufactured in Vietnam
- Frequently Asked Questions about Sourcing from Vietnam
Disadvantages of Manufacturing in Vietnam
Sourcing from Vietnam comes with lots of attractive bonuses: cheap operating costs, stable politics, investment incentives, and increasingly liberalized international trade agreements. Vietnam has expanded trade through bilateral agreements with ASEAN members Australia, Chile, China, India, Japan, New Zealand, and South Korea. But its greatest prize has been a free trade agreement with the EU in 2020. The agreement reduces import duties over seven years in the EU and ten years in Vietnam.
However, there’re several factors limiting Vietnam’s ability to absorb significantly more manufacturing from China and move up the value chain.
Smaller Population
As you can see from the above chart, Vietnam’s labor force is only 7 percent the size of China’s. Therefore, it can attract only a limited share of the firms looking for an alternative to China’s rising costs. Vietnam has succeeded in targeting sectors such as textiles and footwear, however, given its small population, it cannot replace the production that requires massive mobilization of the labor force.
Therefore, businesses looking to diversify their supply chains beyond China might only find a subset of their manufacturing needs in Vietnam.
Gradually Aging Population
Though Vietnam has a relatively young population now, it will gradually enter an aging society with more aging populations by 2050 according to UN population projections. That explains why the government has mounted a campaign to promote fertility.
Dependence on Imported Raw Materials
Another pitfall on Vietnam’s edge against China is that its gross exports include many Chinese and South Korean intermediate goods or raw materials. While Vietnam has seen drastic growth in exports, much of that growth is being captured by foreign rather than domestic firms. Vietnam’s integration with China has risen over the years, with a higher dependency on importing raw materials from China for production.
Lacking a Complete Sourcing Ecosystem
Vietnam does not have a highly developed product procurement or sourcing supply chain with complete sourcing information and data as China does. China has been manufacturing for the world much longer than Vietnam has. There’re many companies like Alibaba and Global Source with decades dedicated to collecting suppliers and products data. Some Vietnamese factories are also listed on Alibaba, but many are not, and most of those listed on Alibaba aren’t manufacturers. Vietnam has a much more fragmented product sourcing manufacturing database, making it more difficult than finding suppliers and manufacturers in China.
Vietnam’s Trade Shows are not as larger or as well organized as China’s. Most of the major shows are held in Ho Chi Minh City, and there are a few are held in Hanoi. But compared to the Chinese mega fairs as the twice-year Chinese Canton Show, the Vietnamese shows are tiny. In fact, at most of the Vietnamese shows we have gone to, we can walk the entire show in a few hours, and rarely do we need more than a day or two at each of the shows. Whereas the Canton Fair in China, you can spend days at the show and maybe not even see the entire show.
Tips on How to Source Products in Vietnam
Here’re some tips to source products directly from factories in Vietnam.
- Check websites including Alibaba and Global Sources, and do some Google searches to see what you can find.
- Check out the exhibitor’s directory from some local Vietnamese trade fairs for the products you are looking for.
- Ask for manufacturing referrals if you know anyone in a similar industry.
Websites to Find Vietnamese Products and Suppliers
Here is a list of websites you can contact to find some Vietnamese manufacturers. The information might not be updated or incorrect, so you may have to contact many people to find what you are looking for.
- Alibaba Vietnam: A list of Vietnamese gold suppliers
- Global Sources: You can also find some Vietnamese suppliers data though it mainly focuses on China
- Vietnam Export Portal: You can find data of Vietnamese suppliers across various sectors
- Vietnam Chamber of Commerce: You can find lists of Vietnamese manufacturers and other trade sources
Tips on Getting Your Products Manufactured in Vietnam
One of the most important steps in any sourcing endeavor is the due diligence to establish that the suppliers you’ve targeted are actual factories, have the ability and experience to actually produce the product you require (especially for your target market), and that they are a good fit for the buyer in terms of best value (price, quality, lead time). Plus, you need to make sure they are truly interested in your business.
The lower number of available factories (compared to China) allows some factories to be very picky about who they take on as new customers. They have the luxury of focusing on larger buyers with bigger, consistent orders. It can also require a long time for samples, especially custom-made samples or new products. If you are having problems sourcing a qualified Vietnamese manufacturer, here are a few suggestions:
- Find a sourcing agent based in Vietnam and have them help you locate manufacturers with production capacities. Sourcing agents or others in Vietnam may already have their connections in place and maybe be able to find your manufacturer to produce your products.
- Try visit the factory yourself and see if they will talk to you and get them to help you with your production.
Frequently Asked Questions about Sourcing from Vietnam
What is the best way to source products from Vietnam?
If you have never sourced or manufactured products in Vietnam before, it may be best for you to find a Vietnamese buying agent that is familiar with your industry to source the products and arrange everything.
Is it easy to import products from Vietnam?
If you buy your products FOB Vietnam, which means the Vietnamese suppliers will handle all the local transportation and Vietnamese customs, then exporting products from Vietnam is quite easy. You just have to get related papers from the Vietnamese suppliers and take care of the customs declaration in the destination country.
What products can I import from Vietnam?
Check our list of 11 Trending Products to Import from Vietnam.