Vietnam: An Emerging Manufacturing Powerhouse

by Stef Calimlim (Content Editor)

Image from Getty

Vietnam is rapidly growing as a trade and investment hub and an emerging manufacturing powerhouse with various competitive advantages over its Asian counterparts.

Current trends show that businesses worldwide are looking to diversify their supply chains and are breaking away from the confines of traditional sourcing, that is, by seeking competitive destinations. Thanks to Vietnam’s solid foundations, it has become one of today’s best and most preferred alternative sourcing markets.

Vietnam’s economy has proven resilient amid the various economic challenges globally. According to statistics from Trading Economics, Vietnam’s GDP growth surged from 5.05 percent in the first quarter of 2022 to 7.72 percent in the third quarter, indicating that its economy is doing well despite the unprecedented global economic challenges. By 2027, the country’s GDP is expected to amount to $690.11 billion, based on Statista’s latest report. Meanwhile, the Asian Development Bank predicts that the country’s economy is set to rebound this year and expand further in 2023, owing to high vaccination rates, trade expansions and continued fiscal policies. With a recovering labor market and active fiscal and monetary measures from its government, Vietnam’s industrial growth is expected to grow by 9.5 percent this 2022.

Major production centers

Vietnam has three key economic regions for manufacturing, which include the Northern, Central and Southern regions. Each region has its unique features and specializations.

The northern region is known for electronics and automotive manufacturing, handicrafts export and state-owned enterprises. The central region is a hub for food, beverage, feed processing, agriculture and marine economy. Garments, textiles and home products manufacturing, meanwhile, is clustered in the country’s southern region.

Key industries in Vietnam

Apparel & Textile

 Vietnam is the second-largest clothing exporter in the world. The exports of textiles and apparel products in Vietnam are anticipated to hit an all-time high of $22 billion in the first half of 2022, according to Nikkei Asia’s latest report. The country’s apparel and textile industry has three major sectors which include fiber production, fabric production and dyeing, and garment manufacturing. 

Footwear & Leatherwear

One of the world’s largest footwear manufacturers, Vietnam is responsible for more than 10 percent of all footwear exports globally, with various big-name shoe brands using Vietnamese factories to manufacture their products. The country’s leather, footwear and bags exports are expected to increase 10 to 15 percent year-on-year to about $23 to $25 billion, according to local reports.

Furniture

When it comes to furniture sourcing, Vietnam provides a versatile selection of furniture, especially wooden choices. It is the leading furniture manufacturer in Southeast Asia, the second in the Asia-Pacific and the fifth in the world. In 2020, the country exported $7.4 billion worth of furniture to the US alone, according to Furniture Today. The industry is expected to reach an annual growth rate of 13.5 percent from 2019 to 2023, as per Statista.

Handicrafts & Home Improvement

 Vietnam is popular for its traditional craft villages ranging from pottery, weaving, painting, embroidery, paper-marking, stone-carving, carpentry, bronze-casting, ship-crafting and hat-making. Vietnamese handicrafts have high profit rates and great market potential due to their unique and intricate craftsmanship. The government is focused on improving the country’s export capacity and value chain, and aims to reach its export turnover goal of $5 billion by 2025.

Advantages of sourcing in Vietnam

Stable political system

 Vietnam has a more stable political environment. Maintaining a one-party state system has allowed its government to better address the challenges its country is facing and meet the needs of its citizens since there is less political struggle, easier and faster decision-making, and quicker implementation of government policies.

The abundance of young, skilled labor

According to the World Bank, Vietnam currently has a strength of 56.1 million labor force. It is one of the largest labor markets in the Southeast Asian region, with young, dynamic and skilled workers ready to take on jobs that the market demands.

Stable currency

Vietnam’s stable currency has been a key ingredient of its export industry. Having a stable currency allows the country to avoid inefficiency costs brought about by inflation. It also lets the government finance deficits at low rates and helps businesses.

Free Trade Agreements (FTAs)

Vietnam has been a member of the World Trade Organization, the world’s largest international economic organization, since 2007. Its membership has allowed it to strengthen its position in global trade, expand its trade networks, diversify its exports, increase its credit ratings and participate in the development of new principles of international trade. Vietnam has been actively participating in bilateral trade agreements such as the UK-Vietnam FTA, EU-Vietnam FTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. With these FTAs in place, member parties enjoy reduced or zero export taxes and tariffs, among others.

Global Sourcing Fair Vietnam 2023

Vietnam is ready to showcase its unique offerings and welcome visitors from around the world at the upcoming Global Sourcing Fair Vietnam 2023, which will be held on April 26 to April 28, 2023 at the SECC in Ho Chi Minh City. The first Vietnam trade show, which is 100% focused on international sourcing, provides a comprehensive online and offline solution for buyers seeking new sourcing options. The show will feature more than 5,000 home, gift and fashion products from 500 verified and export-ready suppliers from Vietnam and other Asian exhibitors.

As Vietnam transforms into a global manufacturing hub and sourcing destination, Global Sourcing Fair Vietnam provides the platform for buyers and suppliers to meet and get real business done. To catch the latest show updates, highlights and more, buyers can subscribe to our newsletter.

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