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. Read on to learn more.
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 US, and Europe.
Key to Vietnam’s popularity among manufacturers is the fact that Vietnamese workers have great skill in hand assembly. These high workmanship standards result in high-quality products. Defects are rare. The combination of high-quality products and low manufacturing costs is leading many companies to move their manufacturing from China to Vietnam.
Another contributing factor to the migration from China to Vietnam is the current trade war between the U.S. and China. 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.
Do Vietnam’s Costs Compare?
One of the prime appeals of manufacturing in Vietnam is the country’s low labor costs. According to Statista, Vietnam’s manufacturing labor costs were estimated to be $2.73 (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. Research, negotiations, and configuring cost-effectiveness, location, and processes will be necessary before making any transition.
What Are Vietnam’s Key Industries?
Vietnam manufacturing has long been known as an important player in the textile industry, with more than 6,000 textile manufacturers employing close to 2.5 million workers. China is the only China bigger manufacturing hub. The country is also a key manufacturer for other industries, however, including the electronics industry.
According to Vietnam Briefing, Vietnam’s number-one export is phones, with a 2017 export value of $45.1 billion. Textiles are number-two, at $25.9 billion. The country’s other top exports are computers and other electronics goods ($25.9 billion), footwear ($14.6 billion), and machinery ($12.8 billion). Other important manufacturing industries include furniture, luggage, and wood products.
What Companies are Currently Outsourcing to Vietnam?
In the technology field, Canon, HP, Intel, LG Electronics, Nokia, and Samsung all use Vietnam for manufacturing. (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? Before you make that first move, contact ITI Manufacturing toll-free at 888-574-6823. Our offshore experience currently includes China, Vietnam, and South Korea, and additional countries are under consideration. With our “No manufacturing defects” guarantee and our 45+ years of experience, we can 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.