With the outbreak of the US-China trade war, many American and Chinese companies are relocating their manufacturing bases to Vietnam. Vietnam has signed bilateral and multilateral free trade agreements with numerous countries and regions, the most significant of which are the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement. This demonstrates the openness of the Vietnamese government towards foreign investment. Why is Vietnam's manufacturing sector so popular? It relates to both cost and quality.
Why Manufacture in Vietnam?
Vietnam offers manufacturers worldwide a low-cost, high-quality environment.
Firstly, it holds a strategic geographical position, serving as an important hub for international maritime trade, and can act as an export center to other Southeast Asian countries, the United States, and Europe.
Secondly, Vietnam boasts a young and large workforce with excellent hand assembly skills. In Vietnam, nearly 88% of the population aged 25-59 joins the workforce. High craft standards result in high-quality products, with defects being rare. The combination of high-quality Vietnam manufacturing products and low manufacturing costs is why many companies are moving their manufacturing operations from China to Vietnam.
Do Vietnam's Costs Compare?
One of the main attractions of Vietnam's manufacturing industry is the low labor cost. According to data from Statista , the Vietnam factory worker salary is estimated $2.99 per hour, significantly lower than in Mexico and China. Consequently, many manufacturing operations are moving to Vietnam.
What Are Vietnam's Major Industries?
For a long time, Vietnam's manufacturing industry has been a significant participant in the textile sector, employing nearly 2.5 million workers across more than 6,000 textile manufacturers. China remains a broader manufacturing hub. The country is also a major manufacturer in other industries, including electronics.
According to oec.world , leading product made in Vietnam factory outlet is broadcasting equipment, with an export value of $42 billion. Telephones rank second at $21.4 billion. Other major Vietnam manufacturing export products include integrated circuits ($19.8 billion), footwear ($8.9 billion), and machinery ($7.6 billion). Other significant manufacturing sectors include furniture, bags, and wooden products.
Which Companies Are Outsourcing to Vietnam?
Canon, HP, Intel, LG Electronics, Nokia, and Samsung have all opted for Vietnam manufacturing. (Technology modules for Canon, HP, Intel, LG Electronics, Nokia, and Samsung are manufactured in Vietnam.) Other companies manufacturing goods in Vietnam include Adidas, Ashley Furniture, IKEA, J. Crew, Nike, and West Elm.
An increasing number of global companies are producing their products in Vietnamese factories. They achieve high-quality products at lower manufacturing costs, which benefits their bottom line and provides consumers with quality products.
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