Vietnam Becomes Asia’s Best Country For Manufacturing

Last updated May 21st, 2024.

Because of its rare combination of low wages, skilled labor, strategic location, and lax regulations, Vietnam is arguably Asia’s best country for manufacturing.

According to numbers by the International Trade Center (ITC), Vietnam’s revenue from electronics exports amounted to $50 billion.

This might seem like a low number compared to China’s nearly $1 trillion. Still, Vietnam’s rapid export growth helped it climb the ranks into the top 10 electronics producers.

In fact, despite a prediction by analysts that China will maintain its status as the world’s largest electronics exporter for at least several decades, lots of multinational firms are deciding to base their new factories in Vietnam.

Manufacturing in Vietnam vs. China

Companies that expand into Vietnam often cite China’s aging population, rising costs, and a looming trade war with the United States as their main reasons.

For example, Samsung’s largest mobile phone factory in the world finished construction in Vietnam’s northern province of Thai Nguyen.

Vietnam, along with other nearby countries such as Thailand and the Philippines, are now offering their own incentives to lure manufacturers away from China.

The result is that many companies are now shifting their investment toward other Asian markets – especially to places like Vietnam which claims one of the highest export growth rates on the planet.

Foreign businesses say Vietnam has a convenient geographic location when compared to other Southeast Asian countries.

Likewise, Vietnam’s long eastern shore allows faster shipment to the Europe, Japan. Sharing a border with China makes existing supply chains easier to maintain as well.

Vietnam shares a border with China, along with several rapidly growing frontier markets in Southeast Asia. There couldn’t possibly be a better country for multinationals to relocate.

Vietnam’s Future: Can it Maintain Growth?

However, low wages are still the main draw for most manufacturing firms expanding into Vietnam. Factory workers here among the region’s lowest paid.

Only Laotian and Cambodian employees are paid less money. Yet these nations also don’t have some of Vietnam’s other advantages.

Will Vietnam continue to grow at a fast pace? The nation’s economic future depends on whether it’ll create creating higher-value products over time.

If Vietnam continues to invest in education and infrastructure, it’ll grow well into the future.

If not, Vietnam will only attract investment until their neighbors can outcompete them on cost and value.