As an importer, it is important to consider several sourcing alternatives, in order to be able to deal with any risks associated with the sourcing in China: factory closures, shortages of raw materials, exceptionally long production times, etc. You can have multiple suppliers in different regions of China, but you can also expand your sourcing to other countries.
Vietnam presents itself as a very good sourcing alternative depending on your field of activity, thanks to globally recognized skills in certain industries. Thus, sourcing in Vietnam allows you to benefit from certain advantages, but nevertheless requires some adaptation from the importer accustomed to sourcing in China. This is what we will see in this article.
What are the advantages of sourcing in Vietnam?
The cost of Vietnamese labor is very attractive despite the relatively high level of qualification and the quality of the goods produced. Vietnam remains a little above India in terms of production costs but below Chinese prices. The country is growing and recently launched an investment plan for factories to increase their production capacity. The industrial future of Vietnam is therefore very promising, especially since the unemployment rate is very low. Companies looking to relocate their production to Vietnam will benefit from this dynamism. However, they will first have to adapt to the cultural difference as well as to the specification of the Vietnamese industrial environment.
What are the differences between sourcing in Vietnam and sourcing in China?
Although these two countries are bordering each other, Vietnam and China have differences in the way of doing business. The culture being different, the professional requirements are different. This cultural difference is reflected in the way contracts are negotiated. In Vietnam, the margins of negotiation are more limited than in China, and there is not any notion of guanxi (relationship) with the supplier. Communication is less accessible because Chinese factories have adapted to marketplaces like Alibaba, which make it easier to contact suppliers. Customization of goods is less advanced, because years of experience and openness to foreign markets have enabled Chinese factories to refine their techniques and improve their skills in tailor-made services. Therefore, certain goods produced in China cannot be systematically reproduced identically in Vietnam.
Access to raw materials is also more limited, which has a direct impact on production times. Finally, logistics is more complex in Vietnam because of the quality of the infrastructures and the limited capacity of ports.
For which industries should you consider sourcing in Vietnam?
Vietnam is a sourcing alternative that should not be overlooked for certain categories of goods. It is recognized worldwide for the quality of its textile and luggage industry, and has increased skills in furniture with a large production capacity. Many factories in Vietnam are specialized in this field. Companies like Ikea source in Vietnam. The factories have thus been able to diversify their production techniques, which allows importers to be able to source increasingly complex products.
In general, Vietnam has excellent production capacities for products made from raw materials such as wood, bamboo, plastic, or rubber. The different materials offered by the factories are reputed to be of excellent quality, which represents a major advantage in favor of sourcing in Vietnam. The electronics industry is also booming. Apple and Samsung have relocated part of their production to Vietnam. Vietnam will become a major platform for the manufacture of electronic products, thanks to the increase in its production capacity.
In conclusion, some importers will consider Vietnam as their main source of supply. Others will choose Vietnam as an alternative to China, if certain events were to impact their supply chain.
Nevertheless, sourcing in Vietnam requires a lot of rigor and a certain ability to adapt. As an importer, you have to adapt to the country codes to be able to source under the best conditions.
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