2023 Product Sourcing Guide - Vietnam
The conflict between the United States and China over trade during the Trump administration has given the debate over whether importers should move production to Vietnam a new life.
For years, importers have thought about moving their supply chains away from China, and some have already taken that stance.
Take, for instance, Nike. With 37% of production in 2010, Vietnam became the primary supplier of Nike-branded footwear, while China remained a close second with 34%. By 2018, Vietnam had increased by 47%, while China had decreased by 26%.
So Why Source In Vietnam?
Due to its vast agricultural industry's wealth, political stability, and expanding consumer market, Vietnam is an appealing sourcing market. With low labor costs, the nation remains highly competitive in a labor-intensive industry.
According to the 2020 Economic Complexity Index (ECI), Vietnam was the 61st most complex economy, ranked 41st in terms of GDP (current US$), 16th in terms of total exports, 18th in terms of total imports, and 139th in terms of GDP per capita (current US$).
On the World Bank's metrics, Vietnam ranks 69th, while China is 46th in terms of ease of doing business. This is one area where Vietnam actually performs better than China. In addition, Vietnam was one of 34 nations that made the most significant gains in these metrics between 2018 and 2019, particularly regarding the low cost of business start-up, taxes, and contract enforcement.
Additionally, with the EU-Vietnam Free Trade Agreement (EVFTA), European companies will have opportunities to eliminate 99% of all import tariffs, and reduce barriers and contract agreements.
When I was sourcing in one of the factories, I was fortunate to be given a presentatio about Vietnem, they shared to me some key points on why Vietnam is a promising country to manufacture your next products.
Here let me share to you the slide:
Also in the slide below concerning labor rate, look at the disparity between Vietnam and other Asian countries!
What Can Be Sourced in Vietnam?
The top exports of Vietnam are : a). Broadcasting Equipment ($42B) , b).Telephones ($21.4B), c). Integrated Circuits ($19.4B), d). Textile Footwear ($8.9B), and e). Office Machine Parts ($7.68B).
Vietnam exports mostly to the United States ($77B), China ($49.4B), Japan ($20.4B), South Korea ($19.6B), and Hong Kong ($13.8B).
In 2019, the monthly minimum wage in Vietnam varied by region from $125 to $180, with Hanoi and Ho Chi Minh having the highest rates for urban areas. These rates are just half of China’s, which fares from $140 to $346.
However, many importers have discovered that moving to manufacture in Vietnam is not as straightforward as simply switching suppliers. Vietnam has been hailed as the "next China" by numerous media outlets.
Challenges in Vietnam's Product Sourcing
1. Online Presence
If you are familiar with online product sourcing in China, you will find doing this activity challenging for Vietnam.
First, there are only a handful of Vietnamese factories listed on Alibaba.
Second, online data is not that accurate, some available on Alibaba are not actually manufacturers in Vietnam.
Third, the product you have in mind may not be available or doesn't exist yet in Vietnam. Assuming what you have in China is available in Vietnam is absolutely wrong. This goes mostly for electronic gizmos and gadgets like Bluetooth, speakers, and sportswear.
Fourth, factories in Vietnam may not have an online presence or website to broadcast their products. Most Vietnamese suppliers are focused on working with large international brands rather than dealing with small buyers sourcing online.
So if you try for example LED lamps or some other types of lighting products, you can conduct a speedy search on some databases pertaining to China, and as a result, you will obtain a comprehensive list of sources and suppliers that you are free to get in touch with; you can't expect the same result for Vietnam.
2. Quality Control and Inspections
One of the concerns importers must consider is the quality of Vietnamese goods, despite lower labor costs.
To remotely verify product quality, many importers opt to have professional third parties conduct product inspections. However, the location of the factory can have a significant impact on inspection costs. If your third-party quality control provider does not operate extensively in Vietnam, you might have to pay more for quality control inspections.
Many local inspection companies in China only operate domestically and don’t have a global presence, so getting them to reach and check your products could send you more costs, longer lead times, and integrity concerns due to a lack of ethical and centralized operational policies.
3. Logistics and Infrastructure Availability
China has some of Asia's most advanced and effective import-export infrastructures, including well-paved roads, seven of the world's ten busiest shipping ports, and a vast rail network. Whether you are simply visiting your suppliers or moving freight, getting from one supplier to the next is relatively simple.
However, importers thinking about moving to Vietnam may find that the infrastructure there poses a significant logistical challenge. Due to less efficient infrastructure, you may experience unexpected delays and longer lead times.
Vietnam ranked 39th out of 160 countries in the World Bank's 2018 Logistics Performance Index, far behind China (26th) overall. The main reason China and Vietnam scored differently is that their infrastructure if of different quality. However, Vietnam's $5 billion North-South expressway, which will cover 654 kilometers, is expected to boost the logistics sector significantly.
4. Human Resources: Labor Force & Skilled Labor
Regarding the size of its workforce, Vietnam is severely behind. China employs nearly 14 times as many people as Vietnam, with 788 million. The surge in manufacturing brought about by the Sino-U.S. trade war has already resulted in a significant shortage of skilled labor in Vietnam.
Education, know-how and development, and several other crucial human capital index rankings also place Vietnam far behind. Due to these restrictions, many manufacturers will find Vietnam less appealing than China as an alternative.
Despite Vietnam's annual export records, importers must be aware of their restrictions when sourcing goods from a country still in its boom phase.
Where and how do you source in Vietnam?
There are some methods to get in touch with possible suppliers for your products, here are a few:
1. Go online!
You will likely find what you're looking for online if you’re sourcing textiles, bags, packaging materials, furniture, tarps, or woodcrafts. These are the supplier directories you should check out:
- Alibaba.com/vn
- Globalsources.com/manufacturers/Vietnam
- Vietnam-manufacturing.com
- Vietaz.com
- Vietnamesemade.com
Here are some PRO tips on ensuring you get the most out of your online transactions: Never keep a supplier guessing what you want.
You must provide precise product specifications and ask straightforward questions like:
- What is your unit price?
- What is your MOQ requirement?
- What does the product sample cost?
- What is your standard production time?
- Where is your factory located, and can we visit you?
- Do you accept third-party quality inspections?
2. Use a Sourcing Company
Sourcing firms with local knowledge can add much value by giving you access to their extensive supplier networks. They can also match you with the correct factory based on your order volume and product requirements.
Investors should also exercise caution in locating reputable sourcing firms, as some are not true sourcing firms but rather traders with various roles.
Unlike traders, sourcing companies provide all necessary information about manufacturers, such as the company's profile, production capacity, key contact person, sample cost, MOQ requirements, certifications, and so on.
Furthermore, sourcing firms can assist you with a factory tour, supplier background check, and even testing and logistics through a third party. Some businesses will provide these services as a complete package, while others will charge based on project milestones or individual services.
What can a Vietnam Sourcing Company Provide?
Planning & Finding Suppliers
The sourcing company will find, check, discuss, and start planning for your project, before making our final selection with you. They ensure that there are no surprises or hidden costs involved at any point during the sourcing process.
Sending Samples
In order to ensure the most suitable quality of the products, they can start a sampling procedure with suppliers until you are satisfied with their product. Only then will they proceed in sourcing for your final product.
Quality Control
To provide high-quality solutions, they can send experts to visit the factory to double-check everything from equipment used for production, all the way down to quality inspection. Once these confirmations have been completed, they can negotiate terms and finalize details ahead for making quality products with competitive prices.
Shipping Your Products
Before importing products from Vietnam, it’s important you work with a sourcing agent that can offer guidance and advice throughout each step of the process. Vietnam sourcing agents can assist to import products smoothly by providing quotes from forwarders to guarantee an efficient delivery time, and reduce goods damage.
Advantages of Working with Vietnam Sourcing Agents
In recent years, Vietnam has become a go-to destination for businesses seeking to source products. This is because the country boasts a highly skilled and affordable labor force, as well as a vast network of suppliers.
However, for businesses that are not familiar with the local language, culture, and regulations, sourcing from Vietnam can be a challenging task.
That's why many businesses are turning to Vietnam sourcing agents for help. These professionals offer a wide range of services, including supplier vetting and verification, and quality control and inspection, which can help businesses overcome the challenges of sourcing from Vietnam.
• Supplier vetting and verification
When it comes to supplier vetting and verification, Vietnam sourcing agents can assist businesses with identifying reliable and trustworthy suppliers. This is particularly important in a country like Vietnam, where there are many suppliers to choose from and not all of them may be legitimate or able to meet the needs of the business. By working with Vietnam sourcing agents, businesses can have peace of mind knowing that their suppliers have been thoroughly vetted and verified.
• Quality control and inspection
Another key advantage of working with Vietnam sourcing agents is quality control and inspection. Vietnam sourcing agents can help businesses ensure that their products meet the required quality standards before they are manufactured goods are shipped.
This can help businesses avoid costly mistakes and ensure that their customers receive high-quality products that meet their expectations.In addition to supplier vetting and negotiation, Vietnam sourcing agents can also help businesses with logistics and shipping.
They can arrange for the transportation of goods from the supplier's factory to the port of export, handle all necessary documentation and customs clearance, and arrange for the shipment of goods to the final destination. This can save businesses time and money, as well as reduce the risk of errors and delays.
Another advantage of working with Vietnam sourcing agents is that they can help businesses navigate the complex regulatory environment in Vietnam. They can assist with obtaining the necessary permits and licenses, as well as ensure that businesses comply with all relevant regulations and standards. This can help businesses avoid legal issues and reputational damage, which can be costly and time-consuming to resolve.
3. Book a flight and visit a trade show in Ho Chi Minh City or Hanoi
Attending a trade show in Ho Chi Minh City or Hanoi is the best way to meet Vietnamese factories. You can meet factory representatives at a trade show in person, get price quotes, and ask questions faster than waiting for them to reply to your emails.
Meeting them in person also helps you gauge their company’s credibility and product quality. Here is some trade shows you visit if you’re looking for products manufactured in Vietnam.
Apparel & Textiles
Furniture, Homedecor & Handicrafts
Electronics
Food & Agriculture
- Vietnam Farm & Food Expo AGRI Ho Chi Minh
Packaging
These events are annual international travel event that enhances exchanges, tourism promotion, and business opportunities for domestic and foreign tourism companies. Usually, these events are expected to attract over 300 exhibiting companies and 150 high-level buyers from over 50 countries and territories, together with more than 20,000 visitors, all gathering in one place over three days.
4. Visit Global Trade Shows
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Vietnamese factories also attend HKTDC trade shows in Wanchai and Globalsources trade shows at the Asia World-Expo, in Hong Kong. As such, you may not need to go to Vietnam to find factories there.
When it comes to providing businesses that are interested in sourcing products from Vietnam with the most advantageous platform, Vietnam is not wasting any time and is positioning itself strategically as a potential market leader.
This includes businesses that want to export their goods from Vietnam and gain direct access to an already established market in either the United States or Asia.
Now, is Vietnam what you are looking for?
If you are interested in getting most out of sourcing from different countries, my company, Imprint Genius, can help you navigate and get the best products with the best deals. Click here for more details.
FAQs
What are the top products manufactured in Vietnam?
The top products manufactured in Vietnam, thanks to its favorable business environment, and low labor costs, are these industries:
1. Electronics
Vietnam is emerging as a major player in the electronics manufacturing industry, a sector that is rapidly expanding in the country. The presence of large companies and manufacturers such as Samsung, LG, and Intel has helped to establish a thriving ecosystem for electronics manufacturing in Vietnam. The country is now the second-largest exporter of mobile phones and industrial items after China, and this trend is expected to continue in the coming years.
2. Textiles and Garments
Vietnam has a long history of textile and garment production, and it is now one of the world's largest exporters of textiles and garments. The industry employs over 2.5 million people and accounts for nearly 16% of the country's GDP. Vietnam's competitive advantage in this sector lies in its low labor costs and high-quality products. In recent years, the country has also made efforts to improve working conditions and sustainability in the textile manufacturing industry itself, which has helped to increase its appeal to foreign buyers.
3. Footwear
Vietnam is the third-largest exporter of footwear in the world, after China and India. The country's footwear industry has grown rapidly in recent years, thanks to its skilled workforce, low labor costs, and favorable business environment. Vietnam is now home to some of the world's leading footwear brands, including Nike, Adidas, and Puma. The industry's success has been driven by a combination of factors, including access to high-quality materials, a focus on innovation, and a commitment to sustainability.
4. Furniture
Vietnam is also a major player in the furniture industry, thanks to its skilled labor force and abundant natural resources. The country is home to many furniture manufacturers, both large and small, that produce high-quality wooden products for both domestic and international markets. Both bamboo products and handicraft products have been growing at a steady pace in recent years, and it is now one of the top exporters and manufacturers of furniture in the world. The industry's success can be attributed to its ability to meet the demands of customers for both quality and affordability.
5. Agriculture and Aquaculture
Vietnam's agricultural products and aquaculture sector is a major contributor to the country's economy, accounting for nearly 15% of its GDP. The country is a major exporter of rice, coffee, and seafood, among other products. Vietnam's favorable climate and abundant natural resources make it an ideal location for agriculture and aquaculture production. In recent years, the country has made efforts to improve the sustainability of its agricultural practices, which has helped to increase the appeal of its products in international markets.
How to find Vietnamese suppliers?
Vietnam has a wide range of products for domestic and international markets. To find Vietnamese suppliers, consider the following ways:
1. Attend trade fairs and exhibitions where you can meet potential suppliers face-to-face and establish relationships. Vietnam Expo, SaigonTex, and Hanoi Textile and Garment Industry Expo are popular events that connect buyers and find suppliers.
2. Utilize online marketplaces such as Alibaba.com, Global Sources, Tradekey, and Vietnam Yellow Pages, which offer a convenient way to find new suppliers.
3. Leverage local networks by partnering with local businesses, reaching out to industry associations, or tapping into personal networks. Vietnam has a strong community of small and medium-sized businesses that can recommend suppliers.
4. Conduct online research by searching for suppliers on search engines and social media platforms, exploring supplier directories, and checking out resources provided by the Vietnamese government such as the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam Trade Promotion Agency (VIETRADE).
How do I find a sourcing agent?
Finding a sourcing agent in Vietnam may seem daunting, especially if you are new to the industry. However, with the following best practices, you can confidently find a reliable agent:
- Conduct thorough research
Start by searching online for top-sourcing companies and agents in Vietnam. Check industry associations, trade shows, and other online directories for a list of top-sourcing companies and agents.
2. Verify their experience
Check their website, social media pages, and online reviews to get an idea of their experience and reputation. You want to make sure the agent you choose has experience in your industry and can provide the services you need.
3. Verify their credentials
Verify the credentials of any sourcing agent you are considering working with. Ask for references and check with industry and trade associations to verify their membership. Check their business registration and licensing with the Vietnamese government to ensure they are a legitimate business.
4. Discuss your needs
Discuss your needs with the agent to determine if they are the right fit for your business. Consider the products you are sourcing, the quantity you require, and your budget.
5. Ask about their services
Ask about the services they offer, which include supplier identification market analysis, supplier vetting and verification, price negotiation, production monitoring, quality control, and logistics. Remember that their primary focus is to connect you with the right manufacturers for your product.
6. Request a quote
Request a quote that includes all services and other costs associated with the sourcing process after discussing your needs with the agent.
7. Review the contract
Carefully review the contract before signing with a sourcing agent. Ensure all services and costs are included, and there are no hidden fees. The contract should outline the agent's responsibilities and your responsibilities.
Is there Alibaba for Vietnam?
Yes, there is an Alibaba for Vietnam. There are online marketplaces in Vietnam that can be useful for sourcing products. While Alibaba is a popular online platform used for sourcing products from China, Vietnam has its own set of online marketplaces that can be just as helpful in finding suppliers and products.
Two popular online marketplaces in Vietnam are Alibaba Vietnam, which operates as a B2B platform for suppliers to showcase their products and connect with buyers, and Vietnam Trade Portal, which promotes trade between companies in Vietnam and other countries by allowing buyers to search for suppliers based on product categories and location.
Sourcing agents and trading companies are also available to connect international buyers with suppliers in Vietnam, providing services such as supplier identification, product sourcing, quality assurance and control, logistics, and local market expertise.
