Sourcing from Vietnam: Why It’s a Smart Choice for US Businesses

Vietnam is a solid choice for business sourcing, as the Asian country boasts competitive labor rates and various free-trade agreements which help support cost-effective arrangements.

There are also many industrial clusters in Vietnam which serve as important hubs for various raw materials and product types. In this blog post, you’ll learn more about Vietnam and its suitability as a sourcing option.

Is Vietnam a Good Place to Source Products?

• Solid industrial base - Vietnam has a strong reputation as a manufacturing country which has a solid industrial base, and the ability to roll out mass production on everything from electronics to furniture.

• Home to big brands - Vietnam is home to a wealth of manufacturing facilities making it a suitable option for sourcing everything from automotive components to pharmaceuticals. There are several big global brands with plants in the capital Hanoi and beyond.

• Free trade agreements - Through a series of free trade agreements including the EU-Vietnam Free Trade Agreement (EVFTA) and the Progressive Trans-Pacific Partnership (CPTPP), there are preferential tariffs, and in some cases no tariffs, to various regions around the world.

• Well-ranking with World Bank - Vietnam consistently performs well in the World Bank’s “Doing Business” rankings across a variety of metrics, suggesting that it’s a great country to do business with.

• Industry 4.0 roadmap - You’ll also find that under the “Industry 4.0” roadmap laid out by Vietnam, the country is hurtling into the future with a heavy emphasis on automation, smart factories, and digital supply-chain transparency.

• Quality certifications - Many facilities across the country sport ISO 9001, IATF 16949, and ISO 13485 certifications, meaning you can rely on the quality of their operations and safety protocols.

What are the benefits of sourcing from Vietnam instead of China?

When sourcing from overseas, many U.S.-based businesses look to China for its reliability in manufacturing at scale at the lowest price. However, there are various benefits of sourcing from Vietnam as the country rivals China for affordability, and can compete in various other areas too.

For example, historically the Vietnamese dong (VND) has shown to be less volatile against the dollar than the yuan (the Chinese currency), which can make it easier to budget when sourcing products from Vietnam.

Plus, many smaller Vietnamese factories will accept low Minimum Order Quantity (MOQs), in the hundreds compared to the thousands as you might expect from China, which allows you to test new products without investing a large sum upfront.

Cost Savings of Sourcing from Vietnam Compared to Sourcing From China

Typically, when looking to source from Vietnam, you’ll find that costs are lower as factory wages are often less than you’d expect from various regions of China. This means on average you can expect to find good value for money when sourcing from Vietnam, particularly for labor-intensive goods.

That’s not to mention the potentially advantageous tariff terms, whereby certain products would qualify for a 0% import duty in certain markets, which is considerably less than tariffs on comparable Chinese goods.

Key Manufacturing Sectors in Vietnam

If you’re looking to understand what types of products you can source from Vietnam at a glance, here’s a brief overview:

How Do I Find Manufacturers in Vietnam?

There are various ways to track down reliable manufacturers in Vietnam, whether you’re based in the U.S. or have boots on the ground in the country.

If you’re unable to make it to Vietnam, one of the best ways to find manufacturers (if you don’t have any referrals or recommendations) is to use a B2B marketplace. If you are able to make it to Vietnam, you’ll be best served by showing up at one of the country’s many local trade fairs where you’ll have the opportunity to meet with suppliers face-to-face.

B2B Marketplaces and Local Trade Fairs

B2B Marketplaces

B2B marketplaces are online directories or hubs where you can browse verified exporters and find the perfect match when it comes to sourcing for your business. Some marketplaces list exporters from around the world, while others will focus exclusively on Vietnamese exporters.

Here are some of the most reliable options:

• Alibaba - Alibaba is one of the most popular online B2B marketplaces which hosts more than 200,000 manufacturers and suppliers. While its remit extends beyond just Vietnam, you can filter by the country to find local exporters in the country.

• VietnamTrade - VietnamTrade is run by the Ministry of Industry & Trade (MOIT), and it’s the government’s official export portal. As such, you’ll only find verified Vietnamese exporters on this site, and you’ll be able to browse a variety of sectors from textiles to machinery to find exactly what you’re looking for in a sourcing partner.

• Vietnam Export - Vietnam Export is a private B2B directory that compiles profiles from a number of regional trade-promotion centers, curating supplier catalogs and highlighting FTA-eligible goods. It can be especially useful if you’re looking to source renewable-energy equipment or specialty chemicals.

• HCM Digital - HCM Digital highlights suppliers based in the commercial capital of Vietnam, Ho Chi Minh, and is run by the local Department of Industry and Trade. Here you’ll find a plethora of detailed information to help you find a sourcing partner such as an interactive map of factory locations, capacity data on floor space and workforce size, and the website even features matchmaking services to pair you up with pre-screened vendors.

Online Directories for Different Industries

If you’re interested in industry-specific online directories and databases to find specialist manufacturers for your products, here are a few you can use:

• Vietnam Rubber Association - If you need to source rubber goods for your business, the Vietnam Rubber Association can be a good resource to browse to find your supplier.

• Vietnam Coffee Cocoa Association (VICOFA) - Vietnamese coffee is world-renowned, and VICOFA is a private trade association which has more than 100 members on its books from farmers to producers so they can help connect you with the right people to source coffee or cocoa-based products.

• Vietnam Association of Seafood Exporters and Producers (VASEP) - As one of the top seafood exporters worldwide, Vietnam is well-positioned to help you source seafood products for your business. VASEP is home to many fishers, packaging companies and other professions operating in the industry.

Local Trade Shows

If you get a chance to visit Vietnam in person, heading out to one of the country’s many trade shows will give you a great opportunity to meet suppliers and manufacturers in person.

• Vietnam Expo - Vietnam Expo is the country’s most popular multi-sector fair which is traditionally held at the ICE (International Centre for Exhibition) in Hanoi. You’ll find more than 1,500 exhibitors and over 50,000 buyers from 60+ countries, exhibiting products that range from electronics to consumer goods.

• Vietnam Manufacturing Expo - At the Vietnam Manufacturing Expo in Ho Chi Minh City there are over 1,400 exhibitors with a particular focus on Industry 4.0 solutions showcasing the latest in automation, robotics, and precision-tooling.

• Vietnam Textile & Garment Industry Expo (VTG) - The Vietnam Textile & Garment Industry Expo (VTG) based in Ho Chi Minh City is one of the best trade shows in the country where you’ll find more than 800 textiles, fabrics, and garment manufacturers.

• Furniture & Home Decor Expo (FAD) - The Furniture & Home Decor Expo (FAD) showcases rattan, teak, and upholstery manufacturers based out of Indonesia and Vietnam.

• Vietnam International Furniture & Home Accessories Expo (VIFA) - This expo makes sourcing furniture from Vietnam easier with home crafts and home decor with more than 400 manufacturers represented and is based in Ho Chi Minh City.

• International Exhibition on Electrical Technology & Equipment (ETE) - ETE Vietnam is one of the most important electronics expos in the country with more than 500 exhibitors. At this trade show in Ho Chi Minh City you’ll find manufacturers with a focus on electronics, green technologies, and renewable energy solutions.

How to Conduct Supplier Background Checks

To verify that the supplier or manufacturer you work with is legitimate and reliable, it’s worth running some background checks before issuing a work order.

• Verify Enterprise Registration Certificate - One of the first things you should do to vet a Vietnamese manufacturer is verify their Enterprise Registration Certificate on the National Business Registration Portal. After placing an order, you can then double check that the tax code matches up with the invoices.

• Request copies of certificates - Once you’re in communication with a prospective supplier or manufacturer, you can request copies of compliance and regulation certificates to ensure they operate to a certain standard. These certificates include the ISO 9001, the ISO 14001, and the OHSAS 18001, but there are other industry-specific certificates too.

• Hire an evaluation firm - If you’re assessing various options and you want to make sure they can satisfy the order to your expectations, you can hire an evaluation firm which will thoroughly review capacity, QA processes, and workforce conditions.

• Check past customer feedback - Run through customer reviews for each supplier you’re considering and be sure to place sample orders in smaller quantities to determine the quality of the product before you place a large purchase order.

Once it comes down to placing an order and agreeing terms with your manufacturer, make sure to build in MOQs, quality-acceptance criteria (AQL), packaging specifications, and delivery milestones to protect your interests.

Shipping and Logistics Tasks to Consider When Sourcing From Vietnam

Navigating Vietnam’s Export Policies and Tariffs

For shipping general goods to non-FTA markets, Vietnam levies a 5-7% average duty fee while most manufactured goods will pass through with zero duties to Europe, Canada, Japan, Australian, and other ASEAN members.

Some categories of goods such as pharmaceuticals and chemicals will require pre-approval from ministries, so you might need to allow for an extra few weeks in the delivery process.

Choosing the Right Freight Forwarder

When looking for a reliable freight forwarder for your goods, it’s important to pay attention to where their experience lies. Ideally, you would find partners who’ve conducted business through Vietnamese ports before as well as your target destination.

The right freight forwarder for your business might handle the local export clearances and supply electronic Certificates of Origin where applicable. Forwarders who offer real-time tracking dashboards and notify you with status updates can help you feel confident in the timelines you agreed upon.

Working With a Sourcing Agent

If you’re looking for a more comprehensive solution for all of your product sourcing needs, you could consider working with a local sourcing agent who’ll guide you through the process from start to finish.

A sourcing agent or buying office can act as your local representative, with boots on the ground in Vietnam. Working with one, you can have someone in your corner who might speak Vietnamese, understand cultural norms on a deeper level, and be in a good position to negotiate the best MOQs and payment terms for your product sourcing.

You can effectively outsource the process of finding a sourcing partner with a sourcing agent, as they’ll handle everything from ordering factory audits to drafting purchase order terms and carrying out risk assessments to make sure you’re covered.

Though sourcing agents will add to the cost of product sourcing, they can be a good option to consider if you want to outsource the process and feel confident that you’ll get the best deals.

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