New Trade Agreements
At the beginning of the 21st century, A Bilateral trade deal was signed between the United States and Vietnam. The RCEP agreement was also signed by Vietnam aka Regional Comprehensive Economic partnership that has a web of 15 nations and nearly a 3rd of the population on the west Pacific Rim on this planet, all in 1 trade Zone, this was possible as Vietnam was already a reputed ember of ASEAN trade agreement which is for south-east Asian countries exclusively. This shows that Vietnam has access to source materials from its partners and neighboring countries in the ASEAN and RCEP regions.
The government of Vietnam provides tax benefits to attract foreign investment into the country. To build the manufacturing industry domestically, they provide establishments that are technologically advanced in industrial colonies at discounted tax rates, strategic tax holidays, and other tax incentives to grow and build in the country. These benefits help the new manufacturers to increase their capability and capacity at lower tax rates.
Connectivity can become a problem, as one might think for a country like Vietnam. The city of Ho Chi Minh aka Saigon, the financial capital of Vietnam, has gone under progressive infrastructure growth, especially in the south.
The locale surrounding the city of Hanoi, the capital of Vietnam, has gone under large investments with electronic tech giants such as Samsung towards the growth of the region by deploying people and money in mass. This region of Vietnam is ahead of the rest and is recommended due to connectivity and ease of moving supplies from port to your facility and vice versa with finished parts or products. In a booming region in the efforts for expansion, roads are being built, railways and ports to support growth when it comes to manufacturing.
Labor Training Programs
One of the major stakeholders, employees are the driving asset for organizations, the central government understands the need to upskill their people, to enhance the knowledge and skills of their workforce, this is another way the central government is making their domestic market vibrant and a part of the diversification of the economy. There are several vocational programs in their arsenal of development initiatives. The labor force manufacturing is high quality and has enhanced the capabilities of the Vietnamese workforce.
A Commitment towards Green Economy
For the Vietnamese government, sustainability is a primary motivator. They want to be a carbon-neutral country by 2050, and one of their green goals is to develop a sustainable manufacturing industry.
This is an excellent time for businesses who want to become more sustainable and want to start from scratch. Vietnam has benefits in that the manufacturing industry is a rising sector in the country, and they can apply sustainable directives for cleaner energy and manufacturing processes to establish a green economy in its totality through infrastructure, which is only the beginning. If green manufacturing is ingrained in your company’s DNA, it may be the determining factor in the manufacture of your product.
Finding the Right Factory for Production
You may already be aware of the number of manufacturing choices there in China, it becomes overwhelming sometimes to which manufacturer to choose. Despite the Pandemic hit in the year 2020, the World Bank in Vietnam reported the manufacturing sector alone brought $45 billion in revenue in US dollars but in the same year China made $3.2T in US dollars.
We see the difference is more than 60x times, which shows Vietnam’s manufacturing sector does not have a solution for every manufacturing need. The choices are limited, you will have to find the right connections to know about the domestic market and get in touch with the right partner. You will need someone to check if the manufacturer has all the resources such as specific technical equipment for your product’s creation and does it have relevant skilled labor and specific equipment.
It is also required to check certifications for quality control, which is progressively developing as well. All boils down to selecting the right manufacturer to make sure your production is seamless. The capability of Vietnam is limited for now and it’s still developing its manufacturing sectors unlike China, so It might not be the option for everyone, but it can be an option for you Contact FNM Vietnam for more info.