The government has taken a stance to change its image across the world and enhance the economy of Vietnam by venturing into manufacturing. As known, Vietnam is an agricultural focus country.
The government wants to diversify the country’s portfolio to minimize the threat to their economy from external influence. Companies like yours can take benefit of this sentiment and get your production going, as the government will be making it easier for foreigners to make international trade with them.
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.
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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.
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.
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.
Vietnam’s two most generous challenges in construction allure production area, that it is increasing, and it has a sole-body, central regulated administration. Infrastructure bettering be reluctant demand and organizing. Government bureaucratic rules may be confusing although reconstructing, two together endure determinant into your conclusion, exceptionally by what method they grant permission impacts your schedule and in what way or manner long it will enjoy receiving your brand to display.
The Vietnamese government’s commitment to a diversified economy has contributed to the development of trade, especially in the manufacturing sector. Measures such as infrastructure development, international free trade agreements, tax breaks, education, and training contribute to business growth. Thus, the market presents a favorable climate for business growth, which can attract new international investors to contribute to the development of the country.
On this infrastructural plan, many advances are noted on the railroads, road and maritime, it is the case of the city of Hanoï and all around the south. Training and education measures for the acquisition and diversification of skills in order to boost the market and to be in line with the skills demanded on the world market. In addition, a light tax policy that attracts potential international investments. This tax incentive contributes to the development and construction of the country. For example, a low tax rate, or even a tax exemption, can be granted to companies wishing to build Vietnamese soil and participate in the growth of the country’s economy. In the same vein, 12 free trade agreements will be signed in 2021 and in particular a trade agreement between the United States and Vietnam signed since 2001. These partnerships, or even agreements, facilitate the acquisition of raw materials, the export of goods in the world. Below are important agreements that have impacted business growth in Vietnam: ASEAN (Association of Southeast Asian Nations) and RCEP (Regional Comprehensive Economic Partnership).
By 2050, the Vietnamese government aims to reduce carbon emissions and become greener in relation to the growth of industrial activities. To this end, a commitment has been made to the sustainable development of manufacturing. The benefit of this commitment encourages manufacturers to use and implement cleaner and more environmentally friendly manufacturing measures. Moreover, these ecological policies are attracting more and more companies concerned about their image and the environment.
Finding the right partner is a complex task. Thus, many factors must be taken into account, especially when your search is international access. Already, it is essential to know the cultural values, the social, economic and political issues of the country where you want to do business. But also to know the strengths and weaknesses of your partner’s company in order to avoid any surprises.
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If your product requires technological input. It is important to also focus on this point when looking for partners, because in Vietnam, not all suppliers have state-of-the-art technological equipment. It is undoubtedly that China excels more than Vietnam at the international level. And this thanks to its technological capacity and its diversified skills. The only downside of the Vietnamese market comes from its inability to meet all the needs of the international market, especially those requiring a technological touch.
