You heard that right. Vietnam, not China, is the world’s best manufacturer.
A survey by Deloitte predicted Vietnam, Malaysia and Indonesia will be the top manufacturing countries in 15 years.
Here’s how Vietnam reigns supreme in supply, and why your business needs to get on board.
Low labor costs have helped Vietnam become a supply-chain giant.
China used to be the king of manufacturing, with much of their economic growth relying on this sector. But since China’s hourly wages increased to $3.60 US in 2016, other Asian countries have been able to compete. Even Chinese businesses are moving their manufacturing to Vietnam for cheaper costs.
More foreign investment means more factories built in Vietnam, further improving Vietnam's economy.
Your business can take advantage of these low costs, especially if you have a strong currency. Buy low with exports, and sell high at home.
One of the main reasons why China’s manufacturing has fallen is a shortage of skilled labor.
The working-age population (15-59 years old) in China peaked in 2011, but has fallen every year since. Meanwhile, 74% of the Vietnamese labor force is under the age of 50.
Buying Vietnamese goods made by skilled workers ensures that they are high quality, while keeping costs low.
China dominated manufacturing in the 2000s with a younger population. Now it's Vietnam's turn.
Ideal Geography for Trade
Vietnam’s sea connections remain one of its greatest assets for international trade.
The three largest Vietnamese ports are in Hai Phong, Ho Chi Minh City and Da Nang.
In 2018, operations will begin to double the capacity of Hai Phong’s port. This will benefit all businesses around the Vietnamese capital, Hanoi.
Vietnam is also well-connected by rail transportation, especially to China. Stretching 531 miles, the Kunming-Hai Phong railway can transport a container in under 9 hours.
Vietnam’s transportation infrastructure benefits your business whether you export or import.
The Vietnamese railways reduce the cost of transporting exports across Vietnam before shipping. This cuts Vietnamese expenses, which could mean a better price for your business.
If your business is importing US goods to Vietnam, it benefits from Vietnam’s many ports.
In 2016, the Vietnamese Seaport Association announced their new priority is port logistics. They wish to “simplify the life of manufacturers exporting their goods into Vietnam.”
Added port efficiency and multiple sea connections makes exporting to Vietnam a breeze for US businesses.
Foreign investment has become a priority for the Vietnamese government. They plan on becoming a “developed country” by 2020. Also, Vietnam wishes to modernize their cash-dependent economy, through investment and infrastructure.
Many remember the rise of China’s economy, which went from $153 per capita GDP to $1284 between 1978 and 2005. China accomplished this, becoming the world’s second-largest economy, through manufacturing and government reform.
Vietnam is heading down a similar economic path. Government support and competitive manufacturing has ushered Vietnam into the global elite. Your business could benefit by doing business with Vietnam and taking advantage of their manufacturing.
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