Vietnam, the land of the “Ascending Dragon”, is gradually establishing itself as a land of opportunities. Over the recent years, this country has progressed a lot. It has discarded the centrally planned system and developed a market-based economy. Even Vietnam sourcing has started competing against China, a country, which has been the main outsourcing hub for years.   

Why is China Losing Sourcing Opportunities?  

Now, China is finding it difficult to retain its top position as global businesses have already started to shift their sourcing activities to other Asian countries, including Vietnam. Many reasons are working behind the degradation of China- its trade war with the US, incredible hike in labor rates, and closing of countless factories due to the rigorous environmental regulations.   

From May 2019, the US has escalated tariffs from 10% to 25% on imported Chinese goods, which are worth more than US$250 billion. It has made importing from China a costly affair. Moreover, monthly labor wage rates in China have reached an all-time high state. Chinese authorities have also imposed restrictions on exporting many raw materials. Due to these factors, China is no more the best option for Western countries.  

This downturn of China brings a great opportunity to Vietnam. To grab this opportunity, Vietnam has been putting efforts into improving its production and export abilities. If you are looking for a trusted alternative to replace Chinese sourcing services, you can consider Vietnam. Go through this blog to learn the opportunities and challenges of souring from Vietnam.  


The emergence of a strong economy and ease of doing trade has led Vietnam to a huge success in the world of commerce. Let’s have a look at some of the key opportunities that a company can leverage by sourcing from this country.   

  • Captivating Market Growth across Multiple Categories  

From 2013 to 2017, the Vietnam market has witnessed an enormous growth of ~10% to US$ 15 billion. This market is driven by escalating demand of the end-users. Most importantly, the Manufacturing Purchasing Managers Index grew to 53.8% in 2018. From 2012 to 2017, the electronics market has expanded, and this expansion can be seen in the market growth.   

  • Low cost of Labor  

If you compare the labor rates in Vietnam to that of China, you will find that Vietnam offers 50 % fewer labor rates than China. Therefore, Vietnam is an affordable option for foreign companies. Vietnam has more than 57.5 million laborers employed in various sectors, such as agriculture, fishing, manufacturing, and textile.   

The government is deploying several measures to hike the vocational and technical training, such as launching new accreditations to empower the workforce with the skills the big brands are looking for.  

Availability of the Suppliers  

Since 2012, many large, mid-level, and small businesses in Vietnam, have achieved 51.6% growth. This data has caught the attention of many international brands of different sizes. The country has more than 6,000 textile and garment manufacturing companies. 84% of these companies are privately owned and 15 % of these businesses have FDI, while 1% of the companies are state-owned. The fabrication industry contains more than 10,000 companies. These statistics are clearly showing that Vietnam has ample suppliers for meeting the demands of global companies. Availability of suppliers is another reason working behind the rise of Vietnam sourcing.

  • Enhanced export skills  

Do you know that Vietnam is the 21st largest exporter country in the world? According to the reports, in 2017, the country shipped products and services worth ~US$220 billion. In the last five years, the total export of this country has hiked at a CAGR of 13-14%. The US, China (excluding Hong Kong), Japan, Korea, and Germany are some of the main partners of Vietnam. This incredible growth would not be possible without the increasing export skills of the country. Moreover, the laws and regulations related to sourcing services in Vietnam are more flexible than its competitors.   


Along with the opportunities, you should also consider the challenges. Check out a few challenges given below:  

  • In Vietnam, the legal limit for overtime is 4 hours/day. Some foreign businesses may find it difficult to meet their requirements.  
  • The country still needs to work on the methods that can help the importers get transparent and flexible exporting services.   
  • In some domains, particularly in technology, the Vietnamese employees need more improvement.  

A Final Takeaway  

The challenges, discussed above, can easily be mitigated to leverage the opportunities Vietnam provides. If you are looking for a trusted and affordable hub for sourcing, you should consider Vietnam. All you need is to find the right supplier. By hiring a reputed sourcing agency, you can find the right supplier in Vietnam.   

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