Vietnam

Labour cost competitiveness, EVFTA trade access, electronics and garments supply base, and scalability scores for Vietnam as a sourcing destination.

Labour cost competitiveness

Vietnam offers some of Southeast Asia's most competitive manufacturing wages — minimum wages vary by zone from approximately USD 150–210/month. Costs are rising but remain below Thailand, China, and Malaysia.

Supply base depth

Electronics and garments supply chains are well-developed but Tier-2 and Tier-3 supplier ecosystems remain thin. Raw materials and advanced components are largely imported — domestically sourced content ratios are lower than China or Thailand.

Logistics & infrastructure

Major ports at Ho Chi Minh City (Cai Mep), Haiphong, and Da Nang. Road infrastructure improving rapidly; north-south expressway network under construction. Inter-modal logistics less developed than China or Thailand.

Workforce skills

Young, growing workforce with improving technical literacy. Strong in basic manufacturing and assembly. Engineering graduate numbers increasing. English proficiency improving, particularly in FDI-oriented export zones.

Scalability

Vietnam is the fastest-growing manufacturing export destination for China+1 strategies. Factory capacity is expanding rapidly in electronics, garments, and footwear. FDI inflows are the highest in Southeast Asia per capita.

Ease of doing business

Business environment is improving but foreign ownership restrictions remain in several sectors. Regulatory predictability is lower than Singapore or Malaysia. Customs procedures have improved but can be inconsistent.

Trade access & tariffs

EVFTA (EU-Vietnam FTA, effective 2020) provides zero or near-zero tariffs for qualifying Vietnam-origin goods to the EU — a significant competitive advantage. CPTPP member. However, rules of origin requirements mean buyers must verify domestic content to claim preferential rates.

Sustainability baseline

Environmental standards weaker than OECD peers. Rapid industrialisation has created environmental pressure. Social compliance in garments and footwear supply chains is improving under brand pressure but gaps remain. EUDR exposure is real for coffee, rubber, and timber-related categories.

Innovation & IP

Vietnam's technology sector is growing rapidly — it is one of Southeast Asia's fastest-growing tech export economies. Samsung, Intel, LG, and Foxconn have major facilities. IP protection is improving but enforcement quality varies.

Quality standards

Quality management capabilities are improving, particularly in electronics and garments clusters. ISO adoption is increasing. However, quality consistency is lower than China or Thailand, and third-party audit infrastructure is still maturing.

Labour & Cost Competitiveness

Wage competitiveness: Vietnam's minimum wages, set by the National Wages Council, range from approximately USD 150–210/month depending on economic zone (Zone 1 = Ho Chi Minh City, Zone 4 = rural). These are among the lowest manufacturing wages in Southeast Asia — below Thailand, Malaysia, and well below China's coastal provinces.
Rising wages: Wages in Vietnam have been rising at approximately 5–7% annually. Buyers entering Vietnam today are at a higher wage point than early movers but Vietnam's cost advantage over China for labour-intensive categories remains significant and will persist for at least a decade.
Export zone structure: Vietnam's industrial parks and export processing zones offer streamlined customs, tax incentives (corporate tax exemptions of 2–15 years), and labour pools that have already absorbed FDI. Major zones in Binh Duong, Dong Nai, Haiphong (VSIP), and Hanoi anchor the electronics and garments clusters.
Labour force demographics: Vietnam has a young, growing working-age population — median age approximately 32 years. This demographic profile supports sustained labour supply growth over the next decade. Labour turnover in export zones is significant but manageable for buyers with established HR practices.

Supply Base & Infrastructure

Electronics cluster: Samsung alone accounts for approximately 25–30% of Vietnam's total export value. Samsung's supply chain has drawn hundreds of Korean and international component suppliers into Vietnam. LG, Intel (Hanoi), and Foxconn have significant operations. The electronics cluster is primarily assembled goods with a high import content of components.
Garments and footwear: Vietnam is the world's third-largest garment exporter and second-largest footwear exporter. Key brands including Nike, Adidas, and Lululemon have significant Vietnam sourcing. The supply base is concentrated in Ho Chi Minh City, Binh Duong, and Dong Nai provinces.
Infrastructure investment: The government is investing substantially in expressways, ports, and industrial zone development. The Cai Mep deep-water port complex south of Ho Chi Minh City can accommodate large container vessels. Haiphong is the primary northern port serving Hanoi-region factories.
Supply chain depth limitation: Vietnam's main limitation is thin Tier-2 and Tier-3 supplier ecosystems. Many components and raw materials are imported — often from China. This creates both a cost efficiency gap and a concentration risk, as Vietnam's manufacturing competitiveness depends partly on Chinese supply chain proximity.

World Bank LPI →

Trade Access & Business Environment

EVFTA: The EU-Vietnam Free Trade Agreement (effective August 2020) eliminates tariffs on approximately 99% of product lines over 7–10 years. Vietnam-origin goods receive preferential EU market access that many Asian competitors lack. This is the most significant factor driving European sourcing interest in Vietnam. Rules of origin requirements (typically 40% Vietnam value-added) must be verified.
CPTPP: Vietnam is a CPTPP member — providing preferential access to 11 Pacific economies including Japan, Canada, Australia, Mexico, and the UK. This multi-market FTA coverage makes Vietnam one of the most trade-connected emerging market sourcing destinations.
Business environment: Vietnam is a single-party state; political and policy risk is moderate but predictable. Foreign ownership is restricted to 49% in some sectors. Land use rights are structured differently from freehold — foreign investors lease rather than own land. Regulatory enforcement can be inconsistent between provinces.
EUDR risk: Vietnam is a significant exporter of coffee (second globally), rubber, timber products, and some cocoa — all EUDR-regulated commodities. From 2025, EU importers must provide due diligence statements that Vietnam-origin products are deforestation-free. This creates compliance obligations for relevant category buyers.

EVFTA text →EUDR →

Innovation, IP & Quality

Technology sector growth: Vietnam's digital economy is one of Southeast Asia's fastest-growing. Ho Chi Minh City and Hanoi have emerging tech startup ecosystems. FPT Software, VinGroup (VinAI), and a growing local tech sector are building domestic innovation capability.
FDI-driven technology transfer: Samsung's deep presence in Vietnam has catalysed supplier development programmes and technology transfer to local companies. Intel's Hanoi assembly and test facility has trained Vietnamese engineers to international standards. FDI remains the primary mechanism for technology upgrading.
IP protection: Vietnam has strengthened IP legislation in line with EVFTA commitments. In practice, enforcement quality varies — brand protection for premium products requires active monitoring and local legal engagement. Vietnam is not currently a major risk for high-volume IP theft at the state level, but trade secret protection is weaker than OECD peers.
Quality trajectory: Quality management capabilities are improving rapidly, driven by electronics OEM requirements (Samsung supplier standards, for example, are demanding) and EU market access requirements under EVFTA. Third-party audit infrastructure is expanding but audit quality varies. Buyers should maintain direct quality assurance programmes.

WIPO GII 2024 →

← Sourcing Attractiveness Index → Methodology

← Sourcing Attractiveness Index