Vietnam is quickly becoming one of the main Vietnam sourcing destinations in Asia. Many based outsourcing firms have now established their presence on the internet, which means that clients can easily search and select a company from the comfort of their own home or office. This article will concentrate on the advantages of outsourcing with a Vietnam based outsourcing firm, the pricing involved, the various types of products they can source, and a brief overview of the best Vietnam directory listings.
First, let’s look at why Vietnam is rapidly becoming such a popular choice for global companies looking to source labor and other manufacturing resources. Like China, Vietnam offers a unique offshore manufacturing environment. The government encourages free trade and offers the country full access to global markets, while maintaining strong administrative and legislative frameworks to protect intellectual property and support quality control and standards. Like China, Vietnam enjoys a low-cost workforce that is highly educated and anxious to work in a profitable industry.
Second, let’s consider why Vietnam is an ideal destination for outsourcing American manufactured goods. Vietnam’s primary industry is its manufacturing sector, which remains the backbone of the country’s economy and remains one of the most reliable global economic contributors. Vietnamese manufacturers have access to the cheapest labor in the world thanks to free market reforms. Additionally, Vietnamese manufacturers enjoy access to a sophisticated human capital pool that caters to the skills and talents of thousands of talented Vietnamese workers with experience from many different corners of the world. Finally, American companies have access to a sophisticated supply chain system consisting of state of the art machinery and equipment and a network of capable and trusted shipping and logistics providers.
Now let’s examine the primary advantages of outsourcing with Vietnam based supply chain and logistics providers. First, Vietnam has a number of advantages over China for our purposes as American business. For starters, Vietnam’s economy is much smaller than China’s, and the gap between the size of a country’s economy and its population is about the same as the width of the Mississippi. That means that Vietnam’s economy is spread out across a large area rather than concentrated in any single geographic area as is the case in China. This allows Vietnam to effectively use its massive freight rail network to move freight quickly and cheaply between ports on its coast and coastal regions and inland areas like Hanoi or Haiphong in Thailand.
In addition, because Vietnam is less isolated from neighboring countries than China, its trade with neighboring countries has a much lower impact on China’s overall economy. China does rely on Japan for military assistance and supplies, but the logistical support is limited to certain types of goods and it is generally of lower quality than what we would expect in Vietnam. Vietnam on the other hand relies almost entirely on its own internal supply chain for its agricultural products and sophisticated machinery and equipment. In fact, much of Vietnam’s heavy industrial equipment and heavy manufacturing equipment comes from Europe or Japan.
Finally, Vietnam’s lack of dependence on China for raw materials limits its ability to fully exploit its natural resources, something that China has been doing since the 1970s. While Vietnam’s economy depends to a large degree on exports of raw materials like oil and coal, these exports bring in revenues that are more than offset by the relatively high cost of importing those materials. On the other hand, many of Vietnam’s largest manufacturers either produce their own raw materials or purchase them from major exporters like Japan, South Korea, and the United States. Because they have so little reliance on outside sources, Vietnam’s manufacturers have a highly efficient supply chain that allows them to keep manufacturing costs at a minimum. As a result, factory productivity is higher, allowing Vietnamese goods to price much lower than comparable foreign-made products.
One important caveat about Vietnam’s overall manufacturing efficiency is that the country suffers a great deal of pollution from its lack of centralized industries like those in China. However, there is a lot of new growth potential in Vietnam, and as the country transition from economic development to socialism gains steam, Vietnam’s industrialization will likely accelerate. This means that Vietnam’s factories will more likely require the services of modern machinery and equipment than in the past. For companies that currently import their industrial supplies, it may be worth the small investment to outfit their existing factories with modern machines to speed up the supply chain.
In summary, there are many positive aspects to Vietnam’s sourcing-oriented, export-friendly system. The sheer size of Vietnam’s market makes it a prime destination for global companies that need low-cost access to raw materials. It also offers much cheaper labor than most Asian competitors. Finally, Vietnam’s lack of dependence on China for raw materials allows it to develop its own domestic industrial base. These factors are important factors for any company looking to develop their own supply chain, but in particular help to make Vietnam an excellent choice when it comes to locating your factory. If you’re interested in finding out more about Vietnam’s unique setup as well as the advantages that it offers over shipping and logistics in Asia, please contact a leading logistics and supply chain advisor today.