Manufacturing in Vietnam: Benefits, Key Industries and How to Get Started

Establishing a manufacturing presence in Vietnam offers numerous advantages, including cost-effective labor, a strategic location, and a growing industrial sector. This guide outlines the essential steps and considerations for businesses aiming to set up manufacturing operations in Vietnam.

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Why Should You Consider Manufacturing in Vietnam?

Cost Benefits Compared to Other Countries

Vietnam offers competitive labor costs, with an average monthly salary of approximately $261, which is lower than neighboring countries like Thailand and the Philippines. This cost advantage makes it an attractive destination for manufacturing.

Skilled Workforce and Infrastructure

Vietnam boasts a young and dynamic workforce, with ongoing investments in education and vocational training enhancing skill levels. The country's infrastructure, including ports, roads, and industrial zones, has seen significant improvements, facilitating efficient production and distribution.

Best Industries for Vietnamese Manufacturing

Vietnam's manufacturing sector is diverse, with key industries including:

Textiles and Apparel

Vietnam is a leading exporter of textiles and garments, known for its skilled labor and high production capacity. The industry benefits from established supply chains and trade agreements that enhance market access. When manufacturing textiles in Vietnam, it’s worth requesting samples before going into large scale production. It can be difficult to determine the exact texture and colour of textiles when choosing a supplier online. Sample swatches can help to ensure the quality meets your expectations.

Electronics

The electronics sector has experienced rapid growth in Vietnam, attracting major global companies. Vietnam produces a wide range of electronic goods, from consumer electronics to complex components, leveraging its skilled workforce and favorable investment climate.

Furniture

With abundant natural resources and craftsmanship, Vietnam has become a significant player in furniture manufacturing, exporting a variety of products to international markets. One point to consider when manufacturing furniture in Vietnam is the shipping. Furniture will have different shipping requirements and take up more space than textiles, for example, therefore there may be additional costs. These are all factors to take into account when pricing products to ensure profitability.

How to Set Up Manufacturing in Vietnam

1. Secure a Location

Identify a suitable site for your manufacturing facility. Options include leasing land in industrial zones, renting existing factory space, or purchasing land for construction. Each choice has its benefits and considerations regarding cost, infrastructure, and regulatory compliance.

2. Obtain Necessary Licenses and Registrations

Apply for the Investment Registration Certificate (IRC) to establish your investment project legally. Subsequently, secure the Enterprise Registration Certificate (ERC), which serves as the business's official license and tax registration. Additional permits may be required depending on your industry and location.

3. Develop a Business Plan

Create a comprehensive business plan detailing your manufacturing processes, market analysis, financial projections, and operational strategies. This plan will be crucial for regulatory approvals and attracting potential investors or partners.

4. Conduct Market Research

Analyze the Vietnamese market to understand local demand, competition, and supply chain dynamics. This research will inform your production strategies and help tailor your products to meet local preferences and standards.

5. Establish Supply Chains

Build relationships with local suppliers for raw materials and components. Assess their reliability, quality standards, and capacity to ensure a steady supply chain that meets your production needs.

Finding Factories and Partners in Vietnam

Identifying reliable factories and business partners is crucial for successful manufacturing operations. While online resources are available, many Vietnamese suppliers prefer traditional methods like trade shows and direct networking.

Some trade shows to look into are:

• Global Sourcing Fair Vietnam
• Vietnam Manufacturing Expo
• Vietnam Industrial and Manufacturing Fair: VIMF

Many trade shows specialise in one specific industry, so it’s worth doing some research into which one could be the most worthwhile visiting for your business.

Engaging a local sourcing agent or consultant can also make it easier to find connections and help navigate cultural and business customs.

Navigating Legal and Regulatory Requirements

Compliance with Vietnamese laws is essential. Key considerations include:

• Investment Laws: Understand foreign ownership regulations and sector-specific restrictions.

• Taxation: Familiarize yourself with corporate tax rates, incentives, and reporting obligations. Hiring a local tax specialist can help save time and ensure compliance.

• Labor Laws: Adhere to local labor regulations, including employment contracts, wages, and working conditions.

• Environmental Regulations: Ensure your manufacturing processes comply with environmental standards and obtain necessary environmental impact assessments.

Consulting with legal experts familiar with Vietnamese law can help navigate these complexities effectively.

Discover Wise Business: Simplify International Financial Management

Managing finances across borders is crucial for manufacturing businesses operating in Vietnam. This is where Wise Business can help.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 140+ countries.

Wise Business offers solutions to meet international business needs:

• No Monthly Fees: Optimize your financial operations without incurring additional costs.

• International Payments at the Mid-Market Rate: Conduct global transactions with transparent and fair exchange rates, minimizing currency conversion costs.

• Connect to QuickBooks to Track Bill Payments: Integrate seamlessly with QuickBooks and other accounting software to monitor expenses and maintain accurate financial records.

• Designed to Manage Multiple Currencies All in One Place: Hold and manage funds in over 40+ currencies, facilitating smooth international operations.

• Receive Payments Like a Local with Major Currency Account Details: Get local account details in major currencies, making it easier to receive payments from global partners.

By leveraging Wise Business, you can streamline your financial processes, reduce costs, and focus on establishing and growing your manufacturing operations in Vietnam.

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All sources checked February 2025.