![]() ![]() In 2020, Vietnam surpassed Bangladesh to become the world’s second largest exporter of ready made garments (RMG). The growth of the garment industry has been impressive and plays an important role in the economic growth of the country. Textiles consistently rank among Vietnam’s leading export industries, with over 6000 textiles and garments manufacturing companies, employing upwards of 2.5 million workers. The US also had the second-highest import-export turnover with Vietnam at US$100 billion, followed by China. Other business areas include information and communications technology, automotive, and medical devices.īilateral trade between Vietnam and the US hit a new record high in 2021, with a total of US$111.56 billion, up nearly US$21 billion year-on-year as per the General Department of Customs. Interestingly, Vietnam is well on its way to becoming a key location for high-technology manufacturing, with companies like Samsung, LG Electronics, Nokia, and Intel making multi-billion dollar investments into the country. While Vietnam is widely known for being a prime location for investors operating in the textile industry, there are many other business areas that are seeing significant growth in the country. Source: General Statistics Office Industry Snapshots Compared to 2017, the US has overtaken China for being the largest export market for Vietnam. With a population of over 97 million and Southeast Asia’s fastest-growing middle class, Vietnam clearly represents an important market for foreign goods. This growth is expected to continue for some time to come – domestic consumption is predicted to increase at a rate of 20 percent per year. Of particular interest to investors has been the continuing growth of Vietnam’s domestic consumer market, which has been developing by leaps and bounds. Vietnam is seeing strong growth on multiple fronts. These advantages have enabled Vietnam to become a premier “sourcing economy” in the eyes of many companies. Since the mid-2000s, the Vietnamese government has offered extremely competitive financial incentives to businesses seeking to set up operations in the country, in addition to a zero percent withholding tax on dividends remitted overseas and a low corporate income tax (CIT) rate of 20 percent. In terms of regulatory and financial incentives, Vietnam has become increasingly investor-friendly in recent years –the government has taken such actions as reforming its financial sector, streamlining business regulations, and improving the quality of its workforce. The RCEP, which came into force on January 1, 2022, has also fostered the entry of goods exported in and out of Vietnam as it reduces cost, improves market access as well as offers streamlined customs procedures. Learn more about Vietnam's strategic advantage for traders.With the country’s workforce growing annually, Vietnamese workers are comparatively inexpensive, young, and, increasingly, highly skilled.Īnother driving force behind Vietnam’s growing popularity is the country’s collection of free trade agreements. Located in a strategic position for foreign companies with operations throughout Southeast Asia, Vietnam is an ideal export hub to reach other ASEAN markets.Ĭompared with other developing markets in the region, Vietnam is emerging as the clear leader in low-cost manufacturing and sourcing, with the country’s manufacturing sector accounting for 25 percent of the country’s total GDP in 2021.Ĭurrently, labor costs in Vietnam are approximately 50 percent of those in China at US$2.99 per hour compared to US$6.50 per hour respectively, and around 40 percent of those reported in Thailand and the Philippines. Given the recent trade war between China and the US, alongside Vietnam’s recent free trade agreements such as the RCEP, the EVFTA, and the UKVFTA the country is steadily becoming more open to international trade and investment. In the past few years, a growing number of businesses have relocated their operations from China to Vietnam in an attempt to escape rising costs and an increasingly complex regulatory environment. Recent trends show that the number of orders shifting from China to Vietnam has seen a significant increase.įor example, China’s Pearl River Delta, long known as one of the key factory centers for the world’s manufacturers (particularly those from Hong Kong) has now become too costly for many companies to stay in the region. With its rising costs, China is no longer the go-to destination for many businesses, and Vietnam has arisen as a serious competitor. Vietnam Briefing highlights gives an overview of the industries primed for import and export activities.Upbeat growth projections are set for the country’s import-export business as the global economy resumes.As Vietnam transforms into a global manufacturing hub, it has emerged as an effective relocation destination also known as the China+1 strategy.
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