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Beyond China: Vietnam’s role in global manufacturing
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6 min read | Updated on June 20, 2025, 14:35 IST
SUMMARY
Vietnam is quickly evolving from a cost-driven manufacturing destination to a global supply chain anchor that offers stability, innovation, and geopolitical flexibility. This evolution positions the country as a key player in the new era of manufacturing, drawing major international corporations and creating long-term opportunities for businesses looking to diversify and future-proof their supply chains.
Manufacturing accounts for 20% of Vietnam's GDP
Vietnam is steadily emerging as a key player in global manufacturing. Long considered just a low-cost alternative, Vietnam is quietly reshaping its role in the global supply chain. In 2022-24, manufacturing accounts for almost 20% of the GDP. It has been a key anchor is the country’s growth, helping the economy grow by an impressive 7.1%, the fastest in East Asia.
Major companies like Apple, Samsung, and Intel are expanding their presence, drawn not just by affordable labour but by a combination of stable policies, digital growth, and a skilled workforce.
So, why Vietnam, and why now? Vietnam’s growth story is supported by solid fundamentals: record-high FDI of $38.2 billion in 2024, double-digit export growth, and manageable inflation. It is quickly establishing itself as a stable and attractive option for manufacturers looking to diversify their supply chains.
Key macroeconomic indicators (2023 vs 2024)
| Indicator | 2023 | 2024 |
|---|---|---|
| Population (mn) | 100.3 | 101.3 |
| GDP ($ Bn) | 433 | 459 |
| GDP Per Capita ($) | 4,317 | 4,536 |
| GDP growth (%) | 5.0% | 7.1% |
| Export growth (YoY, %) | -2.5% | 15.5% |
| FDI registered ($ Billion) | 39.4 | 38.2 |
| Inflation (CPI, %) | 3.3% | 3.6% |
| Public debt (% of GDP) | 34.4% | 32.9% |
| Fiscal deficit (% of GDP) | -2.4% | -1.6% |
Source: Focus Economics, World Bank
From Hangzhou to Hanoi: Rethinking global manufacturing geography
Trade tensions, rising wages, and policy unpredictability in China have triggered a broader rethink. While China remains essential, companies are increasingly seeking regional diversification, and Vietnam is delivering on execution:
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Samsung, Vietnam’s largest foreign investor, plans to expand into new fields such as digital transformation and semiconductors, with continued government support, while deepening local supply chain integration, R&D, and innovation partnerships.
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Apple now manufactures iPads, MacBooks, Apple Watches, AirPods, and the carbon-neutral Mac mini in Vietnam, which is set to produce 20% of iPads and Watches, 5% of MacBooks, and 65% of AirPods by end-2025, backed by 35 suppliers, 80,000 workers, and $4 billion in investments.
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Intel, having invested over $1.5 billion in Vietnam, plans to expand its operations through factory upgrades, local workforce development, and a broader supplier network—reinforcing Vietnam's growing role in the global semiconductor supply chain despite short-term investment adjustments.
Vietnam vs. China: Complementary, not competitive
Vietnam’s lower export tariffs and expanding trade agreements have made it an increasingly attractive sourcing destination compared to China, especially after the US–China trade tensions. While Chinese labor costs have surged, Vietnam offers more affordable manufacturing, supported by improving infrastructure.
Companies like Nike and Apple have shifted parts of their supply chain to Vietnam to reduce dependency on China while maintaining product quality. This shift allows businesses to manage rising tariffs, control production costs, and diversify operational risks more effectively.
Vietnam: The new bridge between China and the world
Vietnam’s export engine isn’t running in isolation—it’s powered by deepening supply chain linkages with both China and the US.
The numbers tell the story. In May 2025, Vietnam’s trade surplus with the US jumped to $12.2 billion, up 42% from a year ago. Exports to the US surged to $13.8 billion, while imports from China hit a post-pandemic high of $16.2 billion, up 21%. This dual spike reflects how Vietnam is evolving into a critical connector, receiving inputs from China, adding value, and exporting to the West.
Companies like Shein, Alibaba, and others are tapping into Vietnam’s manufacturing ecosystem to serve global markets more efficiently. With a growing network of industrial parks, trade agreements, and port infrastructure, Vietnam is no longer just a factory floor, it’s becoming the regional springboard for high-volume, cross-border trade.
Comparison of key manufacturing enablers
| Factor | Vietnam | China |
|---|---|---|
| Tariff Levels | Low | High |
| Labor Costs | Competitive | Increasing |
| Infrastructure | Developing | Well-established |
| Trade Agreements | Expanding | Limited (recently) |
Source: News articles
China’s average annual worker earnings rose from $8,451 in 2012 to $16,934 in 2024, reflecting a significant increase in wages driven by rapid economic growth and shifts in the country’s labour market.
Source: Trading economics
In contrast, as of 2025, the average annual salary in Vietnam is ~VND207,600,000 (around $8,126 per year). This reflects the country's economic growth and the increasing demand for skilled professionals. However, Vietnam also faces wage competition from countries like Indonesia and India, where monthly wages are even lower, around $200.
2024 workforce & wage comparison
| Metric | Vietnam | China |
|---|---|---|
| Avg. annual wage | $3,756 | $16,934 |
| GDP growth | 7.1% | 5.4% |
| Export dependency | ~87% of GDP | ~20% of GDP |
| FDI inflows (2023) | $36.6 billion | $33 billion |
| Workforce | 52.4 million | 734.3 million |
| Workforce participation (Age 15+) | 73.6% | 65% |
| Employment to population (Age 15+) | 73% | 62% |
| GDP per person employed (2023) | $ 24,236 | $42,167 |
| Top export sector | Electronics | Electronics |
Source: Government sources, news articles
Vietnam is not positioned to replace China, but to complement it in areas such as political neutrality, participation in free trade agreements, and lower regulatory complexity for Western buyers.
Building for the future: Trade, talent, and transformation
Vietnam isn’t resting on cost competitiveness alone. Its strategic advantages are underpinned by forward-looking investments in digital transformation, sustainability, and trade infrastructure:
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Industrial parks: Over 400 industrial zones are planned by 2030. Already, 300 are operational with over 80% occupancy. Projects like Hac Dich and Phuoc Binh 2 underscore the momentum in high-tech FDI and land absorption.
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Trade architecture: Vietnam has signed 18 Free Trade Agreements and over 80 Double Tax Avoidance Agreements, making it one of the most open economies in Asia.
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Green commitments: Vietnam has pledged to achieve net zero emissions by 2050, aligning itself with ESG-conscious investors and buyers.
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Industry 4.0: The country's digital industrial market is forecasted to reach $30 billion by 2030, positioning it as a future-ready hub for smart manufacturing and automation.
Investor spotlight: Why Vietnam commands capital attention
Challenges remain—land approval delays, power shortages, regulatory gaps—but steady reforms are strengthening investor confidence. With $136 billion in exports to the US, Vietnam has become a strategic partner in global risk management and supply chain diversification.
In summary
The future of global manufacturing will not be defined by cost alone, but by resilience, agility, and alignment with the demands of a multipolar world. Vietnam is rising to that challenge — not as the cheapest alternative, but as the smartest bet.
With reforms, infrastructure, and a policy backbone in place, Vietnam is no longer a peripheral player in the “China+1” strategy. It is the conviction choice for companies seeking to future-proof their supply chains.
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