China has been a dominant force in the world of manufacturing for decades. However, as China has continued to develop, companies are starting to move away from sourcing from them. There are many countries perceived to be on the path to becoming the “new China.” Sourcing from Vietnam, for example, is becoming increasingly attractive due to their significantly lower wages. Vietnam currently supplies the biggest footwear brands including Adidas, Puma and Reebok, and are now the primary supplier for Nike-branded footwear. Nevertheless, how does sourcing and manufacturing in China and Vietnam compare?
1. Wages are 2x Cheaper in Vietnam
With the enormous growth of China’s economy, average wages have climbed so much that they are now at par or even higher than in some parts of Europe. Whereas in Vietnam, labor rates are roughly one-third of the market labor rate in China.
As a result, Vietnam has become an appealing and ideal place for companies to source from when it comes to lowering the financial aspect of sourcing, which is often one of the main reasons for outsourcing abroad.
2. Complexity of Product
Whether you should source from a certain country is dependent on the complexity and type of product.
China has a wealth of experience when it comes to manufacturing a large range of products, from clothing, toys and bags to electronics, machinery and furniture. You name a product type, and China has probably got experience in manufacturing it.
However, Vietnam has proven to be very capable when it comes to sourcing labor-intensive products such as backpacks, footwear and clothing. Custom backpack manufacturers and clothing manufacturers are well established in Vietnam and are a trusted source when it comes to standard apparel and textile products as well as more technical custom products, for example, automotive specialty bags.
So although Vietnam doesn’t have the same level of experience as China, they are a very attractive location when it comes to apparel and textiles in which they have shown to already be skilled, especially given their high-quality bag manufacturing ability.
China’s many years in the manufacturing and sourcing industry has allowed them to develop all types of infrastructure. Whether you ship an item on the ground, by sea or in the air, China is the most efficient and competitive in this area, both nationally and internationally.
However, this does not mean that Vietnam’s infrastructure isn’t as good. Vietnam is continually improving their infrastructure, with investment in the country’s roads, rail and port facilities.
A report by Dezan Shira & Associates reported that the Vietnamese government is “currently working on increasing the efficiency and scope of infrastructure projects through foreign and private investment via public-private partnerships”.
Therefore, although Vietnam is competing with the extremely high levels of China’s infrastructure, their infrastructure for sourcing is already at a high standard and is only going to continue to improve over time.
Overall, China still remains a very attractive location due to their vast manufacturing experience, high quality infrastructure and an increasingly technical workforce. Nevertheless, with China’s wage continuously rising, Vietnam offers a great alternative by offering cheaper labor for a workforce with proven skill, especially for backpack designers and manufacturers. In these areas they have a wealth of manufacturers delivering anything from bags and jackets, to shoes. This paired with their developing infrastructure and their growing experience positions Vietnam as a real opportunity for many businesses.
Here at Kowide Outdoors, we have been manufacturing high quality backpacks & activewear for over 30 years and thus possess a vast knowledge of the industry in Vietnam. So if you wish to know more about sourcing your products from Vietnam, please Contact us and place an enquiry. We will get back to you as soon as possible.
By - Jennifer Chen