In the past few years more and more companies are starting to see Vietnam as a leading manufacturer, with recent reports showing that big US brands such as Nike and Adidas are moving away from China in favour of Vietnam. China has traditionally been the top choice for companies seeking to outsource their manufacturing. It has been known historically as the manufacturing hub for the world with huge productivity, capability and product range. Yet Vietnam’s emergence is a trend that companies can no longer ignore.
Here are Five reasons why Vietnam sourcing has become increasingly popular:
One reason to source backpacks from Vietnam is the skilled labor that exists in the country. Vietnam specializes in manufacturing, and therefore can produce large amounts of high-quality products in a short time-frame. The number of outsourced shoes, coats and bags made in Vietnam are now second only to China for garment sourcing in the US. The US Department of Commerce’s Office of Textiles and Apparel reports that it rose by 18% to account for $1.1bn of US clothing imports in January 2017.
Another reason to source from Vietnam is the low age of the population whereby 74% of the labor force is under the age of 50. This presents huge opportunities as a younger workforce means a larger and more productive workforce. Vietnam is also increasing its public spending on education which shall see a huge investment and increase in skilled workers Vietnam’s already impressive skilled workforce will assuredly continue to grow in skill and size. This means we could see a new wave of designers and manufacturers who “get it” and provide just what your company needs in the years to come.
Another reason to source custom backpack manufacturers from Vietnam is the lower all-in cost. Again, when we compare Vietnam to China we can see that Vietnam has a much lower hourly labor rate than China, this is because of the 2016 hourly wage increase across the whole of China means they no longer hold a sizable cost advantage. While Vietnam’s labor cost is only slightly less than China’s, Vietnam also enjoys lower duties for many categories of items, and also does not face the uncertainty of tariff wars with the U.S. that China is often embroiled in. This uncertainty is a material criterion for all companies as the headaches of having to shift production from China to another area could be considerable in its negative impacts to a business.
Infrastructure and Geography
Vietnam is seeing a huge amount of growth in its imports and exports, which is mainly attributed to the manufacturing industry, but also due to tons of foreign investment pouring into the country. This has sparked the need for development across the whole country. One aspect of which is transportation. Geographically, Vietnam is ideally positioned to enter the eastern and western markets. While manufacturing is developing rapidly, Vietnam still depends on fabric imports from China and other surrounding countries. Because of the proximity, Vietnam can import fabrics quickly and with beneficial tax rates. They are also investing heavily in roads, railways and ports. In 2018, operations will begin to double the capacity of Hai Phong’s port, one of Vietnam 3 main ports alongside Ho Chi Minh City and Da Nang. Vietnam also boosts an impressive 531 miles of railway connecting it to China in just 9 hours. Sourcing from Vietnam, therefore, has never been easier.
One final reason to source from Vietnam is the political stability in the country. Vietnam is in a stable place politically meaning more and more international investors are seeing it as a reliable and trustworthy option. With the US and China’s ongoing trade disagreements, businesses are now anticipating ways to avoid unnecessary costs as other countries such as Vietnam are now seen as the ‘safer’ option. A free trade agreement with the European Union is set to take effect this year, so Vietnam sourcing will accelerate. Its stable economic and political environment, and relatively clean record on compliance with safety and other corporate social responsibility (CSR) obligations could give it an edge on nations such as Bangladesh, Turkey and China.
Here at Kowide Outdoors, high quality bag manufacturing is at the heart of our productions. Our custom backpack designers and manufacturers are highly skilled and produce a variety of garments for businesses of all sizes and needs. If you would like to know more, please contact us here.
By - Jennifer Chen