A comprehensive guide for SMEs, brands, and industrial players looking to build supply chains or establish operations in Vietnam.

Over the past decade, Vietnam has emerged as one of the most strategic manufacturing destinations in Asia. What used to be considered a secondary alternative to China is now, for many companies, a primary sourcing and production hub.

Vietnam recorded over 8% GDP growth in 2025, positioning it among the fastest-growing economies globally, with strong momentum expected into 2026.

Whether you are launching a product, scaling an existing line, or diversifying your supply chain, Vietnam offers a unique combination of cost competitiveness, industrial capability, and long-term growth potential.

At the same time, successful market entry (whether through distributing products, offering services, or establishing local operations) requires a structured approach and a deep understanding of the local ecosystem

This page provides a practical overview of Vietnam across three key dimensions:

Sourcing and manufacturing;
Market entry and business opportunities;
Operating and living environment for entrepreneurs;

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🟦 1 — SOURCING & MANUFACTURING

Manufacturing in Vietnam at a Glance

Vietnam’s rise as a sourcing and manufacturing hub is closely tied to global supply chain shifts. As companies increasingly adopt a “China+1” strategy, Vietnam has positioned itself as a reliable and scalable alternative — particularly for labor-intensive and mid-complexity production.

Unlike some emerging markets that are still developing their industrial base, Vietnam already benefits from a well-established export ecosystem. This includes industrial parks, logistics infrastructure, and a workforce that has been trained through years of collaboration with international buyers.

The country’s manufacturing strengths are concentrated in key regions:

The North (Hanoi, Bac Ninh, Hai Phong) — strong in electronics and industrial manufacturing
The South (Ho Chi Minh City, Binh Duong, Dong Nai) — diversified industries including furniture, textiles, and consumer goods

This geographic structure allows companies to select production zones based on proximity to suppliers, ports, or specific industry clusters.

From a cost perspective, Vietnam remains competitive, although it is no longer the lowest-cost option in Asia. Instead, its positioning has evolved toward a balance between affordability and reliability. Many buyers today are willing to accept slightly higher costs compared to lower-cost countries in exchange for better organization, export experience, and production consistency.

However, it is important to approach Vietnam with realistic expectations.
Factories are often less flexible than in China, particularly when it comes to small orders or rapid product iterations. Lead times can also be longer, especially during peak seasons. Understanding these dynamics early helps avoid friction and ensures smoother project execution.

Key Manufacturing Industries

Vietnam’s manufacturing ecosystem is not uniform — it is built around strong verticals where the country has developed deep expertise and export capabilities.

Furniture & Wood Products

Vietnam is one of the world’s leading exporters of furniture, particularly to the United States and Europe. The industry benefits from a combination of skilled craftsmanship, access to raw materials, and a strong base of export-oriented factories.

Manufacturers range from large-scale exporters producing for global brands to smaller workshops capable of handling custom designs and niche collections. This makes Vietnam particularly attractive for:

Furniture brands launching new collections
Hospitality and interior projects
Companies looking for a mix of standard and customized products

Textile & Footwear

The textile and footwear sector is one of Vietnam’s most mature industries. With decades of experience working with international brands, factories are familiar with quality standards, compliance requirements, and large-scale production.

Capabilities range from simple cut-and-sew operations to more integrated models including fabric sourcing and finishing. For SMEs, the key challenge is often navigating minimum order quantities and finding suppliers willing to support smaller production runs.

Metal & Industrial Fabrication

Vietnam’s industrial capabilities are expanding rapidly, particularly in metal areas such as:

Welding and fabrication
CNC machining
Steel structures and components

This makes the country increasingly relevant for industrial buyers looking to outsource components or sub-assemblies. While quality levels vary across suppliers, the overall trajectory is clearly upward, with more factories investing in equipment and certifications.

Construction & Building Materials

Vietnam has developed strong capabilities in building and construction materials, supported by a growing real estate sector and large-scale infrastructure projects.

Key areas include:

Flooring and tiles (ceramic, porcelain, engineered wood)
Aluminum and glass systems (windows, facades)
Steel structures and prefabricated components

This makes Vietnam increasingly relevant for developers, contractors, and buyers looking to source building materials with a balance of cost and industrial capacity.

Home Decor & Handicrafts

Vietnam has a long tradition of artisan-based production, particularly in materials such as bamboo, rattan, ceramics, and lacquerware. These products are widely exported and often combine traditional craftsmanship with modern design.

For brands focused on sustainability or natural materials, this segment offers strong potential. However, production can be less standardized, requiring careful management of quality and consistency.

Plastics & Packaging

The plastics and packaging sector supports both domestic consumption and export manufacturing. Factories offer a wide range of capabilities, from simple packaging solutions to more technical components.

This sector is particularly relevant for companies looking to localize part of their supply chain or develop OEM products.

How Sourcing Typically Works

For most companies, sourcing in Vietnam follows a structured but iterative process. While the steps may appear straightforward, each phase requires careful coordination to align expectations with factory capabilities.

1. Product Definition & Specifications
Everything starts with clarity. The more detailed the product specifications — materials, dimensions, finishes — the easier it is to identify suitable suppliers and avoid misunderstandings later.

2. Supplier Identification
Vietnam’s supplier landscape is fragmented. Identifying the right factories requires filtering based on capabilities, past experience, and export readiness.

3. Sampling & Development
Sampling is often where expectations meet reality. Multiple iterations may be required before reaching a satisfactory result, especially for customized products.

4. Factory Visits or Audits
Visiting factories — or conducting audits — provides essential insight into production capabilities, organization, and reliability. This step significantly reduces risk.

5. Negotiation (MOQ, Pricing, Lead Time)
Negotiation in Vietnam is less transactional than in some other markets. Building trust and establishing long-term potential often plays a role in securing better terms.

6. Production & Quality Control
Once production starts, quality control becomes critical. Inspections during and after production help ensure consistency and reduce the risk of defects.

Vietnam vs Asia Manufacturing Hubs

Criteria	Vietnam	China	Thailand	Cambodia	Indonesia	India	Philippines	Laos	Myanmar
Cost	Medium	Medium–High	Medium	Low	Medium	Low	Medium	Very Low	Very Low
MOQ	Medium–High	Flexible	Medium	Low–Medium	Medium	Flexible	Medium	Low	Low
Quality	Improving fast	High	Stable	Basic–Mid	Mid	Variable	Mid	Basic	Basic
Lead Time	Moderate	Fast	Moderate	Moderate–Slow	Moderate	Slow–Variable	Moderate	Slow	Slow
Flexibility	Medium	High	Medium	Medium	Medium	High	Medium	Low	Low
Infrastructure	Strong	Very Strong	Strong	Developing	Strong	Developing	Strong	Limited	Limited
Best For	Scaling SMEs	Large volumes	Niche industries	Low-cost labor	Domestic + export mix	Engineering + scale	BPO + light mfg	Simple production	Early-stage sourcing

Interpretation

Vietnam sits in a balanced middle position in Asia.
It is not the cheapest, nor the most flexible — but it offers a strong combination of:

Export-ready factories
Improving quality standards
Political and economic stability
Strategic positioning in global supply chains

In comparison:

China remains the most advanced and flexible ecosystem
Cambodia, Laos, Myanmar offer lower costs but limited capabilities
India offers scale and engineering but can be complex to manage
Indonesia & Philippines are more domestic-driven economies with selective export industries

For many SMEs, Vietnam represents a low-risk entry point into Asian manufacturing.

Vietnam is particularly suited for companies looking to build long-term production partnerships, rather than relying on highly flexible, short-term sourcing.

Common Challenges & How to Address Them

Despite its strengths, Vietnam presents specific challenges that companies need to anticipate.

Minimum Order Quantities (MOQ)
Factories often require higher volumes to justify production runs. For smaller brands, this can be a barrier to entry.

Supplier Fragmentation
The market includes a wide range of factories with varying levels of professionalism. Identifying reliable partners requires due diligence.

Communication Gaps
Language and cultural differences can lead to misunderstandings, particularly during product development.

Quality Consistency
Maintaining consistent quality across batches requires monitoring and structured processes.

Mitigation Strategies

Work with pre-qualified suppliers
Invest time in detailed specifications and sampling
Maintain regular communication during production
Implement on-site inspections or third-party quality control

🟨 2 — MARKET ENTRY & INVESTMENT

Doing Business in Vietnam

Beyond manufacturing, Vietnam is increasingly attractive as a destination for companies looking to establish a presence in Asia. Its combination of economic growth, young population, and strategic location makes it a compelling option for both production and market expansion.

The country’s business environment has evolved significantly, with ongoing improvements in regulatory frameworks and infrastructure. While administrative processes can still be complex, they are becoming more structured and predictable.

About market entry and business opportunities

High-Potential Sectors for Foreign Companies in Vietnam

Vietnam’s economic growth over the past decade has been largely associated with its rise as a global manufacturing hub. However, reducing the country’s potential to manufacturing alone would be a mistake. Today, Vietnam represents a multi-layered opportunity landscape, where foreign companies can enter not only through production but also through services, distribution, and strategic positioning within a rapidly expanding economy.

As the country continues to industrialize and urbanize, several sectors are emerging as particularly attractive for international businesses. These sectors are driven by a combination of structural factors, including a young population, increasing disposable income, strong export performance, and government support for foreign investment.

Understanding where these opportunities lie—and how they connect to each other—is essential for companies looking to enter Vietnam in a sustainable and scalable way.

Manufacturing & Industrial

Manufacturing remains the backbone of Vietnam’s economy, but the nature of opportunities within this sector has evolved significantly. While Vietnam initially attracted foreign companies primarily for labor-intensive production, it is now moving toward a more diversified industrial ecosystem.

Today, opportunities extend far beyond simply setting up a factory. Foreign companies can position themselves within the broader industrial value chain, where demand is growing for services and expertise that support production activities.

Engineering services, for example, are increasingly in demand as factories upgrade their capabilities and integrate more advanced machinery. Maintenance and technical support services are also becoming critical, particularly for companies operating complex production lines that require consistent uptime and performance.

Supply chain management represents another area of opportunity. As international buyers diversify their sourcing strategies and expand their supplier networks in Vietnam, there is a growing need for coordination, quality control, and logistics optimization. Companies that can offer structured solutions in these areas are well positioned to capture long-term value.

Rather than competing directly with local manufacturers, many foreign companies find success by positioning themselves around the manufacturing ecosystem, providing expertise, technology, or coordination that enhances overall efficiency.

Consumer & Retail

Vietnam’s domestic market is undergoing a significant transformation, driven by the rapid expansion of its middle class. Rising incomes, urbanization, and changing lifestyles are reshaping consumption patterns, creating opportunities for both local and international brands.

The demand for packaged food and beverages is increasing as consumers shift toward more convenient and branded products. This trend is particularly visible in urban centers, where modern retail formats and e-commerce platforms are gaining traction.

At the same time, sectors such as cosmetics, healthcare, perfumes, and personal care products are experiencing strong growth. Consumers are becoming more brand-conscious and are increasingly willing to pay for quality, safety, and international standards.

Lifestyle and consumer brands also benefit from this shift. Products that combine design, functionality, and brand identity are finding a receptive audience among younger consumers who are exposed to global trends through digital platforms.

For foreign companies, entering the Vietnamese consumer market requires a deep understanding of local preferences, pricing sensitivity, and distribution channels. Success is often achieved through a combination of localized strategies and strong brand positioning, rather than direct replication of models from other markets.

IT, Digital Services & Offshoring

Vietnam has emerged as a competitive destination for IT services and offshoring, supported by a growing pool of skilled developers and engineers. The country’s education system produces a steady stream of graduates in technical fields, and many young professionals are eager to work in international environments.

This has created opportunities for foreign companies to establish development centers, outsource software projects, or build hybrid teams combining local talent with international management. Compared to more mature outsourcing destinations, Vietnam offers a balance between cost efficiency and quality, particularly for mid-complexity projects.

In addition to traditional outsourcing, the digital sector is expanding into areas such as fintech, e-commerce, and digital platforms. Startups and technology companies are actively developing solutions tailored to the local market, creating opportunities for partnerships and investment.

For companies looking to leverage Vietnam as part of their digital strategy, the key advantage lies in the ability to build scalable teams at competitive cost, while maintaining access to a dynamic and fast-growing market.

Hospitality, Tourism & F&B

Vietnam’s tourism and hospitality sector continues to show long-term potential, driven by both international arrivals and domestic travel. As infrastructure improves and connectivity increases, more regions are becoming accessible, creating new opportunities for development.

The food and beverage sector, in particular, has seen strong growth. Urban consumers are increasingly exploring new dining experiences, and international concepts are gaining popularity. At the same time, local cuisine remains a central part of the culture, creating opportunities for hybrid concepts that combine international standards with local flavors.

Foreign companies entering this space often focus on differentiation, whether through brand identity, product quality, or customer experience. While competition can be intense in major cities, secondary cities and emerging destinations offer untapped potential.

Success in this sector requires a strong understanding of local tastes, pricing expectations, and operational challenges. However, for companies that can adapt effectively, Vietnam offers a dynamic and growing market.

Education & Training

As Vietnam continues to develop, education and professional training are becoming increasingly important. Both individuals and companies are investing more in skills development, creating opportunities across multiple segments.

International schools, vocational training centers, and specialized education programs are all areas where foreign expertise can add value. In addition, corporate training services are in demand as companies seek to improve workforce skills and adapt to new technologies.

This sector is closely linked to the broader economic transformation of Vietnam. As industries evolve, the need for qualified talent increases, creating a continuous demand for education and training solutions.

Foreign companies entering this space often benefit from their ability to bring structured programs, international standards, and recognized certifications, which are highly valued in the local market.

Real Estate & Construction

Vietnam’s rapid urbanization is driving sustained demand for real estate and construction. Residential, commercial, and industrial developments are expanding in both major cities and emerging regions.

The industrial real estate segment is particularly relevant for foreign companies, as the growth of manufacturing and logistics creates demand for factories, warehouses, and industrial parks. Developers and investors are actively responding to this demand, creating opportunities across the value chain.

At the same time, the residential and commercial sectors continue to evolve, with increasing focus on quality, design, and integrated developments. Foreign companies can participate in this sector through investment, development, or by providing specialized services such as design, engineering, or project management.

B2B & Professional Services

As more international companies establish operations in Vietnam, the demand for professional services is growing rapidly. This creates opportunities for foreign firms to support businesses entering or expanding within the market.

Procurement offices, for example, play a key role in managing supplier relationships, quality control, and logistics. Companies that provide structured sourcing and supply chain solutions are increasingly in demand, particularly among SMEs that do not have their own local teams.

Technical consulting is another area of growth, especially in sectors such as manufacturing, engineering, and sustainability. Companies often require external expertise to optimize processes, implement new technologies, or meet international standards.

Accounting, legal, and corporate services are also essential components of the ecosystem. Navigating regulatory requirements, managing compliance, and structuring operations all require specialized knowledge, creating opportunities for service providers with local expertise and international experience.

Sustainability & Digital Transformation

Beyond traditional sectors, Vietnam is entering a new phase where sustainability and digital transformation are becoming central themes. These trends are not only driven by global pressures but also by local developments, including regulatory changes and evolving consumer expectations.

Green manufacturing is gaining traction as companies seek to reduce environmental impact and comply with international standards. This includes areas such as energy efficiency, waste reduction, and sustainable materials.

Circular economy models are also emerging, particularly in industries where resource optimization and recycling can create both environmental and economic value. Companies that can integrate these principles into their operations are likely to benefit from long-term competitive advantages.

Digitalization is another key driver of change. From factory automation to data-driven decision-making, companies are increasingly adopting digital tools to improve efficiency and transparency. This creates opportunities for technology providers, consultants, and service companies that can support this transformation.

Strategic Takeaway : Vietnam should not be approached as a single-entry market with a one-dimensional opportunity. Instead, it offers a layered ecosystem where multiple sectors interact and reinforce each other.

Manufacturing may be the entry point for many companies, but the real value often lies in expanding into adjacent areas such as services, distribution, or technology. By understanding these connections, foreign companies can build more resilient and scalable strategies.

Looking to Enter the Vietnamese Market?

Entering Vietnam requires more than identifying an opportunity—it requires structuring the right approach, selecting the right partners, and navigating the local environment effectively.

Our team supports companies with:

Market entry strategy
Partner identification
Supplier and ecosystem mapping
On-the-ground execution

For many SMEs, a phased approach allows them to test the market before committing to a larger investment.

Vietnam vs ASEAN Alternatives for Market Entry

Criteria	Vietnam	Thailand	Malaysia	Indonesia	Philippines	India	Cambodia	Laos	Myanmar
Ease of Setup	Medium	Medium	Easy	Medium	Medium	Medium	Easy	Medium	Difficult
Cost of Operation	Low–Medium	Medium	Medium–High	Medium	Medium	Low	Low	Very Low	Very Low
Market Size	Large	Medium	Smaller	Very Large	Large	Massive	Small	Small	Medium
Talent Pool	Growing	Skilled	Highly skilled	Large	English-speaking	Large	Limited	Limited	Limited
Infrastructure	Strong	Strong	Very Strong	Developing	Strong	Developing	Developing	Limited	Limited
Regulatory Clarity	Improving	Stable	Clear	Complex	Moderate	Complex	Flexible	Limited	Unstable
Best For	Manufacturing + export	Regional ops	HQ / services	Domestic market	BPO / services	Scale + tech	Low-cost entry	Basic ops	High-risk / frontier

Interpretation

Vietnam stands out as a fast-growing economy with low entry costs and stable business environment, making it particularly attractive for companies focused on:

Importing and distributing products
Building service-related products and technologies
Building long-term industrial partnerships

In contrast:

Malaysia is more suited for regional headquarters and services
Indonesia and India offer massive domestic markets but are more complex to navigate
Philippines is highly competitive in services and outsourcing
Cambodia, Laos, Myanmar offer lower costs but remain early-stage markets

Business Setup Essentials

Entering Vietnam requires understanding several key elements:

Company structure depending on activity
Labor regulations and hiring practices
Banking and payment systems
Tax obligations and compliance

While these elements can be managed independently, many companies choose to work with local partners to navigate the process more efficiently.

🟩 3 — LIVING & OPERATING

Cost of Operating

Vietnam offers a competitive cost structure for companies operating in Asia. Office rent, salaries, and general operating expenses remain relatively affordable compared to many regional markets.

This creates a favorable environment for startups and SMEs looking to establish a presence without excessive overhead.

Business Environment

Operating in Vietnam requires adapting to a relationship-driven culture. Trust and long-term collaboration often play a key role in business success.

Decision-making can be fast, but processes may be less formal than in Western markets. Companies that invest in local understanding tend to navigate the environment more effectively.

About life in Vietnam

Key Cities

Ho Chi Minh City — commercial hub with strong manufacturing and trade connections
Hanoi — political and industrial center, close to China
Da Nang — emerging city with growing infrastructure

Practical Considerations

Vietnam offers a dynamic and generally safe environment for expatriates and business owners. Infrastructure is improving rapidly, and major cities provide access to international services, education, and healthcare.

🟥 START YOUR PROJECT IN VIETNAM

Vietnam offers significant opportunities — but success depends on how well you navigate the local ecosystem.

Whether you are sourcing products or considering market entry, having the right structure and support can make a substantial difference.

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Q&A about Vietnam Sourcing, Market Entry & Doing Business

How big is the language barrier when doing business in Vietnam?

The language barrier exists but is manageable. Many export-oriented companies have English-speaking teams, especially in sales. However, communication gaps often appear at the production or technical level, where English is less common.

More importantly, cultural differences can affect communication. Suppliers may avoid saying “no” directly, which can lead to misunderstandings or overcommitment.

For industrial projects, having local support or clear communication processes is key to ensuring that specifications and expectations are properly understood and executed.

How adaptable are Vietnamese manufacturers and partners?

Vietnamese suppliers are generally flexible and open to new projects, which is a strong advantage for product development or customization. They are often willing to adjust processes or explore new product lines.

That said, adaptability does not always mean capability. Some factories may accept projects beyond their real expertise.

To manage this, companies should validate suppliers through sampling, audits, and gradual scaling. When properly structured, this flexibility becomes a real asset.

What is driving Vietnam’s economic growth and why does it matter?

Vietnam’s growth is driven by exports, foreign investment, and a young, productive workforce. In 2025, the country recorded strong GDP growth of around 8.0%, with total GDP reaching approximately $510 billion.

Looking ahead, most forecasts expect Vietnam to maintain solid momentum in 2026, with growth projections typically ranging between 6.5% and 7.6%, depending on global conditions, while the government is targeting an even more ambitious ~10% growth scenario .

For foreign companies, this is critical: Vietnam is no longer just a low-cost production base, but a fast-growing economy with a rapidly expanding middle class and strong consumer potential. Entering now means positioning early in a market that is growing in both exports and domestic demand.

How can companies test the market before fully entering Vietnam?

A phased approach is often the most effective. Instead of setting up a full company immediately, businesses can start with a “soft landing” by finding partners, testing suppliers, running pilot projects, or building a small local presence.

Solutions like Employer of Record (EOR) allow companies to hire staff and operate locally without creating a legal entity, making it easier to explore opportunities with limited risk.

This approach helps validate the market before committing to a long-term setup.

Vietnam vs China for manufacturing: how should companies decide?

Vietnam is often chosen as an alternative or complement to China. It offers competitive labor costs, strong export capabilities, and favorable trade agreements.

However, China still leads in terms of infrastructure, supplier density, and advanced manufacturing.

Rather than choosing one over the other, many companies adopt a “China + Vietnam” strategy, balancing cost, capability, and supply chain resilience depending on the product.