Why Manufacturers are Moving from China to Vietnam

If you’re planning to expand your manufacturing operations from China, you’ll find that Vietnam presents a solid case.  Between 2010 and 2025, Vietnam’s annual export revenue climbed from approximately USD 72 billion to USD 475 billion. This surge shows how quickly the country transformed from a regional agricultural exporter into the international manufacturing hub we know today.

In this guide, we walk you through what changed in Vietnam’s manufacturing landscape, how the country now compares with China on cost and access, and the practical considerations before you commit to a move.

Understanding How Vietnam Became the World’s New Manufacturing Base

A decade ago, Vietnam was still a secondary option for global brands. It was seen as a backup destination for low-end garment work, as complex electronics and high-value assembly stayed firmly in southern China. 

However, more and more foreign brands are moving to Vietnam. This change is driven by two factors:

• Infrastructure: In the last 15 years, Vietnam built out deep-water ports at Hai Phong and Cai Mep, opened dozens of dedicated industrial zones, and connected its northern manufacturing belt to China via the Kunming–Hai Phong rail line. 
• Policy: Vietnam signed 16 active free trade agreements covering Europe, the Americas, and Asia-Pacific, while keeping foreign ownership rules among the most open in Southeast Asia.

When multinationals needed to diversify their supply chains after the 2018 US-China trade war, Vietnam already had the infrastructure and open trade policies in place. Today, Vietnam handles a major share of global production for consumer goods and technical assemblies. We explore why and how in the sections below.

Major Industries Moving from China to Vietnam

Major global brands have moved primary production lines to Vietnam. Samsung produces more smartphones in Vietnam than in any other country. Nike sources more than half of its global footwear from Vietnamese factories. Apple’s contract manufacturers have shifted iPad, Apple Watch, and AirPods assembly to northern Vietnamese provinces. 

These industries prove that Vietnam’s infrastructure today supports complex, high-volume production rather than just simple assembly.

• Electronics and Mobile Devices: Northern industrial hubs in Bac Ninh, Thai Nguyen, Bac Giang, and Quang Ninh now anchor smartphone, tablet, and wearables assembly for the global market. Most major contract manufacturers run multiple facilities across these provinces.
• Textiles, Apparel, and Footwear: Vietnam’s garment and footwear sector has moved past basic contract sewing (Cut-Make-Trim). Local suppliers now run end-to-end product development for international buyers, including the ESG and traceability work Western retailers require.
• Automotive Parts and Machinery: Industrial corridors in the north and south also supply electrical machinery, EV components, and precision-engineered parts to Western automotive brands like Ford, General Motors, Tesla, BMW, and Volkswagen. The ecosystem has grown alongside domestic EV players, drawing Tier-1 global suppliers to set up local production.

If you’re planning to move your operations to Vietnam, our local advisors can map out the best route for a smooth entry. We can handle your entity registration, customs, and logistical plans. Book a free consultation via the form below.

Why Manufacturers are Moving from China to Vietnam

Manufacturers comparing Vietnam vs China weigh five practical pillars: location, labor cost, infrastructure, free trade coverage, and tariff exposure. Here is how the two countries compare on each.

1. Vietnam’s Strategic Location

For manufacturers already running operations in southern China, expanding to Vietnam feels more like opening a sister facility across town. Vietnam and China are direct neighbors, sharing a 1,281-kilometer land border. More importantly, they share the same coastline along the Gulf of Tonkin and the South China Sea.

This means your cargo vessels utilize the same global shipping lanes they always have. If your ships are already navigating out of Shenzhen, Guangzhou, or Xiamen, transitioning to Vietnamese waters requires zero deviation from standard global maritime routes.

Furthermore, the time zones line up too. Vietnam operates in UTC+7, while China in UTC+8. The one-hour difference allows your management teams, suppliers, and engineers in southern China to coordinate with your Vietnamese facility in real time. 

2. The Labor Cost in Vietnam vs China

The most immediate financial incentive for companies moving from China to Vietnam is the savings on payroll. Chinese minimum monthly wages in major industrial cities now sit between USD 310 and USD 390. Vietnam’s labour costs run significantly below that, with the country using a four-tier regional minimum wage system that scales pay to the local cost of living.

Under the current rules of Decree 293/2025/ND-CP, effective 1 January 2026, the four wage regions are:

• Region 1: VND 5,310,000 per month (~USD 204). This rate applies to highly developed urban districts in Hanoi, Ho Chi Minh City, Hai Phong, and Da Nang.
• Region 2: VND 4,730,000 per month (~USD 182). This rate covers most of Binh Duong, Dong Nai, Can Tho, and surrounding industrial belts.
• Region 3: VND 4,140,000 per month (~USD 159). This rate applies to smaller provincial cities with emerging industrial parks, including parts of Hai Duong, Khanh Hoa, and Long An.
• Region 4: VND 3,700,000 per month (~USD 142). This rate applies to rural areas where industrial space is still in its early stages.

Shifting your assembly lines to Vietnam means reducing your baseline labor spend by close to half. You will need to add mandatory contributions for social, health, and unemployment insurance, which sit at around 21.5% on top of base salaries. Even with these benefits included, your total payroll remains highly competitive against Chinese alternatives.

3. Infrastructure (Port and Road Access)

Vietnam has strategically built its transportation network to act as a direct, physical extension of Southern China’s supply chains.

• Overland corridor from China: Factories in northern provinces like Bac Ninh, Hai Phong, or Lang Son can receive raw materials and sub-assemblies trucked from Guangdong or Guangxi through the Lang Son and Lao Cai border gates in under 24 hours. This corridor makes just-in-time production schedules viable without expensive air freight.
• Northern deep-water gateway: The Lach Huyen Deep Sea Port in Hai Phong handles mega-container vessels sailing directly to North America and Europe. Goods leave Vietnamese factories without the costly step of transshipping through Hong Kong, Shenzhen, or Singapore.
• Southern deep-water gateway: The Cai Mep-Thi Vai port complex in Ba Ria-Vung Tau serves the industrial corridors of Ho Chi Minh City, Binh Duong, and Dong Nai. The complex handles the largest container vessels on direct US West Coast and EU routes.

Tip: The combination of overland corridors from China and direct-call deep-water ports gives Vietnam more predictable logistics costs and shorter lead times to end markets than most Chinese alternatives.

4. FTA Coverage in Vietnam vs China

Vietnam has signed 16 active free trade agreements that allow you to export finished goods to Europe, North America, and other major Asian markets with low or zero import duties. The three most significant ones for Western-facing manufacturers are:

• EU-Vietnam Free Trade Agreement (EVFTA): Progressively eliminates 99% of all tariffs on goods traded between Vietnam and the European Union, giving Vietnamese-made apparel, electronics, and footwear a significant advantage on European shelves. China has no equivalent agreement with the EU.
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Provides duty-free access to major economies across the Pacific, including Canada, Mexico, Japan, and Australia. China is not a CPTPP member.
• Regional Comprehensive Economic Partnership (RCEP): Unifies rules of origin across 15 Asia-Pacific nations, making it easier to import components from China and export finished products within Asia under preferential duty rates.

The US is a notable exception. Neither Vietnam nor China has a bilateral FTA with the United States. US-bound exports from both countries, therefore, fall back on standard Most Favored Nation (MFN) rates plus current tariff measures, which we cover in the next section.

Tip: China’s free trade access covers most of Asia and the Pacific through RCEP and bilateral deals with ASEAN, but it has no comparable agreement with the EU, the UK, Canada, Mexico, or Japan. Vietnam’s FTA network gives you preferential access to all five.

5. Vietnam’s Tariff Exposure for Manufacturers vs China

Tariff exposure shapes whether your product can compete on Western retail shelves. The gap between Vietnam and China shows up across multiple markets, not just the US.

• United States: As of February 2026, Vietnamese exports face a 10% Section 122 tariff on top of MFN rates. Chinese exports face the same 10% Section 122 plus Section 301 surcharges of 25% to 30%. Sectoral spikes go much higher. Electric vehicles carry duties above 100%, solar cells sit above 50%, and stacked steel and aluminium products exceed 70%. For most product categories, Vietnam-made goods land at US ports 20 to 25% points cheaper in duty than China-made equivalents.
• European Union: Through the EVFTA, Vietnamese exports to the EU face progressively lower duties, with 99% of tariff lines set to be eliminated by 2030. Chinese exports face standard EU MFN rates averaging around 6% on industrial goods, with additional countervailing duties layered on top in sensitive categories. In late 2024, the EU added duties of 17% to 38% on Chinese electric vehicles, with similar measures targeting Chinese solar panels and e-bikes.
• United Kingdom and Japan: The UKVFTA gives Vietnamese exports preferential UK access while Chinese exports face standard MFN rates. Vietnamese exports to Japan benefit from both the bilateral VJEPA and CPTPP, while Chinese exports rely only on the less generous RCEP framework.

Mapping these five advantages onto your specific operations requires local insight. Schedule a call with our local advisors to explore your relocation costs and overall timeline.

The Challenge of Moving Manufacturing Operations to Vietnam

Setting up a factory in a new country is a significant operational challenge. While the advantages are clear, you will need to plan for the practical hurdles you will face on the ground.

1. Supply Chain Dependency on China

If you are planning to move the final assembly to Vietnam, your business cannot cut ties with China overnight. The Vietnamese assembly lines still heavily rely on China for primary components, raw chemicals, custom metal tooling, and specialized surface treatments. On average, many electronic products assembled in Vietnam contain around 28% Chinese-made content.

To manage this dependency, many global brands adopt the China Plus One strategy in Vietnam. Under this model:

• You keep core or complex production in China, where supplier networks and skilled labor remain hard to replace. 
• Move labor-intensive or final assembly work to Vietnam, particularly for goods bound for the US and EU where Chinese tariff exposure is highest. 

This protects your duty bill on Western-bound exports while preserving your access to Chinese components.

2. Skilled Mid-Management and Engineering Shortages

Vietnam has an abundance of hardworking factory floor operators. The influx of foreign capital, however, has created a highly competitive market for skilled mid-management, experienced quality control supervisors, and technical engineers.

Expect to pay USD 1,500 to USD 2,500 per month for an experienced production supervisor or quality engineer in Bac Ninh or Binh Duong. Bilingual or Western-trained candidates command higher rates. Roles requiring industry-specific expertise, such as semiconductor process engineering or pharmaceutical compliance, can run well above that range.

To secure and retain top talent, you need to design attractive compensation packages and invest in continuous local training. You must also account for the administrative process of securing work permits and visas for foreign technical experts who will supervise your early production phases.

3. Raw Material Import Dependency

Because local suppliers are still scaling up their operations, your factory will likely need to import its raw inputs from outside Vietnam, sometimes from China itself. This constant inflow of materials means your operations depend on fast customs clearance and reliable logistics partners. Any delay at the border can stall your assembly lines, making efficient customs management a top priority.

4. Power and Logistical Access

Vietnam’s rapid industrial growth has stretched the local power grid, especially during hot summer months when air conditioning demand spikes. When evaluating different industrial parks, you should inquire about backup generator setups, independent substations, and utility agreements to ensure smooth, uninterrupted operations.

You should also evaluate local transport links. While major highways are modern, secondary roads leading to rural ports can face traffic congestion, making site selection a crucial operational decision.

5. Regulatory Changes

Vietnam’s corporate laws undergo regular updates. To stay compliant, you will need to track the latest regulations closely. The three most important for foreign manufacturers right now are:

• The Law on Investment 2025: This updated framework came into effect on 1 March 2026 under Law No. 143/2025/QH15. For non-conditional sectors, you can now use a company-first sequence, registering your enterprise and obtaining your Enterprise Registration Certificate (ERC) in under a week. This lets you open bank accounts, sign leases, and hire staff before completing your Investment Registration Certificate (IRC).
• Decree No. 96/2026/ND-CP: Issued on 31 March 2026, this decree guides the implementation of the new investment law. It narrows the list of restricted business lines and formally recognizes digital signatures and electronic submissions for foreign investor filings.
• Decree No. 20/2026/ND-CP: Issued on January 15, 2026, this decree introduces special incentives for high-tech enterprises, startups, and small-to-medium manufacturing operations. It provides corporate income tax exemptions and guarantees that provincial authorities reserve dedicated land within industrial parks for prioritized industries.

How Emerhub Supports Your Move from China to Vietnam

Emerhub acts as your on-the-ground compliance partner, handling the administrative, legal, and logistics details so you can focus on the bigger picture. We provide end-to-end support, with services ranging from:

• Company Registration: Structuring your entity under the Law on Investment 2025 and walking you through the ERC-first or traditional licensing pathway.
• Site Selection and Due Diligence: Auditing site maps and reviewing lease agreements to secure the right plot for your operation.
• Importer of Record and Customs Clearance: Importing machinery, components, and tooling through local ports without delays.
• Operating Permits and Compliance: Fire safety, environmental, and sector-specific licenses your factory needs before commencing production.
• Work Visas and Employment Setup: Work permits, employment contracts, and resident visas for your foreign engineers and management team.

With our established local networks and expertise, Emerhub helps you avoid the most common setup delays and establish a compliant hub in Vietnam.

Get in touch with our local team to learn more about how we can support your manufacturing operations in Vietnam. Schedule a free consultation via the form below.