Vietnam edges out China as top manufacturing location

04 Jun '16
2 min read

Vietnam has topped the list of most-preferred manufacturing locations by companies worldwide edging out China, according to a recent report released by the Korea Trade-Investment Promotion Agency (KOTRA).

It attributed the development to the recent trade agreements signed by Vietnam and the country's cheaper workforce.

KOTRA considered 31 of the latest manufacturing plants that were set up or transferred in the six most probable production base countries such as China, Indonesia, Malaysia, Thailand, Mexico, and Vietnam, out of which, maximum number of companies were found to have already entered Vietnam or are in the process of moving into the country. Out of the factories that were transferring their setups, 11 plants were preparing to shift from China, out of which four were headed towards Vietnam.

The Trans-Pacific Partnership (TPP) that was signed recently by Vietnam also plays a major role in this pattern shift, as it will reduce 18,000 tariffs, apart from solving issues regarding intellectual property, environment, investment regulations, and labour.

“Labour-intensive industries such as textile and apparel companies tend to favour Vietnam over China as the mainland no more offers a cheap workforce,” said Jang Soo-young, Analyst at KOTRA.

Vietnam is also a part of the ASEAN (Association of Southeast Asian Nations) economic community and Asia Infrastructure Investment Bank (AIIB). While being a part of ASEAN economic community is a lower recognized fact in the country, being a part of AIIB will help Vietnam with funding for basic business infrastructure construction, the report said. (SH).

Fibre2Fashion News Desk – India

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