Are you thinking of ways to improve the resilience of your supply chain? It would help if you went to Vietnam, a country with a dynamic economy. The factors that have made Vietnam a global source of goods lie in its several favorable trading agreements, low labor costs, and advantageous geographical position.
This blog will look at the principal sectors of strategic sourcing today in Vietnam: textiles and garments, which are increasing; footwear, the big winner in the apparel industry; and electronics manufacturing, which has seen explosive growth in recent years.
Vietnam’s Economic Landscape
The rapid changes in the industry environment and Vietnam’s developing market make it ideal for strategic sourcing, given its relatively vast proportion of the market. Thanks to the electronics and industrial sectors, Vietnam has become necessary in the global exporting industry. Foreign investment in manufacturing was needed for the manufacturing sector. Much of this is due to the multinational corporations that have taken advantage of the country’s favorable investment climate.
Vietnam’s policy to attract foreign direct investment (FDI) is based on reducing trade barriers and providing investment incentives. Trade barriers were also lowered, and more incentives were given than were previously designed only for selected regions. Its vast but young labor force has significantly increased the country’s attractiveness as a company labor pool.
Footwear Production Monopoly over Markets
Vietnam’s production expertise and favorable business conditions have made it a leading power in the global shoe-making industry. Several key factors can be attributed to the success of the Vietnamese economy in this area:
- Market share: Vietnam currently has the second-highest share of the global market for making shoes. Only China has more, showing their actual input into the international market for footwear.
- Suppliers: Vietnam has a perfect supply chain for making shoes. The country’s foremost suppliers are located nearby, saving transportation costs and lead time.
- Comparative advantage: Vietnam’s low labor costs give it a competitive advantage. As labor is so cheap in Vietnam, it is a beautiful place for shoemakers looking to cut production costs while maintaining quality.
- Quality control: To ensure that their products meet international standards for quality, Vietnamese shoemakers have emphasized quality control. This commitment to high-quality products has won the trust and loyalty of global brands and further entrenched the country’s position in the industry.
Manufacturing Growth
In recent years, Vietnam’s electronics manufacturing industry has expanded rapidly. That expansion has made the country an integrated player on the world stage. It grew 12.57 percent in 2019 and 13.56 percent in 2018. That is almost two percentage points above the figure for 2017 (source).
Since 2014, the electronics industry in Vietnam has been very dynamic. To optimize their supply chains and automate production, the sector attracted many multinational companies by offering lower wages and more straightforward procedures.
Vietnam is a tapestry of textile and garment industries.
In addition, concerning the development of the electronics industry, it is becoming more and more dynamic in textile production. The government’s massive push for the garment industry through simplified rules and regulations has boosted the exports of textile products. The country has become one of the top sourcing destinations for textile procurement by retail giants.
Conclusion
The industries mentioned above are developing rapidly and attracting global sourcing companies. As a result, Vietnam is a famous market for international sourcing for several products and services. It helps companies significantly reduce their input costs by sourcing goods from here, thereby increasing their market competitiveness immensely.