Over the past decade, a growing number of global companies have begun shifting production out of China. What started as a gradual diversification has accelerated due to rising operational costs, tariff pressures, and the need for more resilient supply chains. As companies reassess their manufacturing footprint, Vietnam has become one of the most attractive alternatives.
Vietnam’s manufacturing sector has expanded rapidly, offering competitive labor costs, a skilled workforce, and strong export agreements with major global markets. For businesses exploring relocation, the transition is not simple, but with the right approach, it can lead to improved efficiency, reduced costs, and a more stable production ecosystem.
This guide breaks down why companies are making the move, how to evaluate your readiness, and the exact steps needed to shift production from China to Vietnam successfully.
Key Takeaways:
- Vietnam is becoming a leading alternative to China thanks to competitive labor costs, tariff advantages, and strong export agreements.
- Relocating manufacturing requires planning, including feasibility studies, supplier verification, and a clear understanding of Vietnam’s factory clusters.
- Not every product category is suitable for Vietnam, so companies must assess raw material availability, lead times, and QC requirements before moving.
- A phased transition reduces risks, especially when companies maintain temporary dual production to keep supply chains stable.
- Quality control and communication are critical, particularly during onboarding with new suppliers.
- Vietnam offers long-term strategic benefits, including diversification, cost stability, and improved access to global markets.
- VALO can connect businesses directly with verified Vietnam suppliers, supporting a smooth and confident transition.
Table of Contents:
- Key Reasons to Move Manufacturing From China to Vietnam
- How to Evaluate Whether Your Business Should Move
- Step-by-Step: How to Move Manufacturing From China to Vietnam
- Challenges Companies Should Expect
- Tips to Ensure a Smooth Move
- Conclusion
- FAQ: Moving Manufacturing From China to Vietnam
Key Reasons to Move Manufacturing From China to Vietnam
1. Rising Labor Costs in China
China’s labor costs have increased steadily as its economy matures. Higher wages, social insurance contributions, and rising overhead costs have made China less competitive for labor-intensive industries such as apparel, footwear, furniture, and consumer goods.
2. Lower Labor and Production Costs in Vietnam
Vietnam continues to offer one of the most competitive labor markets in Asia. The cost advantages extend beyond wages, factory overhead, utilities, and compliance expenses are generally lower, giving Vietnam a cost edge for many product categories.
Read more: Why Is Vietnam So Cheap? The Real Reasons Behind the Low Costs
3. Tariff Advantages
Vietnam benefits from extensive free trade agreements, including:
- CPTPP
- EVFTA (EU–Vietnam Free Trade Agreement)
- RCEP
These agreements give manufacturers based in Vietnam improved access to key markets. Compared with China, products made in Vietnam can carry fewer tariffs and more competitive landed costs.
Read more: Vietnam, China, and US Trade: Opportunities and Challenges in Global Sourcing
4. Supply Chain Diversification
Companies no longer want to rely on a single-country manufacturing model. Vietnam provides an opportunity to build multi-country production strategies that reduce risk and improve supply chain resilience.
5. Increased Geopolitical Stability
Amid global trade tensions, Vietnam offers a more stable environment for foreign manufacturers. Its pro-investment policies and long-term political stability make it an attractive destination for companies planning multi-year production commitments.
How to Evaluate Whether Your Business Should Move
Before relocating, businesses should assess several critical factors.
Product Type Suitability
Vietnam excels in certain industries, including:
- Furniture and woodworking
- Textiles and apparel
- Footwear
- Consumer goods
- Metalwork and fabricated products
If your product aligns with these strengths, Vietnam may be a strong fit. High-complexity electronics often still favor China.
Volume and MOQ Considerations
Vietnam’s factories generally offer flexible MOQs, though some small and mid-sized factories may have capacity limits. Large-scale, high-volume production is possible but should be validated early.
Material Availability
Some raw materials are readily available within Vietnam, but others, especially specialized components, may still require importing from China. This is common in electronics, plastics, and metal components.
Lead Time Expectations
Vietnam’s lead times can be slightly longer compared to China’s highly optimized production systems. Companies should evaluate their timeline expectations before switching.
Quality Control Requirements
Building a new supplier relationship requires structured quality control. Companies should define their QC plan and consider working with third-party inspectors during onboarding.
Step-by-Step: How to Move Manufacturing From China to Vietnam
Step 1: Assess Relocation Feasibility
Evaluate:
- Cost differences
- Tariff impacts
- Supply chain availability
- Factory clusters
- Timeline and risk
A feasibility assessment helps you avoid making assumptions based purely on cost.
Step 2: Identify Vietnam Supplier Clusters
Vietnam has strong manufacturing hubs:
- Ho Chi Minh City & Binh Duong: furniture, garments, footwear
- Dong Nai: plastics, consumer goods
- Hanoi & Hai Phong: electronics, machinery
- Quang Nam, Da Nang: textiles, supporting industries
Locating the right cluster improves logistics efficiency and supplier availability.
Step 3: Request Samples & Benchmark Quality
Once you shortlist suppliers:
- Request samples
- Compare quality with China-made samples
- Review workmanship, materials, finishing
- Check compliance documentation
This stage determines whether Vietnam factories meet your standards.
Step 4: Calculate Landed Costs
Consider:
- Unit cost
- Packaging cost
- Freight cost
- Tariffs
- Compliance fees
- Expected defect rates
- Total landed cost to your destination market
Vietnam-made goods often benefit from tariff reductions.
Step 5: Visit Factories or Conduct Audits
Factory visits help you:
- Confirm capacities
- Evaluate equipment
- Assess worker skills
- Understand production timelines
- Verify ethical and safety standards
If travel is not possible, third-party audits are a strong alternative.
Step 6: Set Up Trial Production
Start with:
- A small batch
- A clear technical pack
- Agreed QC checkpoints
- Defined milestones
Trial runs help validate quality and consistency prior to full relocation.
Step 7: Manage Transition Timelines
Many companies transition gradually:
- Keep China running temporarily
- Launch initial production in Vietnam
- Switch completely once QC stabilizes
This dual approach reduces supply chain disruption.
Step 8: Establish QC & Compliance Workflows
Put in place:
- In-line inspections
- Pre-shipment inspections
- AQL standards
- Performance testing
- Clear communication channels
Successful relocations depend heavily on early quality management.
Challenges Companies Should Expect
Learning Curve With New Suppliers
Vietnamese factories may require more detailed documentation and guidance at the start. Clear instructions speed up onboarding.
Infrastructure Differences
China’s logistics and manufacturing ecosystems are more advanced. Vietnam is improving quickly, but delays may occur in specific regions.
Limited Capacity in Some Industries
High-tech components and niche materials may be harder to source domestically, requiring imports.
Longer Onboarding Period
Vietnam factories often need time to adjust to new production requirements. Early communication and careful setup reduce delays.
Tips to Ensure a Smooth Move
Dual Production Phase
Run China and Vietnam operations simultaneously during the first months to minimize risk.
Clear Technical Packs
Provide detailed specifications, drawings, measurements, and tolerances to prevent misunderstandings.
Strong QC Partnership
Consider using third-party quality control firms for the initial phases until the factory stabilizes production.
Transparent Communication
Frequent updates, shared timelines, and weekly checkpoints help avoid delays and misalignment.
Conclusion: Vietnam Is Becoming The Smarter Manufacturing Choice
Relocating manufacturing from China to Vietnam provides businesses with clear benefits, lower production costs, tariff advantages, and a more diversified, resilient supply chain. While the transition requires careful planning, companies that execute it well gain long-term stability, improved pricing, and greater operational flexibility.
Vietnam’s rise as a top manufacturing hub is unmistakable. With a skilled workforce, expanding industrial infrastructure, and strong global trade relationships, it has become one of Asia’s most attractive destinations for production.
If your business is considering the move, VALO Vietnam can support your transition. VALO connects international buyers directly with vetted Vietnamese manufacturers, with no middlemen and no fees for buyers. Explore trusted suppliers and begin your shift to Vietnam with confidence.
- Call us 24/7: +84 79 928 7929
- Email: alo@valovietnam.com
FAQ: Moving Manufacturing From China to Vietnam
1. Why are companies moving manufacturing from China to Vietnam?
Businesses are shifting due to rising labor costs in China, tariff pressures, the need for supply chain diversification, and the growing competitiveness of Vietnam’s manufacturing sector.
2. Is Vietnam cheaper than China for manufacturing?
For many industries, such as textiles, furniture, footwear, and general consumer goods, Vietnam offers lower labor and production costs. However, the exact savings vary by product type and material requirements.
3. Which industries are best suited for manufacturing in Vietnam?
Vietnam is strong in:
- Furniture and wood products
- Apparel and textiles
- Footwear
- Consumer goods
- Metal fabrication
- Basic electronics assembly
High-complexity electronics often still rely on China’s mature supply chain.
4. How long does it take to relocate production from China to Vietnam?
Most companies need 3 to 9 months, depending on:
- Product complexity
- Supplier readiness
- Factory onboarding
- QC setup
A phased transition helps maintain supply continuity.
5. Can Vietnam fully replace China for all materials and components?
Not yet. Some materials, especially specialty plastics, electronics components, and engineered metals, still need to be imported from China. Many companies use a hybrid supply model.