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Why Is Vietnam So Cheap? The Real Reasons Behind the Low Costs

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ALO VietnamALO Vietnam
14 July 2025
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Why is Vietnam so cheap? From $1 street food to affordable manufacturing, Vietnam offers exceptional value, but it’s not just about low prices. Thanks to economic reforms, low labor costs, a favorable exchange rate, and strong supplier networks, Vietnam has become a cost-effective destination for both travelers and global buyers. In this guide, we uncover what drives Vietnam’s affordability and how businesses can benefit from it.

Quick Summary

  • Vietnam is affordable due to low labor costs, a strong exchange rate, and pro-investment policies.
  • Big brands like Apple and Nike source from Vietnam for value without sacrificing quality.
  • Vietnam is improving sustainability and labor protections across industries.
  • VALO Vietnam connects global buyers with trusted, affordable suppliers.

Economic Foundations: Đổi Mới & Vietnam’s Market Transformation

cheap cost advantage

From Central Planning to Open Markets

Vietnam’s reputation for affordability began with a pivotal moment in 1986: Đổi Mới, meaning “Renovation”. This set of economic reforms transformed Vietnam from a closed, centrally planned system into a socialist-oriented market economy.

Instead of controlling production, the government began encouraging:

  • Private enterprise and entrepreneurship
  • Foreign direct investment (FDI)
  • Export-led industrialization

Why This Matters

Thanks to these reforms, Vietnam has:

  • Become one of the fastest-growing economies in Asia
  • Attracted major manufacturers in electronics, garments, furniture, and more
  • Developed industrial parks and free-trade zones designed to serve global buyers

For businesses, Đổi Mới laid the groundwork for today’s low production costs, streamlined sourcing, and export readiness. It’s a key reason why Vietnam remains cost-effective yet globally competitive.

Bottom line: Vietnam’s affordability isn’t accidental, it’s the result of smart reforms and 30+ years of economic evolution.

Currency Advantage & Low Cost of Living

low labor cost Vietnam

The Power of the Vietnamese Dong (VND)

Vietnam’s currency gives both travelers and businesses a major advantage. With $1 USD = ~26,163 VND (July 2025), even modest budgets can go a long way.

What Does Daily Life Cost?

Vietnam consistently ranks as one of the cheapest places to live or travel in Southeast Asia. Here’s a snapshot of typical expenses:

  • Street food meal: 30,000–50,000 VND ($1–2)
  • Grab ride across town: ~25,000 VND ($1)
  • Monthly rent in a city like Da Nang or Hanoi: $250–400
  • Coffee at a café: 25,000 VND ($1)

According to Numbeo, Vietnam’s cost of living index is around 37.5, significantly lower than Thailand, Malaysia, or China.

Why It’s Important for Business

For global buyers and manufacturers:

  • Labor costs are low
  • Electricity and land lease rates are affordable
  • Suppliers can offer competitive pricing due to lower overheads

Whether you’re visiting Vietnam or sourcing from it, low daily costs and currency value make Vietnam one of the most affordable countries in the world.

What “Cheap” Really Means in Vietnam: It’s About Value

Let’s Be Clear: Cheap ≠ Poor Quality

When people ask, “Why is Vietnam so cheap?”, they’re often thinking cheap equals low-quality. But in Vietnam, “cheap” often means:

  • High quality
  • Excellent value for money
  • Skilled craftsmanship at low cost

Think about it:

  • A delicious bowl of pho costs $1.50, made fresh with local ingredients
  • Tailored clothes cost 60–70% less than in Western countries
  • Furniture or apparel manufacturers offer factory-direct pricing, without the markup

Vietnam’s Manufacturing: Efficient and Reliable

Many global brands, including Nike, Adidas, Samsung, and IKEA, trust Vietnam for:

  • Skilled, consistent labor
  • Strict quality control
  • Low-cost production with reliable output

This is not a coincidence. It’s the result of strong supplier networks, abundant local raw materials, and decades of export experience.

So, instead of thinking “cheap” means “inferior”, think of Vietnam as delivering world-class quality at a fraction of the price.

For Global Buyers

If you’re looking to reduce costs without compromising standards, Vietnam is a goldmine, especially through trusted sourcing platforms like VALO Vietnam, where you can connect directly with vetted suppliers across industries.

Manufacturing & Sourcing Advantages

Vietnamese exchange rate

1.  Low labor cost + rising skills

Average factory wages sit at 7.7–8.4 million VND per month ($304–340), about one‑third of China’s coastal rates, yet vocational programmes keep productivity high. 

2.  Integrated supply chains & “China + One” proximity

  • Vietnam shares a border with southern China, shortening component lead‑times for electronics, textiles and furniture.
  • Deep‑water ports in Hải Phòng and Cái Mép and new north‑south expressways move goods fast, reinforcing Vietnam’s role as an export hub for global brands.

3.  FDI momentum & big‑tech validation

  • Vietnam hosts 35 Apple suppliers and is on track to produce 20 % of all iPads & Apple Watches and 65 % of AirPods by 2025.
  • Similar expansion from Samsung, LG, Nike and furniture giants confirms the country’s high‑value manufacturing credentials.

4.  Government incentives & free‑trade reach

  • Seventeen active free trade agreements (CPTPP, EVFTA, RCEP, and more) slash tariffs for buyers, while new deals with India, Brazil and the Middle East are under negotiation.
  • Corporate income‑tax holidays, land‑lease discounts and a transparent investment law make site set‑up quick.

5.  Why this matters for buyers

Lower input costs, tariff‑free market access and a workforce trained by Apple‑style programmes combine to create a cheap cost advantage without compromising quality. Through the VALO Vietnam platform, B2B buyers can find suppliers Vietnam‑wide, compare quotes and build supply chains that beat regional price points.

Understanding Why Vietnam Is So Cheap, And Why It’s a Smart Advantage

Vietnam is one of the most cost-effective countries in the world, not because of poor quality, but because of its economic reforms, low labor costs, strong local supply chains, and a currency that offers excellent value for money. Whether you’re visiting on a budget or sourcing products for international markets, the answer to “Why is Vietnam so cheap?” lies in its ability to deliver high value at low cost.

From street food for under $2 to world-class manufacturing partners, Vietnam combines affordability with capability. And thanks to free trade agreements and investment-friendly policies, it’s also easier than ever to do business here.

Want to take advantage of Vietnam’s manufacturing value? 

VALO Vietnam connects global buyers with trusted Vietnamese suppliers across industries like furniture, apparel, home goods, and more. Explore suppliers on VALO Vietnam now!

FAQ: Common Questions About Why Vietnam Is So Cheap

  1. Is Vietnam really cheaper than Thailand or other Southeast Asian countries?

Yes. Vietnam typically offers lower prices for food, accommodation, transport, and manufacturing compared to Thailand, Malaysia, or Indonesia, making it one of the cheapest countries in the region.

  1. Why is Vietnamese labor so cheap compared to China?

Wages in Vietnam are significantly lower than in China’s industrial hubs, largely due to lower living costs and a younger workforce. However, productivity and quality are still strong, especially in export manufacturing sectors.

  1. Does “cheap” mean low quality in Vietnam?

No. “Cheap” in Vietnam usually means affordable and efficient, not poor quality. Many global brands (Nike, Samsung, IKEA) manufacture here because of the high-value output at competitive prices.

  1. Is it safe and ethical to source from Vietnam?

Yes, especially if you work with vetted suppliers. Vietnam is making significant progress in sustainability, labor rights, and environmental standards. Platforms like VALO Vietnam help you connect with ethical and reliable partners.

  1. What are the biggest cost advantages for businesses sourcing in Vietnam?
  • Low labor and raw material costs
  • Competitive land lease and utility rates
  • Preferential tariffs through free trade agreements
  • Skilled labor force and improving infrastructure
  • Strong supply chain for wood, textiles, electronics, and more
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