Vietnam prepares for supply chain shift from China

Vietnam prepares for supply chain shift from China

Multinationals look to build up bases despite infrastructure and labour issues

When the Trump administration began piling tariffs on Chinese goods two years ago, Vietnam looked set to be one of the countries that would benefit most from companies looking to diversify from Asia’s top manufacturing location. 

Veteran businesspeople in the region like to compare its rising economy and exuberant business climate to Thailand’s during its foreign investment-driven boom that began in the 1980s, or China’s 20 years ago when its manufacturing sector was taking off. 

The boosters point to Vietnam’s solid record in making products to global standards, and to a widening network of free trade agreements, including recently with the EU and the UK.

Covid-19 and the closing of Vietnam to most international travellers have calmed some of the hype by hampering companies’ ability to do due diligence there. However, analysts say the pandemic has also driven home the need for businesses to diversify their supply chains away from China, where the crisis struck first.