Low production costs, tax benefits give Chinese goods price advantage in Vietnam

Chinese goods entering Vietnam are often cheaper than local products due to low production costs, taxation benefits and shipping subsidies by manufacturers, says Nguyen Thanh Trung, director of Logistics Technology Solutions Company Limited (LTS).

While a Chinese product sold on e-commerce platforms may be priced very cheap, it may not reflect the full shipping cost, Trung told a workshop titled “Supporting Vietnamese goods on e-commerce platforms” in Ho Chi Minh City Wednesday.

Often, manufacturers subsidize shipping costs, he noted, adding: “Of course, the primary factor behind these low prices is the ability to keep production costs down.”

Furthermore, Trung argued, Chinese goods imported into Vietnam are often treated as personal items rather than commercial goods, complicating tax enforcement.

“This issue isn’t unique to Vietnam; it happens in other countries as well. When a Chinese product enters Vietnam but is taxed at a lower rate than local goods, it naturally becomes cheaper than Vietnamese products,” he noted.

Another factor, Trung said, was the way e-commerce platforms operated. Many platforms in Vietnam sell products indirectly through authorized units rather than directly from manufacturers. For instance, items like clothing and children’s toys from China are imported by Vietnamese entities and sold to consumers through e-commerce channels.

“The actual production cost of these goods in China is already low enough for manufacturers to profit. In some cases, production costs are only about 60–70% of the selling price in Vietnam,” Trung noted.

Discussing the logistics capabilities of Vietnamese companies, Trung acknowledged that while they provide strong domestic services, significant advancements were needed to position Vietnam as a regional logistics hub.

He emphasized Vietnam’s potential, particularly HCMC, which is slated to develop eight logistics hubs as part of a current project.

“We can take inspiration from e-commerce platforms that build modern logistics centers to manage and distribute goods. Vietnamese businesses looking to export should adopt this model. However, the key challenge remains making logistics faster and more cost-effective,” he noted.

Trung concluded by highlighting that speed and cost are two core concerns for logistics customers. While Vietnamese companies can meet domestic demand effectively, improvements in processes and technology were essential for competing at the regional and international levels.