Vietnam most attractive alternative to China for manufacturing: consultant

China used to have many policies to attract foreign investors to build factories, but now there are many changes and Vietnam is the ideal alternative, says Kyle Freeman, a partner at Dezan Shira & Associates.

Freeman shared the information at the workshop "New U.S. policy: Impacts on trade and investment," organized by the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC) in collaboration with the U.S.-Vietnam Business Council and the Vietnam Innovation Institute in HCMC on Wednesday.

Freeman explained that China had previously offered numerous incentives for investors building factories in Asia; the evolving environment has made Vietnam the most attractive market for manufacturing and sourcing.

Although Vietnam may not be the top choice for all investors, it ranks as a strong second or third option, presenting significant opportunities for investment. Vietnam’s competitive advantages include low labor and production costs, a network of free trade agreements, robust infrastructure, and favorable investment policies compared to neighboring countries, according to Freeman.

On the export front, China’s exports to the U.S. are declining, with products from Vietnam and Mexico filling the gap. Vietnamese goods now compete with those from China and Mexico in the U.S. market. Freeman emphasized that Vietnamese businesses must adjust pricing strategies to remain competitive and enhance their market access in the U.S.

Freeman highlighted Vietnam’s competition with China, Mexico, and Canada in supplying products to the U.S. He noted the importance of pricing adjustments for Vietnamese businesses seeking to expand their U.S. market presence.

Vietnam also benefits from certain tax exemptions on products imported into the U.S., which businesses should leverage. However, Freeman cautioned against the risk of Chinese goods being re-exported through Vietnam to the U.S., which could complicate trade relations. He also highlighted the impact of monetary and exchange rate policies on exports, urging businesses to stay informed.

Freeman offered two key pieces of advice for Vietnamese businesses. First, Vietnamese firms update new policies, especially when Donald Trump takes office for the second time. Second, Vietnamese businesses should build a clear and tight export system when bringing goods to China.

Meanwhile, Kevin Morgan, chairman of the U.S.-Vietnam Business Council, highlighted the remarkable growth in Vietnam-U.S. trade relations in recent years, which has positioned Vietnam among the top countries with a trade surplus with the U.S. The U.S. trade deficit with Vietnam reached $102 billion in 2024, posing a challenge to the "fair and balanced trade" goal advocated by Donald Trump.

To address this, Morgan advised Vietnamese enterprises to prepare a range of strategies to adapt to potential changes in U.S. trade policies and import tariffs. He emphasized the importance of prioritizing two-way trade cooperation to narrow the trade gap and align with the long-term interests of both Vietnam and the U.S.