Opportunities Abound: Vietnam’s Manufacturing Landscape and How Chinese Enterprises Adapt

ACH Worldwide Ltd
4 min readSep 14, 2023

Written by Dr. Amanda, Joe Oh

Over the past few years, the world has watched global trade dynamics undergo significant transformations. A primary disruption came from the tension in Sino-American trade relations, leaving Chinese enterprises in a challenging position. The aftermath of the Section 301 Investigation in 2018 saw a 25% tariff levied on certain Chinese imports, leading to a 14.5% decline in trade between the two giants by the first half of 2023 [1]. As articulated by Xie Feng, China’s ambassador to the U.S., this downturn is largely attributed to the U.S. tariffs and export controls.

Amid the trade conflict, Vietnam has become a significant beneficiary. President Joe Biden’s 2023 Hanoi visit marked the strengthening bond, further evidenced by senior executives from leading corporations like Google, Intel, and Boeing attending the Vietnam-U.S. Innovation & Investment Summit. This Summit aims to foster technological innovation and talent development in Vietnam. Key initiatives involve vast investments in semiconductor training, emphasizing STEM education, overhauling higher education to match global benchmarks, and launching the VUSTAR research initiative [2].

Opportunities for growth in Vietnam

This geopolitical realignment brings vast opportunities for Chinese manufacturers. The absence or lower U.S. tariffs on Vietnamese goods make it a favourable manufacturing base for businesses seeking competitive pricing for the U.S. market. Recently, there’s been a noticeable shift in manufacturing hubs from China to Vietnam. A testament to this transition is evident in the large quantities of items being imported from China to Vietnam in Q1 2023: Computers, electronics, and components raking in $4.98 billion; machinery and related equipment at $4.53 billion; textiles reaching $1.8 billion; phones and their components at $1.61 billion; and the iron and steel sector hitting $1 billion [3].

This transition isn’t just about relocation but mutual benefits. Vietnam’s diverse manufacturing capabilities mean it can refine and adapt Chinese raw materials and products to cater to diverse consumer needs.

For Hong Kong-based Chinese manufacturers, the horizon is filled with opportunities. These businesses can not only establish a manufacturing base in Vietnam but also harness its expanding consumer market. Incentives like the BUD funding mechanism further sweeten the proposition, providing financial support for innovative pursuits.

Vietnam’s demographic dynamics is indeed a strong investment rationale. With a middle class expected to rise from 33 million to 95 million by 2030, Vietnam offers a robust consumer base eager for quality and innovation. Furthermore, the median age is only 31.9 years of age, much lower than Hong Kong’s 45.6 years [4]. With the growing interest in gamified technology, the younger generation is well equipped to embrace AI and metaverse strategies.

Utilising AI and Metaverse to accelerate success

Incorporating AI and metaverse technologies can further elevate the business landscape. Chinese businesses aiming for a stronghold in Vietnam’s booming sectors find these tools invaluable for operational excellence, competitive advantages and consumer interaction. Hong Kong-based enterprises can leverage the BUD government fund of Hong Kong to implement their AI and metaverse strategies, refining their operations, building their edges and strengthening their marketing competitiveness.

The potential of AI and smart manufacturing in Vietnam includes:

  • Supply Chain Efficiency: AI-powered solutions streamline production.
  • Predictive Maintenance: Proactively maintain machinery health.
  • Quality Assurance: Harness computer vision for impeccable standards.
  • Seamless Communication: AI-powered linguistic tools promote seamless interactions.

Additionally, smart manufacturing technologies such as IoT, Digital Twin, AR/VR Training, and 3D Printing offer an edge in operational efficiency.

From a marketing perspective, the metaverse is revolutionary. It enhances product exploration, customer interactions, data-driven campaigns, and audience engagement, all contributing to a brand’s vitality.

Furthermore, AI-driven strategies aid in content localization, influencer collaborations, and dynamic market strategies, ensuring brands resonate with the Vietnamese ethos.

To conclude, as trade dynamics evolve, the fusion of AI, metaverse, and the burgeoning consumer base in Vietnam unveils a treasure trove of opportunities for Chinese enterprises. The businesses that adapt, innovate, and strategize astutely are the ones poised for success.

Sources:

[1] Cheng, E. (2023, August 31). China says drop in trade with the U.S. is “a direct consequence of U.S. moves.” CNBC. https://www.cnbc.com/2023/08/31/china-says-drop-in-trade-with-us-is-direct-consequence-of-us-moves.html

[2] The United States Government. (2023, September 11). Remarks by president Biden at roundtable meeting with CEOS. The White House. https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/09/11/remarks-by-president-biden-at-roundtable-meeting-with-ceos/

[3] Các Mặt Hàng nhập khẩu tỷ USD TỪ Trung Quốc Trong quý 1. mekongasean.vn. (2023, April 15). https://mekongasean.vn/cac-mat-hang-nhap-khau-ty-usd-tu-trung-quoc-trong-quy-1-post20454.html

[4] Average age by country. Worlddata.info. (n.d.). https://www.worlddata.info/average-age.php

--

--