Vietnam has emerged as Australia's smartest China-plus-one sourcing destination in 2026 — here's why the shift is happening and how to make it work for your business.
The phrase "China-plus-one" gets thrown around a lot. Here's what it actually means for an Aussie importer: it means not having all your production eggs in one country's basket.
For the past two decades, China was simply unbeatable on cost, capacity, and supply chain infrastructure. If you needed it made, China could make it — fast, cheap, and at scale. That's still largely true.
But the 2025 US-China tariff escalation — which saw the US impose a 145% tariff on Chinese goods and China retaliate with 125% on US products — has accelerated what was already becoming a global consensus: over-reliance on any single country is a supply chain risk. And China, for all its manufacturing brilliance, carries more geopolitical risk than it did five years ago.
Multinationals have been diversifying for years. Apple now makes iPhones in India. Nike sources heavily from Vietnam. Samsung has major factories in Vietnam's Bac Ninh and Thai Nguyen provinces. These aren't small experiments — they're permanent structural shifts.
For Australian SMEs, the question is no longer whether to diversify. It's where and how.
Vietnam didn't become a top-three manufacturing hub by accident. It's been building towards this moment for over a decade — and in 2026, the results are undeniable.
According to the Asia Manufacturing Index 2026 by Dezan Shira & Associates, Vietnam is ranked among the top three most promising manufacturing hubs in Asia, assessed across six dimensions: economy, political risk, business environment, international trade, tax policy, infrastructure, and workforce innovation.
Economy: Vietnam's GDP grew 8.02% in 2025 — among the fastest rates in Asia. Manufacturing and processing drove a 9.97% increase in value added, the highest recorded rate in the 2019–2025 period. GDP per capita reached US$5,026, lifting Vietnam to upper-middle income status.
Trade: In 2025, Vietnam's total trade value reached US$930 billion — an 18.2% year-on-year increase. The country has signed 17 free trade agreements, creating preferential access to markets across Europe, the US, ASEAN, and beyond.
Infrastructure: Vietnam launched 564 major infrastructure projects in 2025, including expressways, Long Thanh International Airport, and expanded port capacity. These investments are designed specifically to support export-led manufacturing growth.
Here's the part that directly affects your bottom line: Australia has preferential access to Vietnamese goods through AANZFTA — the ASEAN-Australia-New Zealand Free Trade Agreement.
This means Australian importers sourcing goods from Vietnam benefit from reduced or zero tariffs at the Australian border on many product categories. Combined with Vietnam's competitive manufacturing costs and improving quality standards, the landed cost equation for Vietnam-made goods is increasingly compelling.
Vietnam's geography also helps. Shipping times from Ho Chi Minh City or Hanoi to Sydney or Melbourne are typically 10-14 days — competitive with China, and often faster than other emerging manufacturing markets.
Vietnam isn't trying to replace China for everything, and it shouldn't. But Vietnam has developed genuine world-class capability in several categories highly relevant for Australian importers:
Vietnam exported US$39.6 billion in garments and textiles in 2025. If you're sourcing clothing, activewear, uniforms, or soft furnishings, Vietnam should be on your shortlist.
Vietnam is the world's third-largest footwear exporter. In 2025, footwear exports reached US$24.2 billion.
Vietnam exported US$17.2 billion in wood and furniture products in 2025 — often at better quality-to-price ratios than comparable Chinese products.
Vietnam's fastest-growing category: US$107.7 billion in electronics exports in 2025, up 48.4% year-on-year.
Exports of machinery, equipment, tools, and spare parts reached US$59 billion in 2025.
Identify one or two product categories where Vietnam has strong manufacturing capability and where the landed cost comparison is compelling.
Many Vietnamese factories are set up for OEM production for international brands. Understanding the OEM vs ODM difference before you start conversations saves a lot of time.
Work with a sourcing agent who has team members on the ground and can conduct physical factory audits. Our Vietnam sourcing service exists specifically for this.
Plan for 30-60 days buffer on your first two to three orders while you calibrate lead times, quality standards, and communication rhythms.
To benefit from preferential tariff rates under AANZFTA, your Vietnamese goods need to meet the rules of origin requirements.
Epic Sourcing has been operating in Vietnam since before the China-plus-one trend went mainstream. Our team in Ho Chi Minh City works directly with factories across garments, footwear, furniture, bags, promotional products, and more.
If you're considering Vietnam for the first time, book a discovery call or send us an email at gday@epicsourcing.com.au — there's no commitment, just a conversation.
For garments, footwear, furniture, bags, promotional products, and a widening range of consumer goods, Vietnam in 2026 offers world-class manufacturing, genuine cost competitiveness, and a trade relationship with Australia that makes the landed cost math work.
The businesses winning right now are running a two-country sourcing strategy, with a sourcing partner who can manage both relationships. That's the China-plus-one playbook. And Vietnam is where it starts.
Sources: Asia Manufacturing Index 2026 — Dezan Shira & Associates; Vietnam Briefing (January 2026); General Statistics Office of Vietnam (GSO); UOB Vietnam Economic Outlook 2026.
