Vietnam's manufacturing sector has transformed dramatically — and Australian businesses are waking up to what that means for them. Here's why Vietnam is becoming the number one China-Plus-One destination, and how to make the move.
Vietnam's manufacturing sector has quietly undergone one of the most remarkable transformations in global trade — and Australian businesses are finally waking up to what that means for them.
Five years ago, "Vietnam sourcing" was still a novelty conversation. Most Aussie importers had one playbook: find a supplier on Alibaba, wire the deposit, and hope for the best. China was the default, the familiar, the only realistic option for the volumes most SMEs were running.
That's changed. Dramatically.
Today, Australia ranks among the top 20 foreign investors in Vietnam, with over 712 registered investment projects and approximately US$1.9 billion in committed capital. Those aren't just multinationals hedging their supply chains — a significant portion of that investment is Australian businesses going direct, building real manufacturing relationships, and discovering something they didn't expect: Vietnam doesn't just compete with China on cost. In many categories, it's outperforming it.
In this guide, I'll walk you through exactly why Australian businesses are moving production to Vietnam, which product categories make the most sense, and how to actually make the transition — without the expensive mistakes that derail most first-time Vietnam sourcers.
The China-Plus-One strategy — sourcing from China as your primary base while developing at least one complementary manufacturing relationship elsewhere — has become the defining supply chain trend of this decade. And when Australian businesses look at their Plus One options, Vietnam comes up first almost every time.
Here's why.
Vietnam's labour cost advantage over China is substantial and widening. Vietnam's minimum wages range from approximately USD $0.69 to $0.99 per hour across different regions — compared to China's coastal manufacturing zones where effective labour rates have climbed to $3–5+ per hour. That's not a marginal difference. Across a production run of any meaningful size, that gap translates directly to your landed cost.
And it's not just labour. Industrial power rates in Vietnam sit around USD $0.085 per kWh — competitive with China and significantly below other regional alternatives like India or Indonesia. For energy-intensive manufacturing processes, that matters.
This is where Vietnam genuinely stands apart. Vietnam has one of the most comprehensive free trade agreement networks in Southeast Asia, including:
For Australian businesses sourcing from Vietnam and selling domestically, CPTPP delivers preferential customs treatment that meaningfully reduces your import costs. For Australian businesses that also export to other markets — or whose products feed into export supply chains — Vietnam's trade architecture is a genuine competitive asset.
Here's something that doesn't get discussed enough in Australian circles: Vietnam's relatively favourable tariff position with the US means that products manufactured in Vietnam face dramatically lower duties than China-origin goods when entering the US market.
This matters for Australian businesses in two ways. First, if you have any US distribution ambitions, manufacturing in Vietnam can make previously unviable margins workable. Second — and more subtly — major global retailers and brands that supply the US market are actively shifting production to Vietnam, which is driving factory investment, skills development, and infrastructure improvements that directly benefit every sourcing buyer, not just the big players.
The old hesitation around Vietnam — "China's quality is more reliable" — is increasingly outdated. Vietnamese manufacturers have invested heavily in advanced machinery and quality management systems over the past decade, often with direct investment from Taiwanese, South Korean, and Japanese companies establishing operations there.
Vietnam's textile and footwear sector generated USD $37 billion in exports in 2024 alone, making it the world's third-largest footwear exporter. When you're the third-largest exporter of anything in the world, quality is no longer a question mark. Those factories are running to international compliance standards, and the output speaks for itself.
Vietnam doesn't manufacture everything that China does — at least not yet. But in the categories it does well, it's genuinely world-class. Here's where Australian businesses are finding the most value.
This is Vietnam's home turf. The country has decades of textile manufacturing experience, a massive skilled labour force, and world-class production capacity. Vietnamese workers have deep expertise in cut-and-sew, which translates to superior quality control for apparel-specific construction compared to general-purpose Chinese factories.
If you're in fashion, workwear, accessories, footwear, or any textile-based category, Vietnam should be your first call — not your last resort.
Vietnam has become one of the world's most competitive furniture manufacturing destinations, with a strong hardwood tradition, skilled craftspeople, and factories that are set up to handle bespoke and small-run orders that Chinese factories increasingly won't touch. Australian interior brands, homewares importers, and furniture retailers have been quietly building Vietnam sourcing relationships for years — and those businesses are now sitting on a meaningful cost and quality advantage over competitors still relying solely on Chinese supply.
Electronics manufacturing in Vietnam has surged over 300% in recent years, driven by investment from Samsung, LG, Intel, and dozens of other global tech manufacturers. The ecosystem this created — specialised components, trained technicians, established logistics — now means Vietnamese factories can competitively produce phone accessories, smart lighting, EV charging cables, and consumer tech products.
For Australian eCommerce businesses in this space, Vietnam offers a compelling alternative to the Guangdong electronics clusters — particularly for brands concerned about tariff exposure or supplier concentration risk.
Vietnam has a strong and growing leather goods manufacturing sector. Quality is excellent, pricing is competitive, and factories in the Ho Chi Minh City and Binh Duong regions have direct experience working with European and US brands — so quality standards and compliance capabilities are typically high. If you're importing bags, accessories, or leather products and you haven't looked at Vietnam yet, you're leaving money on the table.
I'm not going to pretend this is all smooth sailing. Vietnam sourcing has real challenges, and understanding them is part of making the move successfully.
Language and Communication: Vietnam's manufacturing sector is less English-proficient than China's coastal manufacturing zones on average. This is improving — particularly in factories that regularly deal with international buyers — but it's still a factor. Quality requirements, specification documents, and sampling feedback need to be communicated with more care than you'd exercise with an experienced Chinese exporter.
Minimum Order Quantities: Many Vietnamese factories are set up for larger production runs and can be less flexible on MOQs than the nimble trading companies that dominate China's export ecosystem. If you're testing new products at low volume, you'll need to work with sourcing partners who have established relationships and can aggregate orders.
Infrastructure is Still Developing: Vietnam's port and logistics infrastructure has improved significantly, but it's not at China's scale. Transit times, especially for inland factories, can be longer. Build this into your planning and inventory cycle.
Supplier Verification is Essential: As with any manufacturing market, the quality variance between factories is enormous. The best Vietnamese manufacturers are world-class. The worst will burn your budget and timeline. Factory audits and supplier verification are non-negotiable — especially for your first order with a new supplier.
For a detailed comparison of how Vietnam and China stack up across different criteria, check out our comprehensive resource on the pros and cons of sourcing products from Vietnam.
So you're convinced. Vietnam makes sense for at least part of your sourcing. Here's how to approach it practically.
Don't try to shift everything at once. Start with the products where Vietnam has the strongest manufacturing capability (textiles, furniture, leather goods, accessories) and where your current China-based supply chain has the most pain points — whether that's cost, quality consistency, or supplier reliability.
Vietnam has strong factory clusters by region: Ho Chi Minh City and Binh Duong for manufacturing and electronics, Hanoi and the north for textiles, the central regions for furniture. Start by identifying which cluster is most relevant to your category, then use trade databases, sourcing fairs (Vietnam Manufacturing Expo, VIFA for furniture), and — if you're serious about getting this right — a sourcing partner with in-market relationships.
Never skip sampling. This is true everywhere, but especially in a new market where you're still calibrating your expectations. Request at minimum two rounds of samples — a development sample and a pre-production sample — before committing to a full production run.
Treat your first production run as a pilot. Run it at a volume that's meaningful enough to be a real test of the factory's capabilities, but not so large that a poor outcome creates a serious financial problem. Use the pilot to validate quality, lead times, communication, and post-sale responsiveness.
Vietnamese manufacturing relationships, like Chinese ones, reward long-term investment. Factories prioritise buyers who are consistent, communicative, and fair. Invest in the relationship — visit the factory if you can, pay on agreed terms, and give honest feedback on samples. The businesses that get the best pricing, fastest service, and most flexibility are invariably the ones who've put in the relational groundwork.
Our team at Epic Sourcing has built a dedicated Vietnam sourcing service with on-the-ground capabilities in Ho Chi Minh City — so if you want to skip the learning curve and get straight to finding quality Vietnamese manufacturers, that's exactly what we're here for.
I want to close with something important, because I see Aussie businesses make this mistake regularly.
Vietnam sourcing isn't an either/or choice. The most sophisticated importers we work with don't replace China — they complement it. China remains the world's most capable manufacturer across more categories and at more price points than any other country on earth. Its supplier ecosystem, logistics infrastructure, and production scale are still unmatched.
The smart play is: use China for what it's best at — high volume, complex products, established categories — and use Vietnam for what it's best at — textiles, furniture, leather goods, categories where its cost and trade agreement advantages are most pronounced, and products where supply chain resilience matters.
That balance is where you find the real margin advantage. And finding it doesn't have to be something you do alone.
If you want to explore what a combined China and Vietnam sourcing strategy could look like for your business, our OutSource service gives you access to our entire cross-border sourcing network — from Guangzhou to Ho Chi Minh City — under one roof.
Drop us a line at gday@epicsourcing.com.au and let's have a proper conversation about what's possible.
