i3 - March/April 2021 - 29

By Phyllis Schwartz

Policy

G U E ST B LO G

The Vietnam
Manufacturing Advantage
A Strategic Solution to a Supply Chain in Flux

Manufacturing, a leading provider of
OEM/ODM (Original Equipment
Manufacturer and Original Design
Manufacturer) manufacturing services
recognized the opportunity to diversify
by establishing its first Vietnam facility
in 2013. By 2018, GRE expanded its production space to meet growing demand
offering turnkey EMS solutions, from
SMT to plastic injection and more.

or several years now, supply chain diversification has been top of mind for many manufacturers with operations in China.
Vietnam is one of the Association of Southeast
Asian Nations (ASEAN) countries that has benefited the most from the China-US trade war.

With the passage of two major free
trade agreements (Border Trade
Alliance (BTA) and EU-Vietnam Free
Trade Agreement (EVTA)) in 2020,
Vietnam has become a prime destination for foreign direct investment (FDI),
particularly in the manufacturing
industry. The US-China trade war has
further encouraged FDI as companies
look for quick solutions to avoid tariffs.
Described recently as Asia's " shining
star " in its response to the pandemic,
Vietnam is poised for progress. It is the
only Southeast Asian country targeting
economic growth (6.5%) in 2021.

Why Vietnam?

Vietnam's geographical proximity to
China has given it a critical advantage
as a supplementary manufacturing base.
Being near China allows manufacturers
to access raw materials and equipment
and move them across the border with r
elative ease. At the same time, forwardthinking companies can use Vietnam as a
stepping stone to tap into rapidly growing
ASEAN supplier networks and markets.
Another key advantage is Vietnam's
young, skilled and relatively low-cost
labor force. According to the World
Bank, Vietnam boasts a labor force of
C TA . t e c h / i 3

i3_0321_29_Policy_GuestBlog.indd 29

Vietnam boasts
a labor force of
almost 60 million
workers, growing by over one
million per year.

almost 60 million workers,
growing by over one million per year. Thirty-five
percent of the workforce
supply is generation Y, born between
1976 and 1995. Vietnamese workers are
described as hardworking, educated and
able to adapt to new working environments quickly, so training is minimized.
The large Chinese-Vietnamese population make cultural and language integration for Chinese firms easier.
The Vietnam government's infrastructure investments and businessfriendly policies have turbo-charged
Vietnam's manufacturing industry.
According to the Ministry of Planning
and Investment, in the first six months
of 2020, Vietnam's industrial parks and
industrial zones welcomed 335 foreigninvested projects worth U.S. $6 billion.
To meet increasing demands for efficiency in transport services, the
Vietnamese government has prioritized
ongoing improvements in infrastructure. Major projects like the NorthSouth Express Railway linking Hanoi
and Ho Chi Minh City, at an estimated
cost of U.S. $55.85 billion, will ease the
flow of goods around the country.
Progressive firms like GRE

According to GRE Manufacturing's
Executive Director, Richard Fong,
" Vietnam as a country and a workforce is
perfectly positioned to deliver the sophisticated electronics goods and components to meet global demand. GRE
Manufacturing is excited to see continued improvements in Vietnam's infrastructure and the country's commitment
to inclusive and sustainable growth. "

Selecting a Facility

When sizing up Vietnam as a potential
destination for production, there are
some key considerations, like financial
investment, logistics and infrastructure,
availability of skilled labor, the cost of
machinery, components and raw materials. There are many new electronics
factories in Vietnam. Finding a partner
who knows the ropes will ease the burden for companies seeking design and
contract manufacturing services.
The next step for Vietnam is the
transition to meet the demands for
higher-skilled work. Ensuring that
Vietnamese workers come with technical skills requires that firms, educators
and students unite. That along with the
country's containment of the pandemic, economic growth and recent
free trade agreements augur well for
2021 and beyond.
MARCH/APRIL 2021

3/11/21 12:37 PM

https://CTA.tech/i3

i3 - March/April 2021

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