Vietnam Sourcing – Assessing the Processes Involved

Vietnam sourcing

In early July I wrote an article entitled Vietnam sourcing – Where is the New Global Manufacturing Hub? In that article I mentioned Australia, a country with many advantages for doing business in Vietnam. In that piece I also mentioned Canada, another country with many advantages for doing business in Vietnam. So, now it turns out that there are three additional countries that could provide the missing global manufacturing base for manufacturers to locate their factories and facilities.

Major activity is currently in the southern part of Vietnam around the larger Ho Chi Minh City, where 75% of Vietnam’s total exports are made and where over 25% of its population resides. Why Vietnam sourcing from these regions? Vietnam s annual growth in GDP growth in 2021 outstripped all other regional economic economies including India and China and the forecast for growth in 2021 is predicted to be well above 7%. The obvious choice of a Vietnam factory to manufacture your products from if you are thinking of doing business with Vietnam is simply to locate a Vietnamese factory near the location of your planned distribution points and ports of call.

But, that is not the end of your choices when it comes to finding your factories and facilities to manufacture products in Vietnam. First, there is Singapore, a city-state that is a member of the Southeast Asian economic bloc and that has been successfully integrating itself into the global South-east trading system for several decades. Second, there is Mexico, which is becoming a mainstay of Central and South American exporting because of the relatively low cost manufacturing it provides.

In terms of products, Vietnam is a great place to source for a wide range of products such as garments, footwear, electronics equipment, cars, machinery, rubber and chemicals. Vietnam is not just a cheap labour force with a low cost manufacturing base, but also a massive potential for business scope. Vietnam’s low cost trade and rapid growth coupled with its proximity to the US and Canada make Vietnam a viable option as an exporter of goods, as well as a good place to set up a Vietnam sourcing company.

A Vietnam sourcing company needs to consider factors such as the proximity of its proposed vendor’s factory to its proposed logistical destinations in order to achieve maximum business scope. The overall cost of transportation to and from the prospective destination is an important consideration as well, particularly when the product being purchased is bulky or heavy. Another factor that companies have to keep in mind is the political and legal requirements of obtaining normal trade licenses in Vietnam. Finally, potential clients in Vietnam need to be convinced that their local supplier can cope with the quality delivered by their company, and can sufficiently supply the products needed. To achieve these goals, a Vietnam Sourcing Company needs to ensure that it will have established effective working relationships with its clients.

Many of the people who are most qualified to help Vietnamese buyers find suitable sources for their goods are those who work on procurement teams for large clothing and shoe companies. They know which factories in Vietnam produce what kinds of products and how to evaluate these factories and their suppliers to ensure that they are able to provide the kinds of products clients are looking for at the right price. It is worth remembering that there are no import tariffs or custom duties between Vietnam and the rest of the world, nor do buyers have to worry about payment methods or obtaining banking services. These are all factors that buyers must consider themselves before engaging any service provider. Good procurement management services will take all of these factors into account and recommend the best options for buyers to overcome their particular procurement challenges.

The most critical aspect of sourcing activities in Vietnam is the speed and competence of the providers. No two Vietnam based businesses, regardless of how large or small they are, should be considered equal in terms of their ability to deliver quality goods in a timely manner. Both buyer and supplier networks need to operate with complete confidence in the knowledge that all procedures will be thoroughly reviewed and monitored to avoid any delays or errors in service. A careful process of selection along with a well-managed supply chain can be the single most important factor in ensuring that products arrive on time to customers.

To put it simply, quality control is essential for Vietnam based businesses wishing to source products to sell in this part of the world. Whether sourcing for local clients within Vietnam or transacting with global customers, good quality control is key to delivering low cost goods at competitive prices. A thorough and properly managed supply chain is the most effective way to ensure that all parts of the sourcing-and therefore the whole product specification-are delivered in full accordance with international standards.

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