Export : how to set up a factory in Vietnam ?
Establishing a factory in Vietnam appears to be a relevant choice for companies wishing to relocate their supply chain. Our previous article details the reasons why companies make such a choice.
This article will focus more on the points of vigilance to keep in mind when a company wishes to set up a factory in Vietnam.
The significant growth of the industry sector in Vietnam
Vietnam is a privileged country to set up a factory in Southeast Asia, ahead of Singapore, the Philippines and Indonesia. This observation is attributable to the following main elements :
- Greater growth in business activity compared to other countries in the region.
- According to Samsung statistics, 50% of their smartphones and tablets are produced in Vietnam and then exported mainly to the United States, Europe and Southeast Asia.
- Adidas has migrated its production capacity from neighboring countries to Vietnam, due to cheaper labor. Its competitor Nike manufactures nearly 50% of its products in Vietnam.
The north of the country specializes in electronics, automobiles, the manufacture of high-tech products and the assembly of machines. In the South, the dominant sectors are textiles, plastics, rubber and the manufacture of metal products.
How to choose the right location for your factory in Vietnam?
There are 3 main factors to consider :
- Set up a factory in an industrial zone : to date, there are 256 official industrial zones in Vietnam. Note that plots of land are specially reserved for factories. As a result, the company will more easily obtain its building permit if it chooses to locate its factory in a predefined area for this purpose. In addition, it will benefit from tax incentives: exemption from corporation tax during the first 2 years, then reduction of 50% the following 4 years. Some provinces like Hai Phong can grant more aids and subsidies.
- Set up a factory close to transportation facilities : today, only 20% of the roads are paved. Although the area of the country is relatively small, the coastline stretches over 3,000 km. The fact that the plant is close to the main ports, airports and highways is essential to control logistics costs.
- Take advantage of the Vietnamese workforce : the workforce is young and abundant (over 60 million workers, growing by over 1 million per year). Minimum wages vary by province, averaging around $ 150 a month.
In summary, if the decision to relocate your supply chain is an important strategic choice, choosing the location of your factory is just as much important.