Survey: Vietnam’s popularity among western buyers grows 'leaps and bounds'
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|Vietnam, India and Turkey are leading the sourcing diversification charge away from China. Photo: Bloomberg|
Qima, a Hong Kong-based supply chain compliance firm, surveyed 700 companies with international supply chains, found that Vietnam, India and Turkey are leading the sourcing diversification charge away from China.
“As businesses hope to leave the “crisis mode” of the pandemic behind them, China sourcing is bouncing back strongly but is yet to return to pre-Covid levels, while alternative sourcing regions such as Vietnam, India and Turkey are experiencing sustained levels of growth,” the survey unveiled.
A traditional first choice for buyers diversifying away from China, Vietnam saw its popularity among Western buyers grow by leaps and bounds over the past few years – a trend that has remained in effect so far in 2021.
QIMA data shows a 16 percent year-on-year rise in demand for inspections and audits in Vietnam in the first quarter of 2021, which represents a third consecutive quarter of growth that had initially begun as a post-lockdown rebound in mid-2020.
|Vietnam has been one of the biggest beneficiaries so far of the supply chain diversification thanks to its relatively low manufacturing wages compared to China, a skilled and well-educated workforce and good infrastructure following massive investment over the past decade. Photo: VnExpress|
It is worth noting that this growth is more than just a return to pre-pandemic levels, as Q1 2021 inspection demand has, on average, doubled compared to Q1 2019.
The inspection surge in Vietnam is in line with the findings of the QIMA global sourcing survey, where 43 percent of US-based respondents cited Vietnam among their TOP3 buying geographies as of early 2021 (twice the percentage observed in 2019).
Furthermore, the appetite for Vietnam sourcing is far from satisfied and is poised to redefine the sourcing landscape in 2021: around one-third of buyers globally and 38 percent of US-based buyers name it among countries from where they plan to buy more in 2021.
That said, Vietnam is not the only country in the region to benefit from expanded business volumes, as QIMA data on inspection and audits demand in Southeast Asia shows double-digit growth across the board, fueled by the renewed interest from American and European brands alike.
|An Intel's facility in Saigon Hi-Tech Park, HCMC. Photo by Intel Corporation.|
According to Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, a world's leading company providing analytics for major industries and markets, Vietnam has been one of the biggest beneficiaries so far of the supply chain diversification thanks to its relatively low manufacturing wages compared to China, a skilled and well-educated workforce and good infrastructure following massive investment over the past decade.
Another important competitive advantage for Vietnam is its plethora of bilateral and regional free trade agreements.
The new EU-Vietnam FTA has for instance provided a big fillip to Vietnam's competitive advantage as a global manufacturing hub.
Vietnam is also a member of ASEAN and a part of two major regional free trade agreements, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Vishrut Rana, an economist at S&P Global Ratings focusing on the Asia-Pacific region, said "Vietnam is in a good position as it has been open for FDI, and FDI regulations have been favorable."
Dr Seckin Ozkul, director of the supply chain innovation lab at the University of South Florida in the US, said Vietnam has around 10 deepwater ports and a well-trained labor force in the textile and many other industries.
Vietnam has proved that it could produce goods and ship and deliver them, he said.
Rana said the country plays an increasingly important role in global supply chains, particularly in technology, but could easily expand into other areas of manufacturing, VnExpress reported./.
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