Can Vietnam Replace China as the Next Global Manufacturing Hub?

In recent years, Vietnam has managed to significantly boost its manufacturing capabilities, allowing the country to emerge as a major production hub in Asia. Moreover, more and more companies are now looking to end their productions in China, adding to Vietnam’s rise.

This is mainly because China’s image has been tarnished by the COVID-19 crisis. Production costs in the country are also continuing to rise, with countries like Vietnam stepping in to take advantage of the situation. So will it be possible for Vietnam to replace China and become the new manufacturing hub?

How Can Vietnam Take Over China’s Position?

For starters, Vietnam is certainly on the right track. It has made it easier for firms to set up their factories in the country by reducing the barriers to entry and has also ensured that the costs of production remain low. These two factors have helped the country significantly in positioning itself as a major manufacturing hub, boosting electronics manufacturing production in particular. It is also well-connected to Asia, the Pacific region, and Africa, making it easier for multinational corporations to choose Vietnam over China.

However, the country still has a lot of work to do if it wants to fully replace China. The overall manufacturing capabilities of China are still much higher. Almost all major electronics firms are still active in China, and it will not be easy for Vietnam to attract them. Moreover, Vietnam is also facing a stiff challenge from other countries that also want to take firms away from China. Some of these countries include India, Mexico, and Indonesia. Thus, Vietnam must be able to offer special incentives to these firms in order to become the most wanted manufacturing hub.

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