In light of the recent trade war, Platform88 team members traveled to Vietnam in December to visit factories and get a better understanding of the Vietnamese manufacturing industry. Here are a few of the takeaways:
- Most factories and Vietnam manufacturing experts say prices are 5-10% more than prices in China, and MOQs are high.
- Labor cost in Vietnam is half of the that in China, but the price of other inputs, such as raw materials, molds, and logistics, are higher.
- Key components and raw materials are imported from China, Taiwan, Japan, and South Korea, which increases the average lead time.
- We found that Vietnamese factories tend to focus on one product category and are less flexible with working on products outside of their past experience.
- Shipping schedules out of Vietnamese ports are less frequent than China.
- The Vietnamese government does not subsidize the manufacturing industry to the degree that the Chinese government does, another factor that drives up costs.
Our new team in Ho Chi Minh City is vetting opportunities across several categories. We are considering opening a factory in Vietnam in 2020. We will keep you updated!