The appreciation of Chinese currency and rising labor costs in China makes it hard to make profit to outsource services and products to China. Now, more and more companies are building their lower-cost production bases in Vietnam. In fact, with a GDP growth rate only second to China, Vietnam has become the third biggest country of destination for outsourcing service in Southeast Asian countries.
An Emerging Economy
Compared to China and India that produce 2.5 million science graduates respectively each year, Vietnam still lags behind these two countries. But with an increase of 9 thousand graduate year-by-year and more than half of the population age below 25, the population structure of Vietnam is in a prime time. On the contrary, with the aggravation of aging problem in other two countries, Vietnam will be in a more dominant position in the future.
Since its reform and opening-up, especially in recent years, Vietnam has spent more and more money on education. But because of its low gross national product per capita, there are still some problems in education field. This is especially common in rural areas where kids have to help their families with agricultural work. Labor costs of Vietnam are much lower than those of China. This has made businesses that are sensitive to labor costs transfer their factories from other countries, such as China, to Vietnam. For instance, now you can see more Nike Sneakers with the words of “made in Vietnam”.
Except some sporadic local conflicts, Vietnam has a stable political situation. It has one ruling party and good law and order. But there are some corruptions in the government. Sometimes even the foreign companies also suffer from these problems.
Foreign investors and Vietnam government are trying their best to make Vietnam as the best country of destination for outsourcing. They have aimed at high technology and high added-value businesses. In fact, it has become a dark horse in information technology outsourcing market. IT companies can enjoy fast-track investment licensing and favorable tax regimes inVietnam. The universities of Vietnam are paying more and more attention on subjects of engineering and mathematics.
Location, Location, Location
Though in infrastructure, China scores a little more than Vietnam and India. But since there are too many man-made obstacles in China, its advantage is no longer in existence in this aspect. Geographical Location of Vietnam makes it more convenient to sell products to Southeast Asian countries. Vietnam possesses rich resources of land and water, which favors primary products production outsourcing. Though China, India and Vietnam all face inflation problems, but the situation in China is more severe.
With its population structure second to none, government support, rich resources, good geographical Location, Vietnam is becoming a popular destination of outsourcing.
