How to choose a manufacturing site in Vietnam
June 2023
Vietnam ended 2022 with a GDP growth rate of 8%, placing the country at the top World GDP growth rate. With its dynamic economy, and as one of the major ASEAN countries in China + 1 Strategy, the demand for having a manufacturing site in Vietnam has skyrocketed. Now more than ever, companies should seize the opportunity to expand in the country. But how to pick location that meets your business’ needs?
In this article, ALTIOS’ experts will share with you 3 key steps for a mistake-free choice.
1. Secure your manufacturing site in Vietnam's location
This is the key bottleneck for site selection. Many projects were denied after the site check because the government had not approved of the location or park.
In fact, each park has a previously admitted sector list: light and heavy industries can locate in it, as well as sectors whose wastewater reaches National Type B. In other cases, certain parks accept safer industries.
To maximize your and your investor’s time, make sure to secure your business’ location approval and feasibility.
2. Consider these 6 factors for optimal selection
Location:
Manufacturing site legal conditions:
Vietnam has the overall rule for IRC, ERC, environmental, and fire certificates. Certain regions are more preoccupied with investment quality and environmental security, so further documentation may be required, along with evidence for the investors.
These aspects should be well-defined and clarified before the final decision. Moreover, an expert operator can strategically guide the investors to complete processes.
Our international expansion specialists can support you through these crucial steps.
Infrastructure:
Logistics supports:
Every manufacturing site in Vietnam is legally obliged to include:
an internal traffic system, electricity and water systems, a drainage system, a wastewater treatment system, fire prevention and fighting systems, and telecommunications systems.
Since not all locations meet the legal infrastructure standards, ensuring that is the case for your factory will make a huge difference.
Pay close attention to wastewater treatment systems. International investors need good wastewater treatment support to ensure the commitment to the cross-country compliance and ESG values of the global group.
An incidence in a subsidiary can diminish the stock price of the whole group on the Nasdaq or Euronext.
When choosing the right location for your manufacturing site in Vietnam, it is important to consider logistics availability in its varied aspects.
Transportation (road, highway, inland waterway, seaports), high-quality transport supplier–forwarder, as well as the cost for the distance between the different locations.
Abunding with logistical options can positively impact your business’ adaptability to variation.
Keep in mind that the logistics cost in Vietnam is still higher than neighbor countries Thailand and Singapore. For this reason, a fine decision needs to be made to insure an optimal cost
Human resources:
Nowadays, general workers have a fluctuating supply in Vietnam. In some periods, it’s very easy to hire. Sometimes, it’s extremely rare to find general workers. Finding a location that can provide
a stable supply of workforce is important if your business needs
a high quantity of workers.
As for hiring skilled workers, it is another story. Skilled workers’ availability depends on the current businesses on the site and the existing training and formation in the region. Some training is rare in Vietnam, like die-casting or dyeing. Some training is only concentrated in big cities like IT, and finance.
A good scan of human resources availability needs to be made before choosing your manufacturing site in Vietnam to facilitate recruitment in the future.
Facilities for staff relocation:
When developing abroad, numerous businesses relocate experts and managers from other countries. To ensure international standard lifestyles, the new factory must be well connected to a modern city with international education and healthcare systems.
A prior scan before the final decision can help not only in location selection but also in cost estimation.
3. Build your Business Plan
A check of your manufacturing site in Vietnam will give you many details, including land price, legal consultancy cost for the administrative procedure, current local salary, relocation costs, etc. With this information, the investors can estimate the P&L project.
In many cases, land price is much higher in an adequate location than it is in a less appropriate one, in addition to the logistics costs.
In other cases, every other condition is good, but the lack of international facilities limits the foreign expert relocation.
An optimal decision always needs local insights, that’s the reason why third-party consultation does a great contribution to the expansion’s success.
Reach out to one our experts for more information.
Want to learn more?
If you are interested setting up in Vietnam, read our article How to ensure effective interultural communication for doing business in Vietnam
ALTIOS Australia: your trusted advisor in navigating India's complex mining sector
February 2024
With a team of 270+ India-based experts, ALTIOS International stands as a trusted advisor who can help you navigate India’s burgeoning mining sector and reap the many benefits of.
India boasts the production of nearly 95 minerals across fuel, metallic, non-metallic, and minor categories and holds a significant position in the global mining landscape. This, coupled with the recently established Free Trade Agreement between India and Australia paves the way for a host of opportunities.
ALTIOS Australia has been a proud member of Austmine for 5 years, – Australia’s leading association in the global mining industry.
Most recently, ALTIOS was privileged to take part in Austmine’s first training program of the year 2024: “Australian METS India Growth Program”. This provided the most innovative businesses in the Australian METS sector with a detailed introduction to the Indian Mining Market and an overview of the key networks and events in the industry.
ALTIOS’s experts delivered insights on:
- Successful Market Entry Strategies for India
- How to do business in the Indian business environment (clue: it is not a single market)
- Step-by-step overview of the export plan essentials and the considerations in the Indian market
- Advice on how to refine a marketing and value proposition, and Pitch Preparation
”India’s markets are exciting and growing and we find more companies asking us how to best enter and succeed in India. Having helped 100s of companies from all types of industry including many machinery manufacturers for mining and associated industries, we know that preparation is key to success. Understanding your market potential and the best way for you to tap it can help you save a lot of time and money down the line” says our Head of Advisory in India Vipulansh Sharma. “One case study is the journey of Ammann in India: here is our MD interviewing their Director”
“The insights provided by ALTIOS have been critical to preparing our members for entry into the Indian market. This will no doubt lead to increased sales and business growth for the Australian METS sector, and will help participating companies manage the complexities and risks of operating in international markets.” Sheldon Varcoe, Manager – International Projects, Austmine.
Why India?
Want to learn more?
Contact our team for more information on market entry strategies and insights on conducting business in India and fostering networking opportunities.
/ Daniela TOUZE, Business Development Manager, Australia email: d.touze@altios.com
/ Vipulansh Sharma, Head of Advisory, India email: v.sharma@mv-altios.com