Tired of global shocks revealing gaps in your supply chain? Recent events make clear: relying on one hub is no longer viable under evolving trade and investment laws. As a strategic consultant with twenty years’ experience advising on multinational manufacturing ventures—and well‑versed in Vietnam’s Investment Law and new Land Law—I’ve witnessed that shift firsthand. Global leaders are now looking to dynamic markets like Vietnam, attracted by its growing role in global supply chains, to build the agile, diversified supply chains of the future. This isn’t just a trend; it’s a strategic imperative.

Key Takeaways:

• Vietnam is a Strategic Hub: Beyond cost savings, Vietnam’s placement along the Trans‑Asia Railway and major shipping lanes—backed by the amended Land Law 2025—de‑risks your supply chain and delivers geopolitical leverage.
• FDI Surge in Manufacturing: Registered FDI hit $11.52 billion in Jan–May 2024 (Ministry of Planning & Investment), with disbursement rates at a record high—proof that the Law on Investment 2020 (amended 2025) is working.
• Follow a Legal Roadmap: From securing your Investment Registration Certificate (IRC) under Decree 31/2023/NĐ‑CP to factory permits per Decree 35/2024/NĐ‑CP, a methodical, law‑driven process is non‑negotiable.
• 2025 Law Updates: The Land Law 2025 clarifies land-use rights in industrial parks; Decree 65/2024/NĐ‑CP on global minimum tax aligns Vietnam with OECD standards, boosting predictability for manufacturers.
• Agility over Arb: Vietnam’s flexible industrial‑park leasing rules and IT‑backbone investments (5G zones) enable rapid scale‑up—far beyond mere labor arbitrage.

Why Vietnam is a Strategic Manufacturing Hub in 2025

Vietnam vs. China: Total‑Landed Cost & Policy Risk

For years, comparisons focused on Vietnam’s lower labor rates. Today, total‑landed cost—including tariff risk under Section 301 and geopolitical premiums—makes Vietnam’s neutrality compelling. It’s total landed cost which includes the growing risk premium associated with geopolitical tensions. Vietnam offers a powerful combination of competitive labor costs and, crucially, geopolitical neutrality. In addition to lower labor costs, Vietnam’s skilled workforce sets it apart as a key differentiator, able to handle complex manufacturing tasks in the electronics industry.

Compared to other countries in the region, Vietnam’s cost advantages and qualified labor force can compete globally in high-tech manufacturing sectors. Its participation in major free trade agreements like CPTPP and EVFTA provides preferential access to global markets that is getting harder to get from other hubs.

The FDI Surge: What Foreign Investors See in Vietnam

The numbers don’t lie. Ministry of Planning & Investment data shows registered FDI of $11.52 billion in Jan–May 2024, with disbursements at a record 85% of registrations—underscoring confidence in the Investment Law 2020 (amended 2025). As reported by VietnamPlus, this trend proves the country’s policies are working to create a stable and attractive investment environment. The manufacturing and processing industry is still the main attraction, a clear sign of its central role in the supply chain diversification story.

Foreign investment has been a key driver of growth in Vietnam’s manufacturing and processing industry and economic development and export performance.

Workforce: Educated, Scalable, Affordable

Vietnam’s advantage is amplified by its people. You get access to a young, tech-savvy and highly motivated workforce. With a median age of 32, the labor pool is not just affordable but also adaptable and eager to learn new skills. For foreign companies, investing in training and upskilling programs is not just best practice; it’s a game-changer that unlocks huge productivity and loyalty.

Good working conditions are essential to attract and retain top talent in Vietnam’s manufacturing sector.

Key Manufacturing Sectors and Regional Clusters

Sector Deep Dive: Electronics, Textiles, Furniture

Vietnam has become a global player in several key sectors with the capability to manufacture a wide range of products across industries. It’s a critical node in the electronics supply chain for global brands, able to manufacture high-tech products like integrated circuits. Textile and garment is a long-standing pillar, known for quality and capacity. Furniture has seen explosive growth and Vietnam is now a major player in the global furniture industry and attracting international brands like Ashley Furniture. For investors, sector insight into each sector’s compliance and infrastructure landscape is key to success.

Regional Strategy: North vs. South vs. Central

Where you set up matters. Industrial zones play a crucial role in supporting regional manufacturing clusters, offering strategic locations, infrastructure and incentives that drive industrial growth and attract investment.

• North (Hanoi–Haiphong Corridor): Electronics and auto OEMs thrive under Decree 111/2023/NĐ‑CP in zones like Dinh Vu–Cat Hai (deep‑water port access), benefitting from CPTPP tariff preferences.
• South (Ho Chi Minh City Region): As the commercial hub, the South has the best logistics and largest labor pool, perfect for labor-intensive industries like textiles and furniture.
• Central (Da Nang): This region is emerging as a hub for high-tech, IT and mid-sized manufacturing with a great balance of cost, talent and quality of life.

Local Ecosystem Health: Inputs, Logistics, Utilities

A factory doesn't operate in isolation. You need to assess the entire ecosystem, which includes a diverse range of inputs and resources. While Vietnam is strengthening its domestic supply chain for raw materials, some inputs still need to be imported. It's crucial to review raw-material sourcing in compliance with the Customs Law 2014 (amended 2024). The government is investing heavily in power grid stability, with utilities governed by Decree 108/2024/NĐ-CP. Furthermore, the country's expanding port system, particularly major hubs like the Cai Mep–Thi Vai Port, is enhancing freight reliability, a critical factor for any export-oriented operation.

Step-by-Step Roadmap for Setting Up Manufacturing in Vietnam

A successful market entry is not about speed; it’s about a disciplined sequential process.

Before entering the Vietnamese market, you must develop a comprehensive business plan that outlines your manufacturing process, market analysis, financial projections and operational strategy.

Pre-entry Assessment: What to Decide Before Incorporation

Before you even think about legal forms, you need a clear strategy. Does your product have a market fit in the region? Understanding the Vietnamese market—including local demand, supply chain dynamics and regulatory environment—is key to assessing product-market fit. What is your ownership structure, your intellectual property protection plan and your long-term exit strategy? Aligning these strategic decisions with your global headquarters from day one is a risk-free strategy.

Company Formation: From MOUs to Ministry Approval

The formal incorporation process involves getting an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC). Getting the IRC is a key step in formalizing an investment project in Vietnam. This requires detailed documentation and liaison with national bodies like the Ministry of Planning and Investment (MPI) and local Departments of Planning and Investment (DPI).

The process can be broken down into key steps:

1. Sign MOU and submit IRC application to MPI per Decree 31/2023/NĐ-CP.
2. Obtain Enterprise Registration Certificate (ERC) under Enterprise Law 2020.

Understanding these investment laws is essential to ensure compliance with legal and regulatory requirements during company formation. Timelines and capital requirements vary by sector, so professional guidance is necessary.

Facility Setup: Lease, Build or Buy?

You have options: leasing a ready-built factory in an industrial park is the fastest route. Having a manufacturing presence in Vietnam gives you access to robust industrial infrastructure and significant cost advantages, making it attractive for companies looking to tap into the country’s growing industrial sectors. Building your own facility offers customization but involves navigating complex construction permits and zoning rules. Buying is less common for foreign manufacturers. Industrial parks are often the best choice as they offer streamlined administrative support, reliable utilities and pre-vetted land use rights.

Hiring and Managing Local Teams

Understanding Vietnam’s labor code is key. You’ll need clear employment contracts and you must comply with social insurance and payroll tax obligations. A thoughtful onboarding strategy that bridges cultural gaps between local and expatriate leadership will set your team up for long-term success.

Assembling a dedicated team to manage local operations and ensure quality is critical for sustained business growth.

Financial and Regulatory Landscape

Banking, FX and Capital Movement

Opening a corporate bank account in Vietnam is straightforward once your company is incorporated. You’ll need to manage two types of capital accounts: one for your initial capital contribution and another for operational transactions. Managing foreign exchange (FX) risk is a key consideration for any business dealing in multiple currencies.

Corporate Tax, VAT and Incentives

Vietnam offers attractive tax incentives to attract FDI, especially for high-tech, large-scale or geographically prioritized projects. CIT incentives are a major draw for foreign investors in Vietnam’s manufacturing sector. These can include corporate income tax (CIT) holidays or reductions for several years. Understanding how CIT, Value Added Tax (VAT) and Personal Income Tax (PIT) interact is crucial for accurate financial planning.

Legal Structures and Entry Models

The two most common entry models are establishing a 100% foreign-owned enterprise or entering into a Joint Venture (JV) with a local partner. A 100% FIE gives you full control, while a JV can provide valuable local market knowledge and networks. The choice depends entirely on your strategic goals and risk appetite.

De-risking and Scaling for Long-term Supply Chain Wins

Supply Chain Resilience in Practice

True resilience comes from diversification. Businesses can benefit from diversifying their manufacturing footprint in Vietnam, taking advantage of the country’s growing capabilities and incentives. I’ve seen clients execute a “China + 1” strategy by shifting part of their production to Vietnam, mitigating reliance on a single country. Others are building even more sophisticated networks, using a hybrid model that leverages both Vietnam and another ASEAN country like Thailand to create redundancy and flexibility.

Digitalization and Smart Factory Adoption

Vietnam is pushing hard towards Industry 4.0. The government is actively encouraging investment in automation, data analytics and smart factory technologies through various incentives. Vietnam’s high-tech manufacturing sector is growing rapidly driven by digitalization and smart factories. Tech parks with 5G connectivity are being developed to support this transition, your gateway to sustainable and resilient manufacturing.

Risk Management and Dispute Resolution in Vietnam

While the business environment is improving, disputes can happen. As noted in a 2024 outlook from White & Case, Vietnam is modernizing its legal and regulatory frameworks, including a global minimum tax, to align with international standards. The Vietnam International Arbitration Centre (VIAC) offers a reliable forum for dispute resolution. But the best strategy is always prevention through clear, well-drafted contracts.

For more information on Vietnam’s legal and regulatory frameworks for manufacturing, check out additional resources or expert advice.

Conclusion: Turn Manufacturing Intent into Regional Advantage

Shifting manufacturing to Vietnam transcends cost arbitrage—it’s a strategic move for supply‑chain agility, backed by transparent 2025 legal reforms and robust FDI incentives. Vietnam’s booming FDI, energetic workforce and government commitment to improving the investment climate make it an attractive choice. By following a disciplined roadmap and expert guidance you can build a manufacturing operation that not only withstands global pressures but thrives on them.

Vietnam’s manufacturing sector is booming with manufacturing companies and the industrial sector contributing significantly to the country’s GDP. According to General Statistics Office, export turnover and export value have increased year on year and same period, with strong demand from key markets like US, EU and China. Total investment in industrial production is rising, solidifying Vietnam’s position in Southeast Asia. Quality and sustainability are key to Vietnam’s competitiveness and attractiveness to global partners.

Ready to unlock the growth? Let’s partner for a sustainable future. Talk to experts who can turn your manufacturing intent into regional advantage.

You might also like: The Complete 2025 Guide to Doing Business in Vietnam as a Foreigner: Legal, Tax & Licensing Essentials