Vietnam Vs. China For Product Sourcing // Complete Guide
What are the pros and cons of sourcing in Vietnam? What is different when working with suppliers in Vietnam vs. China? Are there good resources to find suppliers in Vietnam? What do you need to know about factories in Vietnam and how they work? We cover this and more in our guide on product sourcing in Vietnam.
With the double whammy of the trade war and the Coronavirus, there has been a huge interest in sourcing suppliers outside China. However, sourcing outside of China isn’t the case for every product. So, who do you know if you should source products outside China, and which country is best for you?
Over the last month, We, the Team at Cosmo Sourcing, have talked daily to clients whose supply chains have been disrupted by factory shutdowns caused by Coronavirus and who need to find a new supplier outside of China.
Unfortunately, we have to turn down many potential clients for various reasons. The most common reason is simply that a suitable supplier exists in Vietnam. However, other clients have unrealistic expectations of how factories work and think it’s as easy as in China. These clients are unaware of the difference between finding a suitable manufacturer in Vietnam and anywhere outside of China, so we need to be very careful to understand this before we start a project.
While most of my experience sourcing outside of China is in Vietnam, Cosmo Sourcing has done a few projects in Indonesia, Malaysia, and Thailand. We have also talked to experts in sourcing in other countries, such as India, Taiwan, the Philippines, and Mexico. From this experience, I have made this guide on what I have observed differently, what products I have seen sourced and manufactured outside of China, and more.
What products should you source outside China?
If you are looking to source suppliers and manufacturers outside of China, you must be mindful that non-China countries only specialize in a few industries. No country is a one-stop-shop for everything like China, and no other country even comes close.
Popular items are Sourced and Manufactured in Vietnam.
In addition to Vietnam, we wrote a detailed country-by-country guide at our partner site, Sourcing Hub, covering what can be made outside China. You can read the guide here: Product Sourcing Outside China // 13 Best Alternatives to China Manufacturing.
Products manufactured in Vietnam include:
Clothing
Furniture
Bamboo items
Apparel
Garments
Shoes
Plastic goods
Stamped metal parts
Leather goods
Wooden goods
Rubber and silicone goods
Packaging
Cut and sew items
And much more
You can read our detailed guide on Products Made in Vietnam at this link.
You need to focus on price-sensitive items in the market they are sold and items that are not time-sensitive. China has one of the most efficient supply chains globally, so you must understand that it will take longer to get your product sourced, manufactured, and shipped in Vietnam. Other countries do have delays that happen, and the suppliers do not rush to get it made. Also, the cost tends to be cheaper in Vietnam than in China for many products, so if you are dealing with a good supplier, the main factor customers buy is cost.
Things to keep in mind about sourcing in Vietnam
If you are looking outside China for suppliers, you must understand that the process is different. One of the most common mistakes I see is buyers expecting other suppliers in Vietnam to work the same way they do in China. Unfortunately, it does not work the same way, and if you have only bought it from China, you need to understand the differences.
From my experience, these are the main misconceptions and difficulties that clients have about sourcing in Vietnam:
Slow response times
Private label and Dropshipping are much more difficult.
The need to work with export-focused manufacturers
Different culture
Alibaba isn’t the best resource.
Supply chains still rely on China.
Scalable manufacturers are more challenging to find
Slower response times when sourcing in Vietnam vs. China
China is hypercompetitive; almost every industry and product niche has several suppliers that compete directly against each other. Therefore, almost every factory will have a sales staff dedicated to responding quickly and thoroughly to get your business.
In Vietnam, most factories have a few engineers or other staff who handle sales as a side job and view sales as secondary. As a result, they will send in quotes when they get around to it, but not as soon as possible.
At Cosmo Sourcing, we budget up to 2 weeks from when we send out RFQs, and we have to pursue and follow up with them aggressively. We post a few requests in China and let suppliers come to us. This change in pace caught much sourcing in Vietnam off guard for the first time.
ODM & private-label products in Vietnam are much harder to find
The overwhelming majority of factories in Vietnam are OEM or Contract manufacturers. These factories expect you, the buyer, to have the design files for your product already made. The factory will make your product according to your specifications. Most factories we work with cannot take a product and make it or a product spec sheet for you. Very few factories outside Vietnam have their designs and products ready to go.
If you are unfamiliar with the terms, Original Design Manufacturers (ODM) means that the factory produces its designs in-house and sells them to buyers. This practice is widespread with Private label businesses and Drop-Shipping businesses. As a result, finding a good supplier for private labels in Vietnam is very difficult, if not impossible, and we have to turn down many requests.
When talking to potential clients sourcing in Vietnam for the first time, I highlight the differences and ensure they either have the product spec sheet made or are willing to work with someone who can make it. For example, Cosmo does not do dropshipping projects outside of China, and we have let people know about the challenges of doing private labels.
Focus on finding export-focused manufacturers in Vietnam.
Just because a factory makes an item does not mean it’s a suitable supplier. You need to understand that making an item for the domestic market differs from making an Item for the international market. When selecting a factory, ensure they have exported before and are set up to make products that meet the market’s quality standards and regulations that they ultimately end up with.
A factory must obtain extra steps and certifications to export and import its product. For example, in the EU, you need CE certifications, many products need lab testing to sell, and if it involves electricity, you’ll need UL certifications. So please ensure you work with a factory that knows what it is doing.
In addition, the factory or suppliers need to understand the quality expectations that the consumers in the destination country expect. It’s much harder to meet these standards if the factory does not have previous experience exporting to the destination country.
That said, we have worked with factories that have not exported before. However, starting that process requires a significant amount of work to get a product made. Sometimes, this has required us to get a certification, which the client paid out of pocket. For reference, a client recently spent over USD 40 thousand and four months getting UL certification for a factory we chose for them.
Vietnam has a Different Culture than China.
Every culture worldwide is different in its business and interaction with foreigners. Please do not expect it to be the same as in China or your home country. I can’t give much singular advice on how Vietnam differs from Mexico and how India is different from Malaysia.
That being said, I’ve done business in over a dozen countries, and some universal values apply to every country. Be polite yet professional, be quick to compliment, and slow to criticize. Always try to understand the culture and take advantage of opportunities. Always be curious and not afraid to ask honest questions. I’ve found that people are proud of their heritage almost everywhere and are happy to show it off.
Many Components Are Still Sourced From China.
Even if your product is made in Vietnam, many components, parts, and raw materials are still sourced from China.
No other country has a diverse and vertically integrated supply chain like China, and whoever is second is not even close. Even though the bulk of manufacturing and final assembly is done in Vietnam, many components and sub-assemblies still need to be sourced or manufactured in China. For example, right now (Feb 2020), we are having an issue with getting backpacks finished in Vietnam because the zippers and some plastic latches are sourced from China, which has shut down due to the coronavirus.
There are many cases like this worldwide. For example, our wooden furniture is made in Vietnam or Malaysia, but the metal handles come from China. Are you doing plastic injections in Taiwan or Thailand? You still probably need to order the mold from China. For many products, you are only outsourcing the final assembly in Vietnam.
Use Alternatives to Alibaba to find suppliers in Vietnam.
Alibaba is so popular among Chinese suppliers and foreign buyers that it’s pretty much the default method for finding suppliers in China. Many people have only used Alibaba and have had great success finding a reliable and reputable supplier for their business. This is not the case in Vietnam.
Even though Alibaba has a section for Vietnam, the suppliers tend to be few and far between and have a near non-existent response rate. For instance, Vietnam strongly distrusts all things Chinese, and almost no factory uses Alibaba. This is the same for many other countries. As a result, it’s Best to use Alibaba Alternatives for Vietnam.
Beyond Vietnam and China, We made this list of more than 50 Alibaba alternatives from Around the world to find suppliers outside China. We cover Alibaba Alternatives in Vietnam, India, Thailand, Malaysia, Indonesia, and more. Many of these are not true Alibaba alternatives but are more of a database, b2b suppliers list, and more. Some Alibaba alternatives have features like Alibaba’s RFQ feature; others have contact info, and you can contact factories directly.
Finally, don’t forget that Google works well when searching for suppliers. Google, which is banned in China, is not banned in the rest of the world. So you can Google “[product] manufacturer/suppliers in [country],” and you’ll get tons of results.
Lower MOQs are more difficult in Vietnam.
One of the major issues when working with Vietnamese suppliers is that it is much more difficult to start small and work your way up.
In Vietnam, for instance, we do not take on any clothing, apparel, and garment projects that are less than 2,000 units. This is because factories in Vietnam refuse to give quotes for small orders, and the ones set up to work small can’t scale up to larger orders.
Many clients are used to working with China, where they can place a small first order of 50-100 units and then make a larger order later. Unfortunately, this is unique to China and difficult to find outside China, including in Vietnam. The difficulty ordering a low MOQ is mainly for large factories; several smaller factories can produce it, but it will be difficult to scale up, assuming your product takes off.
Final Thoughts
If you keep your mind and options open, you can find great suppliers in Vietnam. But, of course, you must keep each point in mind when sourcing and allow for flexibility. Unfortunately, many people don’t have the time or flexibility.
Unfortunately, many businesses fail to prepare, rushing and scrambling to find alternatives to China. Rushing is still doable, but the results won’t be the best; if you want the best results, talk with an experienced sourcing company or agent who can give you the best on-the-ground advice.
Cosmo Sourcing // Your Trusted Partner In Vietnam
If you want to source from Vietnam, contact the Cosmo Sourcing team; we have been helping clients source from Vietnam since 2014. Cosmo Sourcing has the skills and the team to find you the best supplier possible. We are also established in China and are among the only companies that can find suppliers in China and Vietnam. Pick the one you think is best.
Our Vietnam Sourcing services allow you to access new manufacturers that you would not be able to in China and avoid Tariffs. Our services are designed to do everything to take your idea, turn it into a product, and ship it to the final destination. Cosmo can do everything from creating a product spec sheet to validating, sourcing, ordering, evaluating samples, arranging inspections, finding freight forwarders, quality assurance, negotiations, and shipping. We aim to handle every single step of your business in Vietnam for you.
If you start a new business, finding products and suppliers for your products is one of many things you need to handle. Our services are designed to handle every part of your business in China and Vietnam so you can focus on the rest of growing your own business.
We have helped clients from Fortune 500 companies, brick-and-mortar stores, FBA sellers, and brand-new businesses. So don’t hesitate to contact us and let us know how we can help you.