Four reasons you should look at Vietnam when outsourcing

Kate Jones

Vietnam is emerging as an attractive manufacturing option for small businesses looking for alternatives to China. The awakening market there has seen a 35 per cent growth in trade between Australia and Vietnam with a total value of nine billion dollars.

Though it’s still dwarfed by China’s 153 billion dollar, two-way trade with Australia, surging growth in Vietnam has seen the country rival traditional Asian trade partners, including Indonesia.

Here are four reasons you should check out Vietnam:

Less mass-produced, more handmade

For Sara Lundgren, owner of Sydney-based homewares business Zakkia, Vietnam has proved to be the perfect place for the production of her ceramics range. She says her products are handmade and not rolled off a massive production line.

“With our Vietnamese suppliers, most of them have had their trade for generations where the skills have been passed down from their parents, there is a completely different pride in their work,” she says.

“They are so involved in the whole process and because they know their material and techniques so well, they will often give suggestions or improve the products along the way.”

China is also a challenge because most products made there are mass-produced in huge factories.

Smaller quantities

China’s huge factories make it ideal for companies seeking large quantities of products, but that doesn’t always suit small businesses.

“Because we want our products to be handmade, China is also a challenge because most products made there are mass-produced in huge factories,” Lundgren says.

“This gives you less flexibility and means you have to produce in much larger quantities. It also removes a lot of character from the product.”

Positive outlook

Vietnam is one of the world’s fastest growing economies in the Asia-Pacific region, according to the Australians Industry Group. Wages are still low in Vietnam and the workforce is younger than in China, Thailand and South Korea.

Vietnam signed a free trade agreement with Australia in 2010, making it easier and cheaper for Australian companies to tap into supply chains there.

The potential of Vietnam has seen big businesses including QBE, ANZ and BlueScope Steel invest in operations there.

Easy communication

Not everyone speaks English, but Lundgren says communication is no problem in Vietnam.

“I also find that communicating with our Vietnamese partners is so much easier. They understand our quality expectations and have the same expectations of their output,” she says.

“We rarely have quality issues, and when we do, they are usually easy to fix.”

Kate Jones

Kate Jones writes for the business and money sections of The Age and Sydney Morning Herald. She also writes for The New Daily, TAC, RMIT and is a news writing tutor at Monash University.