Prices and labor costs Europe vs. Vietnam: an example
Let’s take the example of a small clothing factory in Europe. A salary in usual countries for an hourly rate of 12€ per hour is about 1,200€ per month. In Vietnam, the cost of living is much lower. The factories are in free zones with tax exemptions. Your company can expect to pay less than 200€ per month for the equivalent experienced employee. That’s more than ten times less than in Europe. Even if you include shipping, storage, and customs tariff, you will still achieve a much more competitive manufacture-chain than production in Europe.
🇨🇳 China vs. Vietnam 🇻🇳 : which one should you choose?
Vietnam is not yet at the level of China in terms of production capacity, so it is better to consider China if your volume is enormous. However, if you are in the early stages of your project or wish to relocate part of your production to a country other than China: Vietnam is the perfect candidate. The factories have operational and already trained Vietnamese staff (generally between 200 and 500 people per factory) to ensure quality control, management, and respect of deadlines. Vietnamese standards have therefore been raised in recent years to enable the country to have a global position in production and export.
Using the advice of a sourcing agent: how does it work?
Finding satisfactory suppliers and legit companies that can understand functional and technical specifications is not easy in Vietnam. The first hurdle that many importers or multinational companies face is a language barrier. Therefore, using the services of a sourcing agent is a wise decision. They can do the market analysis, go on the ground to look for partners, negotiate the prices for you, and ensure the manufacturing deadlines. The rates of these agents are generally from seven to eight percent of the total cost of your production that will be sent to the port, ready to be shipped.
