Afraid of China? Is Vietnam Right for You?

We remain acutely aware of the ongoing tensions between the US and China, a topic that has become quite the “hot potato.” While the threats and accusations dominate headlines, this turbulence hasn’t rippled into our world of packaging. Although we aren’t dealing with high-stakes items like medicine and semiconductors, and are several layers removed from these industries, our experience has been positive: orders are on time, quality has improved, and pricing is competitive (the Chinese economy greatly values our orders). A game-changer, which is crucial not just for sourcing from China but from any country, is the need for “boots on the ground” staff to ensure proper manufacturing and timely shipping/delivery. Without this key element, you are essentially gambling.

Orphoz, a McKinsey company published an insightful article about Vietnam, including information on how Nike preemptively navigated the COVID-19 curve that impacted many companies. Further, we’d like to contribute our own observations about Vietnam's packaging industry. While McKinsey's research primarily focuses on higher-end products and doesn’t delve specifically into our packaging world, their findings are still very relevant and informative.

Link to the McKinsey Article

Here’s what we’ve observed and come to understand about Vietnam, especially concerning packaging, sourcing, manufacturing, and shipping:

• Many new packaging factories/manufacturers are operated by Chinese entrepreneurs establishing affiliates or divisions of existing Chinese plants. Despite their official presentation or company listing, what’s crucial to understand is that the Chinese are cognizant of the ongoing disputes with the US, including tariffs and the increased costs of doing business with mainland China, and are strategically positioning themselves for an advantage.
• Vietnam, in terms of shipping distance, is not much further from China.
• The Vietnamese government, while Communist, maintains a stable and US-friendly stance.
• Over the past 24 months, we have witnessed significant improvements (though there's still progress to be made) in infrastructure, including roads and ports, facilitating smoother shipment movements.
• The number of shipping lines into and out of Vietnam has also increased.

So, what now? Global sourcing is here to stay, and the demand for high-quality, affordable packaging products will continue to rise. With US factories still grappling with worker shortages and extended lead times, Vietnam's role in your sourcing strategy should be considered and taken seriously. As always, it's crucial to rely on your global sourcing partner to navigate the nuances of different countries based on the specific product and timing you need.

It's crucial to rely on your global sourcing partner to navigate the nuances of different countries based on the specific product and timing you need. If you're on the hunt for a trustworthy and cost-efficient global supplier, don't hesitate to reach out to me. I'm here to help connect you with the right resources to meet your packaging needs.

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