China Plus One: How does Vietnam benefit?

The China Plus One strategy is igniting a dynamic shift across the global supply chain, as businesses worldwide actively seek to diversify their operations beyond China. This strategic move, driven by the pursuit of greater resilience and a desire to reduce reliance on a single nation, is creating a wave of opportunities throughout Southeast Asia. Among these nations, Vietnam is emerging as a particularly attractive and strategically positioned hub for manufacturing and sourcing.

Vietnam’s prime geographical location, coupled with its proactive engagement in numerous free trade agreements, is unlocking significant international trade expansion. This growing appeal is translating into exciting prospects and substantial foreign direct investment (FDI) in Vietnam, promising robust growth for many Vietnamese businesses across numerous sectors.

How China Plus One affects Vietnam

With an 8.32% increase in value-added contributions to Vietnam’s GDP in 2024, and with a 2.7% contribution to its overall economic growth rate¹, Vietnam’s manufacturing sector is experiencing significant growth. This is fuelled by increasing foreign direct investment, which hit a record high of US$25.35 billion in 2024².

Several compelling factors are driving these global businesses to diversify their operations into Vietnam, including:

• Competitive labor costs: Comparing Vietnam’s US$2.99/hour labor cost versus China’s US$6.50³, Vietnam offers significantly more attractive rates, providing businesses with increased operational savings in the long run.
• Strategic location: Vietnam’s geographical proximity to China and its position along key shipping routes in Southeast Asia facilitate efficient logistics and access to major markets.
• Favorable trade agreements: Vietnam’s active participation in numerous free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), provides preferential access to key international markets and reduces tariff barriers.
• Government support: The Vietnamese government has implemented business-friendly policies and established special economic zones to attract foreign investment and streamline business operations.
• Young and growing workforce: With a youthful labor pool where over half of its 51.6 million workers are under 35⁴, Vietnam boasts a dynamic and increasingly skilled workforce, capable of meeting the demands of diverse manufacturing sectors.

As multinational companies increasingly move their manufacturing away from China, Vietnam stands to capture a larger market share of traditionally China-dominated sectors like consumer electronics and textiles. This influx of investment and production will further strengthen Vietnam’s export capabilities and its integration into the global economy, leading to sustained economic development and increased international shipping volumes. 

Which sectors in Vietnam will benefit from China Plus One?

Numerous sectors in Vietnam are poised to benefit from the China Plus One shift, including:

• Electronics: With US$142 billion of electronics exported in 2023 alone⁵, and with their competitive labor costs and steadily improving infrastructure, Vietnam has the potential to evolve into a crucial electronics manufacturing hub.

• Textiles and apparel: A notable shift of textile and apparel manufacturing from China to Vietnam is underway. Capitalizing on existing expertise and favorable trade conditions, Vietnamese producers are well-suited to meet increasing global demand, having already positioned itself as the third-largest textile exporter worldwide in 2023⁶.

• General manufacturing: As businesses prioritize mitigating global supply chain disruptions and seek diversified production bases, Vietnam offers a compelling solution. Its competitive production costs and growing pool of skilled labor positions it to capture a larger share of the general manufacturing market.

• Automotive: The global automotive industry's pivot towards electrification presents a unique opportunity for Vietnam. With increasing foreign direct investment, the nation could become a regional hub for electric vehicle (EV) manufacturing and the production of essential components, as companies seek to diversify their automotive supply chains beyond China.

• Agriculture and food processing: The growing global demand for diversified food sources can significantly benefit Vietnam’s agriculture and food processing industries. With its gross production value in agriculture for 2025 already projected at US$29.97 billion7, expanding its processing capabilities can greatly increase Vietnam’s exports of higher-value processed food goods.

How businesses in Vietnam can capitalize on China Plus One

To fully leverage the opportunities presented by the China Plus One strategy, Vietnamese businesses should proactively adopt key strategies such as:

• Investing in modernization and automation: Upgrading facilities and integrating automation technologies are crucial for enhancing production efficiency, meeting increased demand, and maintaining competitiveness in the evolving global landscape. This will enable businesses to handle larger volumes and more complex manufacturing processes.

• Utilizing Vietnam’s free trade agreements: Actively leveraging agreements like the CPTPP and EVFTA can provide significant advantages in accessing new international markets through reduced or eliminated tariffs. However, understanding the specific benefits and requirements of each agreement is key to strategic market entry and cost optimization.

• Forging strategic international partnerships: Establishing relations with international companies and distributors can accelerate market reach, provide access to cutting-edge technologies, and even attract valuable foreign direct investment. These partnerships can open doors to established global networks and enhance overall competitiveness.

• Partnering with reliable logistics providers: Collaborating with experienced logistics companies like DHL Express Vietnam is essential for ensuring reliable international shipping, seamless customs clearance, and optimized international logistics and supply chain management. A strong logistics partner can streamline operations and facilitate smooth international trade expansion.

DHL Express: Empowering Vietnamese businesses in the China Plus One era

In the evolving landscape of the China Plus One strategy, DHL Express Vietnam leverages its extensive expertise to facilitate seamless international trade for Vietnamese businesses. They act as a vital link, connecting Vietnamese companies in key sectors such as electronics, textile, and agriculture to global markets, enabling them to capitalize on opportunities stemming from shifting supply chains and growing foreign direct investment.

Beyond providing efficient and reliable overseas shipping, DHL Express Vietnam also offers support with customs clearances, ensuring the smooth transit of goods. For sensitive products such as food and agriculture, their temperature-controlled transport solutions maintain integrity. Lastly, their comprehensive end-to-end international logistics and supply chain management services provide Vietnamese businesses with the complete support needed to confidently engage in global commerce, from origin to final destination.

So, ready to expand your global reach? Contact the DHL logistics team to learn more, or create a DHL Express business account today and start shipping with a trusted partner!