China Law Blog

Third Party Logistics News recently posted on how those considering Vietnamese manufacturing should look long and hard at Vietnam's logistics problems. The post is entitled, "Vietnam : Lack of logistics infrastructure = higher logistics costs," and it contains good advice for those considering Vietnam.

It concludes what I always conclude. Vietnam is great for some things and not so great for other things and nobody should just be rushing in:

Anybody who has been reading our blog since its inception knows that we’ve always cautioned against “rushing” into China and evaluating the pros and cons for going in carefully before making that decision. We’ve never advocated avoiding China, simply that people should think twice and consider carefully before making that jump - for some companies, it just might not make sense.

As China moves to higher-end manufacturing and costs in general have continued to rise, some companies have been tripping over themselves in their rush to move production to even-lower-cost Vietnam. I wish I could say I was puzzled at the frenzy of activity in Vietnam or that I was surprised by the subsequent port congestion issues that slammed Ho Chi Minh City earlier this year, but I can’t. It’s interesting to note that the same advice we have advocated in the past in regards to China - and still do - are similarly being ignored by countless firms now rushing headlong into the next “hot sourcing country”, Vietnam.

It’s been pointed out before, but I’ll point it out again: Vietnam is not China. And one of the largest differences between the two countries is the level of port and logistics infrastructure. Vietnam simply can’t compare to China’s port infrastructure:

Put simply, Vietnam's logistics, especially its ports, are not on China's level and that oftentimes directly translates into increased costs.