Is it still profitable to expand business to Vietnam?

Special Contributor | Huo Ruikang

Vietnam is becoming one of the popular destinations for Chinese enterprises to go global.

Take Bac Ninh Province as an example. It is less than 40 kilometers away from Hanoi, the capital of Vietnam, and has attracted over 2,100 investment projects, among which more than 600 are from Chinese enterprises. The proportion of electronic industry projects is extremely high.

Why has Vietnam become a popular choice for Chinese enterprises to go global? Chien, the person in charge of investment promotion in the Bac Ninh Industrial Park, said, "It is close, has similar cultures, low labor costs, and favorable policies."

Xiao Fu is studying in Vietnam and receives a large number of inquiries from Chinese enterprises every day. Many bosses are eager to ask her to help investigate industrial parks. Xiao Fu originally worked in industrial software sales in China. At the beginning of 2024, she found that many customers intended to go global to Vietnam, so she quit her job and went to Vietnam to seek development opportunities. Besides her studies, she started a self - media account and introduced the Vietnamese market to the outside world through short videos, sharing opportunities for opening factories in the local area.

Wu Guanye, who came to Vietnam to open a packaging factory at the same time, had a very different experience. The rising raw material prices and the increasing difficulty in recruiting workers made him increasingly distressed. Sometimes he even had to work in the factory himself.

General Manager Wu said bluntly that the current policies and environment in Vietnam are not suitable for all Chinese enterprises. Many enterprises came to Vietnam for the low - cost and tariff advantages at the beginning. Now, the labor cost is almost the same as that in the central and western regions of China. The US - Vietnam trade agreement has led to the loss of half of the orders, and the profit - making pressure is even greater than that in the domestic market. Many enterprises, like General Manager Wu's factory, are in the dilemma of "rising costs before enjoying the benefits", and the difficulty of making a profit far exceeds expectations.

Photo provided by the author

Xiao Fu also mentioned that although there are many Chinese bosses going to Vietnam for investigations and they are very anxious, they are becoming more and more cautious when it comes to actually deciding to invest and set up factories. It's often more talk than action. Through on - the - spot research, the author found that the following four major problems are currently hindering Chinese enterprises from investing in Vietnam.

01 Continuously rising land prices

The 2025 "Industrial Insights" report of Savills Vietnam reveals that the cost of industrial land in Vietnam is constantly rising.

Driven by the demand for industrial land leasing from domestic and foreign investors, the southern region of Vietnam shows strong market attractiveness. The occupancy rate of industrial land reaches 90%, the average land price is $191 per square meter, the occupancy rate of ready - made factories is as high as 92%, and the average rent has risen to $4.4 per square meter per month.

The occupancy rate of industrial land in northern Vietnam also reaches 86%, the average land price is $141 per square meter, and the average rent is $5.1 per square meter per month, which is close to the industrial land price in Dongguan (calculated at 700,000 yuan per mu, approximately $161 per mu).

In addition, the rent increase of industrial land is also becoming more and more obvious. In 2020, the average rent in northern Vietnam was $3.2, and it has increased by 59.4% in 2025, with an average annual increase of 10%. The rent in some parks near Samsung and LG production bases even reaches $6.3.

Relevant calculations show that during the period from 2025 to 2030, the land demand of the Vietnamese electronics manufacturing industry will grow at an average annual rate of more than 12%, and the land price is expected to continue to rise. According to statistics, land costs account for about 60% - 70% of the total investment cost. The increase in land costs undoubtedly adds an operational burden to Chinese enterprises that want to set up factories in Vietnam.

02 The dual dilemma of labor costs and employment problems

Data from the General Statistics Office of Vietnam shows that in 2018, the average monthly salary in Vietnam was about 5.8 million Vietnamese dong (about 1,682 yuan per month), and by 2025, this figure has risen to 8.31 million Vietnamese dong (about 2,300 yuan per month), with an average annual increase of 4.5%.

Enterprises feel it more strongly. In Bac Ninh Province, where Chinese enterprises are concentrated, Roger, who is in charge of helping enterprises recruit blue - collar workers, introduced that the salary of skilled technical workers is basically between 2,200 and 3,500 yuan. It is difficult to recruit workers with a monthly salary of less than 2,200 yuan. The salary of some positions with more overtime can exceed 4,000 yuan during the peak season, which is close to the level in the central and western regions of China. However, in terms of labor efficiency, Vietnamese workers are only 80% as efficient as their Chinese counterparts in similar positions.

The labor shortage and the mismatch of the talent structure make it difficult for enterprises to operate. There is fierce competition for workers in electronics factories. Enterprises in the park poach employees from each other, and there is even a vicious competition of "poaching a line leader and taking away the entire production line employees". Small and medium - sized enterprises are deeply affected.

Behind this is the "involution" of salary in large enterprises. Take the Foxconn factory in Bac Ninh as an example. According to Vietnam News, at the beginning of 2025, Foxconn introduced policies to attract Vietnamese workers, ensuring that workers' monthly income reaches 9 - 12 million Vietnamese dong (2,400 - 3,200 yuan), and providing bonuses according to work experience, as well as incentives such as interview bonuses and referral bonuses.

Large enterprises raise the overall local labor cost significantly by increasing salary and welfare to "grab" workers. A person in charge of an electronics contract - manufacturing factory in Bac Ninh Province said helplessly, "Now it's more difficult to recruit workers than in China. If you offer a monthly salary of 2,200 - 2,800 yuan to recruit skilled chip - mounting workers, you have to wait for a month, and often some workers are poached by Foxconn and Samsung with a high salary of more than 3,500 yuan after working for a few days."

Photo provided by the author

Enterprises also face difficulties in recruiting senior talents. Roger introduced that a plastic products enterprise wants to recruit Vietnamese technical salespeople who understand Chinese or Korean, and the basic salary is set at $5,000, but they still can't find anyone.

The "involution" of large enterprises also highlights the shortage of talent supply in Vietnam.

According to Vietnam ICT News, at the regular press conference of the Vietnamese government in June 2025, Deputy Minister of Education and Training Pham Ngoc Thang said that the proportion of students in STEM (Science, Technology, Engineering, Mathematics) - related majors at the university level in Vietnam is on average 28% - 30%, only 600,000 people. While in China, the figure is 41% at the undergraduate level, 58.5% at the postgraduate level, and 80% at the doctoral level. The development of vocational colleges in Vietnam is relatively backward, which cannot support the talent needed for its electronics industry. Enterprises have to bear high pre - job training costs but still have difficulty meeting the needs of precision electronics manufacturing.

03 Double pressure from management and compliance, increasing operational risks

In addition to the rising land costs and employment difficulties mentioned above, Chinese enterprises operating in Vietnam also face double challenges in management and compliance.

Similar to the situation in the Chinese job market, more and more Vietnamese young people are reluctant to work in factories and prefer more flexible jobs such as food delivery or driving taxis. The attractiveness of manufacturing jobs has declined, and many factories have a capacity utilization rate of less than 50% due to a shortage of workers, further pushing up the unit production cost.

In addition, the Vietnamese culture also makes Chinese - funded enterprises feel out of place. Roger believes that Vietnamese young people have relatively low work loyalty and "quit when they are unhappy". This leads to prominent labor discipline problems among young workers, such as being late, leaving early, and absenteeism without reason, and it is difficult for enterprises to effectively implement their rules and regulations.

More importantly, the labor - management relationship in the Vietnamese job market is complex. The trade unions in Vietnam are powerful and have strict requirements for salary, welfare, and working environment. Labor - management negotiations are long and difficult, seriously squeezing the profit space of enterprises. In addition, European and American customers have high requirements for labor protection of suppliers, and the monthly working hours of employees have reached the limit of 180 - 210 hours.

A person in charge of an electronics factory revealed, "Last year, we wanted to adjust the overtime system, and it took more than three months to reach an agreement with the trade union. During this period, there was a significant loss in production capacity."

Risks at the compliance level also follow one after another. The Vietnamese customs is increasingly strict in supervising foreigners working in Vietnam and frequently conducts identity checks in industrial parks. Chinese employees working in Vietnam with tourist visas for a short period are easily discovered and repatriated, which is not a long - term solution for enterprises. Secondly, new regulations such as the "Chemical Law" implemented in 2025 have strengthened compliance requirements such as environmental assessment and fire protection. Enterprises need to invest funds to improve the compliance system and maintain government relations, and the hidden expenses have increased significantly.

04 The advantage of entrepot trade is no longer there, and the vulnerability of the supply chain is highlighted

In Vietnam, a large number of industries actually adopt the "two - ends - outside" model of "relying on imports for core raw materials and relying on exports for finished products".

Du Thi Thuy Huong, a member of the Executive Committee of the Vietnam Electronics Enterprises Association, pointed out that although electronic products are a commodity category with significant growth in Vietnam's export volume, Vietnamese enterprises mainly undertake the low - value - added assembly process, accounting for only 5% - 10% of the total export volume, and the economic benefits obtained in the global electronics supply chain are limited. A report released by the global market analysis institution Gartner in 2024 shows that in the second quarter of 2024, the average import dependence of raw materials of Vietnamese electronics contract - manufacturing enterprises was as high as 68%.

The trade agreement reached between China, the US, and Vietnam in 2025 has made this global supply chain more fragile.

Lora, who works in the legal field in Vietnam, introduced that since the third quarter of 2025, under the pressure of the US, the Vietnamese government has launched a "monitoring system for Chinese goods transshipment", severely cracking down on the forgery of certificates of origin. If products cannot prove that they meet the standard of local raw materials accounting for more than 30% or the substantial processing standard, they will be identified as "Chinese transshipment". Not only will they not be able to enjoy the preferential tariffs between the US and Vietnam, but they may also trigger anti - circumvention investigations and be subject to a 40% punitive tariff. Even for goods produced locally in Vietnam and meeting the origin requirements, a 20% tariff needs to be paid when exporting to the US.

The US has simultaneously implemented the "Trade Enforcement Enhancement Act", imposing "collective punishment" on third - country enterprises and countries that assist Chinese transshipment. The US Customs and Border Protection (CBP) requires a full - chain traceability of goods exported to the US from "screws to finished products". If a product is assembled in Vietnam but its core components are from China and not truthfully declared, it may still be judged as a violation.

These policies force Chinese enterprises to abandon entrepot trade, turn to real local production, and use local supply chains, further driving up costs. Unfortunately, many industrial supporting facilities in Vietnam are not complete, and there is a shortage of local suppliers. Even if enterprises have orders, local factories have difficulty completing deliveries smoothly.

Enterprises also spend more energy on importing raw materials and components from China. Although the Vietnamese customs has implemented a "green - yellow - red" risk - grading mechanism to provide import convenience for enterprises, most small and medium - sized enterprises still have difficulty meeting the standards.

A practitioner in the electronic component trade complained helplessly, "The customs policies are updated monthly, the classification of goods is complex, and the document requirements are strict. A colleague filled in the wrong HS code, and the entire batch of goods was detained at the customs for two weeks. The frequency of customs inspections is increasing, and it's really too much to handle."

He also added, "In the current situation of Vietnam, except for enterprises that have received orders from large enterprises for supporting production in Vietnam or those targeting the Vietnamese domestic market, it is relatively difficult for other small and medium - sized enterprises to survive in Vietnam." If small and medium - sized enterprises fail to enter the supply chain of core enterprises, they will face multiple challenges such as unstable orders, difficulty in recruiting workers, difficulty in compliance, and high costs.

Therefore, in the current complex and changeable global economic situation, Chinese enterprises in Vietnam are facing more and more challenges. How to find the right position and effectively deal with these challenges has increasingly become the key to the sustainable development of Chinese enterprises in this land.

Huo Ruikang: A special contributor to 36Kr. He has many years of front - line practical experience in the technology industry, covering investment, supply chain, sales, and ecological cooperation, and has the ability to implement global projects. He focuses on overseas markets and enterprise growth, and writes real business logic and industrial stories from a cross - cultural and cross - market perspective.