Vietnam: The New Low-Cost Haven
September 25, 2007
The past twenty years have seen a veritable deluge of Asian foreign investment flowing first into China and, more recently, India. The impetus for most of these investments has been the promise of lower costs for materials, manufacturing, and business processes.
Concurrent with the rapid construction of factories, offices, and labs there has been an insatiable rise in the demand for people — so much so that these two countries are now experiencing unprecedented rates of wage appreciation and employee attrition as experienced workers at all levels jump for better paying opportunities.
Companies Reconsider Their Footprints
Growing costs and constraints on human capital are prompting many companies, particularly those that are heavily invested in China, to reconsider their Asia "footprints". And quite a few of those companies are stepping into Vietnam. In fact, Vietnam has become one of the world’s top recipients of foreign direct investment (FDI). During 2006, Vietnam attracted $10.6 billion in FDI, a record which will has already been shattered in 2007.
With the country set to emerge as the next manufacturing powerhouse in Asia, International Innovations is becoming increasingly involved in client activity related to Vietnam. Beginning with this article, we will be covering a variety of topics on the subject of Vietnam. We’ll discuss everything from the basics of registering a business there to penetrating Vietnam’s fast-growing consumer market. If there’s a particular topic you want us to get into, be sure to let us know.
Let’s get started by looking at some of the key characteristics of Asia’s new low-cost haven…
Vietnam Country Facts
- Population: 85.26 million
- Inflation: +0.1%
- Labor Force: 44.58 million
- Unemployment Rate: 6%
- GDP: $280.2 billion
- Exchange Rate (as of 9.07): $1 = 16,227 Dong
- Size of Country: 125,622 Sq Mi
- Time: +8 hours GMT
- Largest Cities: Hanoi (Capital), Ho Chi Minh City, Haiphong, Da Nang, Hue`, Nha Trang, Qui Nho
Standard Operator Costs, Vietnam and China
| Vietnam | China | |
| Basic Salary | $45 / mo | $120 / mo |
| Social Insurance | $6.75 / mo | $15.60 / mo |
| Health Insurance | $.09 / mo | $2.40 / mo |
| Meals | $10.40 / mo | $26.00 / mo |
| Total (26 days) | $63.05 ($2.34 / day) | $164.00 ($6.30 / day) |
| Bonus | 1 month’s salary | 1 month’s salary |
Other Vietnam Manufacturing Costs
- Electricity: $0.11 / KWh
- Water: $0.286 / cubic meter
- Fax Phone: $2.50 / page
- Phone: $2.50 / $1.31 per min time
- VAT (Value Added Tax): 10% export – claim back quarterly
- Shipping: $500 to $1000 per 20 ft container to North America
For more information, see our other articles about Vietnam.