"Going abroad" has become a hot topic after the outbreak of epidemic. Shanghai Melink International Exhibition Co.,Ltd, together with Shenzhen Polymer Industry Association, successfully organized a business delegation group to Vietnam for deep market research in 2023 .
On October 16-20, 2023, a delegation led by Zhou Dong, the President of the Shenzhen Polymer Industry Association, and consisting of more than 20 members of the association, visited Vietnam to participate the 2023 VietnamPlas Exhibition. Then they conducted research on well-known local enterprises such as Haier's production base in Vietnam, Datongjin Co., Ltd., and Long'an County Industrial Park.They are also welcomed by President ofGuangdong Enterprise Federation of the Chinese Chamber of Commerce in Vietnam and Secretary General of Ho Chi Minh Plastics Industry Association.The delegation got a very comprehensive understanding of  the investment environment, industrial policies, resource conditions, and other information of the Vietnamese market.
 
 
In order to help enterprises make a wise market plan in the new international situation, we has summarized the Vietnamese market information obtained from this visit as follows, providing guidance for enterprises interested in investment in Vietnam:
1. Overview of Vietnam
Vietnam is located at the southeastern end of the Indochinese Peninsula in Southeast Asia, with a narrow and slightly S-shaped terrain. It borders Guangxi and Yunnan in China to the north and Laos and Cambodia to the west, with a narrow and long land area of about 330,000 square kilometers. It is adjacent to the South China Sea and has a coastline of over 3260 kilometers. It is a multi-ethnic country mainly composed of the Jing ethnic group, with a population of 98.47 million (as of 2022). The country is divided into 58 provinces and 5 municipalities directly under the central government.
In 2022, Vietnam's real GDP grew by 8.0%, and its economy rebounded strongly from the economic chaos caused by the COVID-19 in the second half of 2021. The economic growth momentum slowed down in the first half of 2023, with a year-on-year growth of 3.7%, reflecting the impact of weak industrial production and export growth. The GDP growth rate in the second quarter of 2023 was 4.1%, which was an improvement from the 3.3% in the first quarter of 2023.
 
2. High land costs
The ownership of land in Vietnam is the same with China, belongs to the state, and enterprises can only purchase land to use rights, with a maximum term of 50 years. The cost of purchasing land use rights in Vietnam is relatively high. Taking the PAT industrial park as  example, which is near Ho Chi Minh City, an hour's drive away, the purchase of land use rights is $185 per square meter for non polluting enterprises and $198 per square meter for polluting enterprises.
 
 
3. Cost of Building factory
According to our inspection, the construction cost of factories in Vietnam is roughly within the range of 155-600 US dollars per square meter, and the prices of factories of different grades vary greatly.
 
 
4. Factory rent 
The rent for well built factories in Vietnam ranges from $4 to $4.5 per month per square meter, with higher rent for companies with a rental area of less than 1000 square meters.
 
 
 
 
5. Raw material procurement
There is relatively little production of plastic raw materials in Vietnam, and the market still reply on importing, resulting in high cost. That also means opportunity for raw material factory.
 
 
6. Wages
In non-metropolitan core areas, the average cost of general labor is around 2500 RMB, which is about 50% lower than China.
 
 
 
7. Labor union
The Vietnamese labor union organization is relatively mature there, with strong union strength, and can organize employee strikes.
 
 
8. Tariff level
The  majority of Vietnamese origin products are exported to countries like Europe, the United States, Japan, and South Korea with zero tariff.
 
Conclusion
 
It is recommended that enterprises with investment needs in Vietnam, comprehensively compare the differences in land costs and factory rent. For enterprises with one of the four major factors concern like environmental protection, cost, tariffs, and supporting facilities, Vietnam's investment should be your priority consideration.
 
Welcome to contact Melink to obtain more information on the Vietnam inspection information and further communication!