While Vietnam is an emerging economic power house in South East Asia, there can sometimes be confusion as to whether Vietnam sourcing from China is legal or not. While Vietnam does have some legal Structures which are in place as an essential building block to a smooth Vietnam sourcing procedure, it can frequently be hard for businesses (especially those new to Vietnam to choose the best services needed to support their Vietnam sourcing needs. This article seeks to clarify the situation and suggest the best options available to businesses looking to source Vietnam goods.
While Vietnam is an emerging economic power house in South East Asia, there can sometimes be confusion as to whether Vietnam sourcing from China is legal or not. While Vietnam does have some legal Structures which are in place as an essential building block to a smooth Vietnam sourcing procedure, it can frequently be hard for businesses (especially those new to Vietnam} to choose the best services needed to support their Vietnam sourcing needs. This article seeks to clarify the situation and suggest the best options available to businesses looking to source Vietnam goods.}
The basic legal framework of Vietnam is set out in the Basic Law of Vietnam which covers foreign direct investments and requires Vietnamese establishments to register with the Ministry of Foreign Trade and register with the Vietnam Office of the Secretary of Commerce. As part of these processes, Vietnam authorities require all foreign companies wishing to utilise Vietnam labour or invest in Vietnam trade to register with the relevant offices in order to minimize the possibility of having their activities monitored or stopped by the Vietnam authorities. As a result, Vietnam authorities can quickly identify and prevent the entry of undesirable foreign organisations (usually ones that are not registered with the Ministry of Foreign Trade and are from outside of Vietnam). Whilst it is true that Vietnam authorities can and will monitor foreign labour utilising Vietnamese work sites, they do not have the same powers as they do over company registration.
Assuming that a Vietnamese company wishes to utilise the services of another country’s factories to manufacture goods for them, one of the main challenges is in locating the right factories in the first instance. Although the majority of Vietnamese factories do not currently fall within the jurisdiction of Vietnam’s Ministry of Foreign Trade, there are some that do. In these cases, Vietnam sourcing from these foreign factories can still be difficult, as they are outside the purview of the Ministry and so not under its monitoring. Vietnam exports by way of these foreign-owned factories can still have some challenges, and so any agreements made will still need to be approved by the Ministry of Foreign Trade.
Although there are many large and medium-sized Chinese factories in Vietnam, most of these are located in coastal areas along the east coast of Vietnam, away from the coastline of China, and therefore outside of Vietnam’s competence area. Whilst there are some exceptions, such as the Xintang Steel Company, there are not many functioning as export units for major global brands, so sourcing these types of products from Vietnam is not easy. As mentioned previously, there are some exceptions, such as the Xintang Steel Company, but even these are not easy to find. The other challenge for any Vietnam-based factory to source consumer electronics from is the quality of the components supplied by these foreign suppliers.
In terms of factory visits, there are two main factors to consider when making factory introductions to Vietnam: the quality of the raw materials used, and the quality of the finished products produced by these factories. The quality of the raw materials used is an important consideration in Vietnam because it will largely determine whether the final product meets delivery deadlines and conforms to standards set by international quality organizations. It can be a particularly difficult task for smaller Vietnam-based manufacturers to source high-quality and highly competitively priced electronics components, so most Vietnam companies tend to focus their attention on producing lower-cost goods that conform to a standard level of quality. Many overseas manufacturers concentrate almost entirely on lower-cost markets. This means that Vietnamese companies tend to produce goods with few if any bells and whistles, meaning that customers are not likely to pay overly high prices for these goods.
Another key consideration in terms of Vietnam factory visits is the performance of these foreign-owned factories. As with the quality of the raw materials, the performance of the Vietnamese-owned factories themselves can also be a major factor in determining the success of any marketing campaign. For example, it is not uncommon for products to be faulty, or for manufacturing faults to result in shipping delays and increased costs. A good way of dealing with problems such as this is to have a rapid feedback procedure in place, which means that factory representatives are notified immediately of any problems. Another helpful technique is to have a regular inspection schedule, in which case factory representatives are trained to look over all aspects of the factory operations at least once each month.
Finally, and perhaps most importantly, a successful Vietnam sourcing company will not underestimate the importance of excellent communication between the client and the manufacturer. Both parties must effectively communicate with each other in order to ensure that the best possible working conditions are maintained, as well as a clear understanding of the manufacturing process. Effective communication lines between the sourcing company and the manufacturer should include detail about the product specifications, including exact specifications as regards the physical dimensions, weight, quantity, composition, and anticipated end product. In addition, an effective communication line should also provide the client with clear instructions as regards to the expected delivery date and methods of payment.
Finally, in terms of Vietnam sourcing, it is important to remember that there is significant risk involved. Vietnam is a developing country, and in many respects still a developing economy. Therefore, while Vietnamese manufacturers may be extremely reliable, they do not yet employ adequate controls to reduce risks associated with unregistered sources of foreign labor. As a result, there is always the risk that the foreign service company will refuse delivery of your merchandise, or that the goods will not meet your expectations once they reach your door. A reliable Vietnam service company will use advanced technology to track and trace every shipment that it ships out, to provide you with complete documentation as to the status of each shipment. Finally, a reliable Vietnam business service company will register its business and ensure that all of its workers have acquired the appropriate trade training before they begin shipping to Vietnam.