As the trade war between the United States and China takes place, one country that has emerged as a clear winner has been Vietnam. But as many people have come to look at Vietnam as viable home decor and home furnishing manufacturing source, have been surprised that Vietnam was not able or willing to produce all of what they needed.
There are many reasons why Vietnam is not able to produce all your home decor manufacturing needs. There are challenges in finding both a qualified factory and a good agent. Also, the customers may not understand all the types and kinds of products that Vietnam is good at, so they give them the wrong products to manufacture. A potential customer may need to work hard to get a factory’s attention as there are so many people looking to move their manufacturing to Vietnam.
Vietnam is a great source for manufacturing home decor and home furnishing products. Here are 10 tips to help you with your Vietnam manufacturing needs.
First Understand Vietnam Today
The United States did not have diplomatic relations with Vietnam until 1995. Because we were quite late to normalize diplomatic relations with Vietnam it was the Europeans, not the Americans that have led the development of Vietnam and its industries. In fact, for a long time, Vietnam was ignored by many US-based home decor companies. They were so focused on China that they did not see a need to look towards Vietnam as a production base. Suddenly all that has changed and many are also surprised that Vietnam does not quite work the same as China.
One of the first things that anyone should do who is looking to start to manufacture in Vietnam is first looking at Vietnam today. Today Vietnam is a vibrant place. On the outset, it can seem to have more freedom than China. The Vietnamese are active on Facebook, Instagram, and other social media platforms. But it is still the Socialist Republic of Vietnam which is a socialist country.
Vietnam by all accounts is set to become one of the next Asian Tigers. The country continues to open its economy to business and development. It has enacted many laws such as even a new religious law that gives its citizens more rights to worship as they please. Even today you can find many western churches in Vietnam. Also, you can see many other foreign companies, even a host of western banks and financial institutions. This is expected to grow and to continue as Vietnam continues to open its doors more and more for business and foreign investment,
Understand What Products Vietnam Is Good At Manufacturing
Vietnam is not good at manufacturing every product in home decor and home furnishing. In fact, there are many products where China will beat the price and quality of Vietnam. There are also things that Vietnam is weak in manufacturing as they have not yet developed that Industry.
But for the industries and materials that Vietnam has developed, they can be very good at those industries. For those finishes and techniques that Vietnam is very good, they are extremely good at and usually have a long history of production. To discover more about the finishes and techniques that Vietnam is good at you can read our blog 10 Great Vietnamese Home Décor Product Finishes and Techniques We Love by clicking here.
Finding a Reliable Supplier
Many people are surprised to learn that trade shows in Vietnam are not as highly developed as they are in China. In fact, when compared to the Chinese Trade Shows the Vietnamese Trade Shows are extremely small.
Many Vietnamese manufacturers do not show at the Trade Shows Many of the people who are showing at the trade shows are really not factories but maybe agents.
There can be a lot of reasons why finding a reliable supplier in Vietnam can be difficult:
- Handicraft village production – A lot of production is done out in the handicraft villages in Vietnam, especially North Vietnam. Sometimes you may meet someone who is an agent but their cousin is in the village doing the production.
- Unlike China, many Vietnamese factories are also not on Alibaba or other websites. This can make it difficult to even find them. Some of the factories may have some websites, but they can outdated or not really show what they are actually doing. That is why we have found the only way we really know what someone is doing or not doing is to pay a visit to the factory. This. of course can be costly and time-consuming.
- Factories do not answer correspondence- As more and more people are descending on Vietnam to try to find manufacturing it has become harder and harder to get Vietnamese factories to even answer an email or receive your phone call. Many of them are just too busy or they will tell you they are already full. The problem is that some large US clients have been trying to take up any manufacturing they could find in Vietnam so it has made it much harder to find any production space.
- Relationship-based country – Personal relationships in Vietnam are very important. So for many manufacturers, the relationship will be very important to them and the key to their business success. They may also have friends or family in the industry and their friends or family may also recommend business clients to them or even give them production or items to manufacture. So they may not see any need to advertise if they have business relationships in place that help them obtain the business they need.
Work with a Good Agent
Because finding sources in Vietnam is not easy, it is good if you can find a good agent to help you with the sourcing.
Here are some things to look for in finding an agent to help you:
- Specialize in your field – An agent that specializes in your field of home decor and home furnishings will generally be a lot more valuable than one that does not. The reason for this is that they should understand your business and be able to help direct you better than one that does not know anything about your business.
- Knows the good factories that are hard to find – A good agent would also know those factories which are hard to find. The ones that give a good price and have good quality but do not have a website or social media. The ones that will do the volume and quality you want.
- Has important relationships in place – A good agent would have important relationships in place. This can help you immensely in product development and other things you may need.
We have offices in Vietnam and China and we specialize in home decor and home furnishing manufacturing. If you are interested please feel free to contact Anita by clicking here.
What to Look For In a Factory
If you have spent most of your time in China working in large factories, it may surprise you when you go to Vietnam to see how small many of the factories are. Many of the factories that Vietnam considers large are just 10% the size of a major Chinese factory.
As you looking at a factory in Vietnam here are a few things to consider:
- Ability to produce what you need – As the factories in Vietnam are generally smaller this is also an opportunity as many of these smaller factories are not afraid to develop products for you and to try something new. But at the same time if you need a huge volume they may not be able to handle it as a Chinese factory could.
- Willing to develop products – Some factories no matter how big they are or how good they are may not be willing to develop any new products. There can be a lot of reasons for this but one of them is that developing products is expensive and does not always work out. At least in our industry of home decor and home furnishing products, the ability to develop new products is very important.
- Cleanliness and organization of factory – depending on the factory and what they are producing I will look at the overall factory. Some factories are very well organized and others are not. A disorganized factory does not mean it is bad, in fact, some of them are very good especially many of the smaller factories out in the villages. But you will also need to judge how. much time you have to help the factory to make sure your products are correct and you will probably need help to ensure you can get your products out in a timely manner.
- Check packing area – Always go to the product packing area. In fact, this is one of the first places I like to go, as in the product packing area you can look at the cartons and really see who the factory is selling to. If they tell you that they are shipping a particular customer but you see no cartons for that customers either the customer does not buy much from them or they use to sell to them but no longer do. You can tell a lot in the product packing area if you know exactly what to look for.
Why Many Good Factories Do Not Show At the Trade Shows in Vietnam
Many of the good factories do not show at the trade shows in Vietnam. In fact, many of the companies I know that show at the trade shows may not be factories at all but are an agent.
Here some reasons why they may not show at the trade shows:
- They are already full or have enough orders – If a factory is full or has enough orders this can be a sign that this is a good factory. They are the ones that usually have repeat customers so they do not feel they need to show at the trade shows.
- Trade shows are expensive – Trade shows everywhere are expensive. And so the factory may feel that showing at a trade show does not warrant their time and investment. Many of the Vietnamese factories are small so this can be especially hard for them. I have found that many factories that show at the trade shows may have this feeling that if you do not work out as a customer then they can just find someone else. If a factory is doing an order mainly one time and there is not much repeat business, this can be a sign that the factory has some problems as quality, price or something else. I have also seen many of the Vietnamese factories who have shown at the trade shows not come back with a lot of orders.
- The factory is too small -Many of the smaller factories in Vietnam are just too small and so they are not set up to show at any of the trade shows. They may not even have people in their factories that can speak English. Or they may be set up to sell more in Europe than in the United States so they have French or German speakers only.
Understand Not Every Supplier Will Develop Products
Though I have generally found more Vietnamese factories willing to develop products, there are still many who do not want to develop any products for anyone. We have found there are many suppliers who do not even want to try a new finish that is similar to a finish they are already doing.
Here are some of the reasons why they may only want to produce what products they already have:
- Development costs – It is expensive to develop products. No one makes money on product development, and even with the first order, there is not much money made. It is really the repeat orders where the manufacturers can make money.
- Been burned in the past – it could be they have had a lot of people come in and promise them large order if they developed or invested in this or that. And they have found that it normally does not work out and they lost a lot of money in the process. Even if you pay them double costs for the samples plus all the mold charges, there are still many developmental charges the factory must bear.
- Economies of scale – They may have their factory set up in such a way that they have an economy of scale advantage in that to keep their workers producing the same thing they have some cost advantages they will not have by constantly changing their production line
- Do not understand product development – Some Vietnamese factories may not understand product development or you are asking them to do something that is so far out of their expertise or skills that they simply can not do it or they are afraid to try.
In Vietnam Today You May Need To Work To Get Their Attention
Many people have the impression that all the Vietnamese factories even if they are small they will want to work with you. This is not always the case.
There are many reasons why Vietnamese factories may not respond to you:
- Already full – The factory may already be full and so they are not interested. Even if you offer them more money or a lot of orders they may just be full and not want to work with you.
- You have no relationship with them – Vietnam is still very much a relationship-based business. It takes time and effort to build a relationship. They may be willing to do things for people they have a relationship with but not with you as they do not yet have a relationship with you. This is why if you come in a factory and start to yell or scream at them or show them you are upset, and you are new to that factory, it can start to really hurt your relationship with them and chances are they will not be willing to do much for you. Building a relationship takes time and usually takes more than just going to a factory one time.
- They are simply not willing to do what you are asking them – The factory may not be able or not willing to do what you are asking them.
- Too expensive for what they see as the financial returns they will get back – They may feel it is too expensive and they will never be able to make back all the money they will need to spend on the miscellaneous developmental costs.
Understanding Payment Terms In Vietnam Today
Many people are under the impression that the Vietnamese factories will be willing to give payment terms very easily. But the truth is that most are not willing to do so.
Here are some of the reasons many Vietnamese factories will not give payment terms:
- Past bad experiences – many suppliers have had bad experiences in the past. Almost all have been burned with nonpayment, so now they are extremely cautious.
- They have choices they did not have before – As many of them have built up the local market or they have a few trusted customers, they may feel they have a choice that they did not have before.
- They just cannot extend credit – as I mentioned before, many factories are under a lot of price pressure. This also means that they cannot extend credit as they are under too much financial pressure.
- The risk is too high – The risk is just too high if you do not pay them it is hard for them to have any kind of legal recourse to get back payment. This means the risk for nonpayment can be extremely high.
Why Vietnam is a Great Choice To Manufacture Home Decor Products
Vietnam continues to be a great choice to manufacture home decor and home furnishing products. There are many interesting products that they produce, especially for the home decor and home furnishing industry. There are many finishes and techniques that the Vietnamese factories do that other places in the world cannot do or are not able to do it at the prices or quality that the Vietnamese can manufacture.
Vietnam is a great place to produce home decor and home furnishing products. There are so many products they are very good at and so they will continue to be a viable place for the production of these kinds of products for many more years.
Is there an Alibaba for Vietnam?
Though some Vietnamese manufacturers are listed on the Chinese Alibaba there is not a viable or large Vietnamese based website as Alibaba in Vietnam. Many of the factories will now be active on platforms like Facebook to show and explain their products and their production. One problem is that many of these same factories may write mainly in Vietnamese.
One of the best ways to find sources in Vietnam is still through relationships. This, of course, makes it difficult if you are not sure where to start or how to find a reliable supplier. That is why if you are not sure, you can contact Anita at Mondoro by clicking here. and we will see how we can help you. Mondoro specializes in the manufacturing of home decor and home furnishing products.
What are Vietnam’s Top Exports?
It may surprise many people to discover that Vietnam’s top export is now coffee. Vietnam may soon surpass Brazil as one of the top coffee exporters in the world. All of their top exports are agricultural products.
Here are Vietnam’s top exports:
- Coffee – Vietnam exports over 3.5 billion USD worth of coffee and this is expected to grow ever higher going into 2020. They will soon beat Brazil and be named the world’s largest coffee exporter.
- Cashews – Vietnam is the world’s largest exporter of cashews. They account for over 60% of all the cashew sold worldwide.
- Mangos – Recently Vietnam has gained the right to export Mangos and this is going to continue to be a major exporter. Mangos in Vietnam are extremely good and plentiful. The tropical climate is right for the growing of Mangos
- Rice – Though some of their rice exports have dropped over the years they are still a major exporter in rice just behind India and Thailand.