Vietnam sourcing, quick answers
- Why do Australian buyers source from Vietnam?
- Vietnam is used mainly as a diversification origin and for labour-intensive assembly, fabrication, furniture, textiles and moulded goods. Buyers move work there to reduce concentration in a single country and to access competitive labour rates, accepting a shallower tier-two supply base than China.
- What is Vietnam weaker at compared with China?
- The sub-supplier base is thinner. Specialist finishing, precision tooling, unusual raw materials and secondary processes often have to be imported from China or elsewhere, which can add a leg to the schedule. Tooling in particular is frequently made offshore and shipped in.
- Does Vietnam have a free trade agreement with Australia?
- Australia and Vietnam are both parties to regional agreements including the ASEAN, Australia, New Zealand Free Trade Area, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. Preferential rates may apply where the origin rules for the tariff classification are met and the documentation is correct.
- How do you manage quality risk in Vietnam?
- The same way as everywhere else, and with more inspection early on. Supplier audits before placement, first-article approval against the drawing, in-line checks during the first runs, supplier non-disclosure agreements, and a master service agreement with quality checkpoints written in. Critical parts can be inspected in Australia before release.
/ Sourcing / Vietnam
Sourcing from Vietnam
Vietnam is the diversification play. It is genuinely competitive on labour-intensive work and it shortens the sea leg to Australia, but the supporting supply base is shallower than China's, so the programs that succeed there are the ones designed for it from the start.
/ What Vietnam is strong in
Fabrication and assembly.
Welded frames, weldments, enclosures, brackets and hand-assembled products are a natural fit. Where a part carries a lot of labour content and moderate tolerance demands, Vietnam competes hard. See sheet metal fabrication sourcing.
Moulded and finished goods.
Injection moulded parts, packaging, furniture, textiles and consumer goods are all well served. Tooling is often sourced from outside Vietnam and shipped in, so the tooling plan and the production plan need to be treated as two separate schedules. See injection moulding sourcing.
Where it is thinner.
Specialist heat treatment, plating and finishing, unusual alloys, precision tooling and deep multi-axis machining capacity are less concentrated than in China. That is not a reason to avoid Vietnam, it is a reason to check the full process route before committing, including where each secondary operation actually happens.
/ Freight
A shorter sea leg.
Cargo generally moves out of Ho Chi Minh City and Cai Mep in the south or Haiphong in the north, frequently transhipping through Singapore or a southern Chinese hub before running down to Sydney, Melbourne, Brisbane or Fremantle.
Direct services are less frequent than the main China trades, so transhipment is common and schedule reliability, rather than headline transit time, is what we plan around.
We do not publish port to port transit times here, because they change with the service booked and with transhipment. We confirm the schedule for your shipment and build it into your delivery plan.
/ Duty and agreements
Tariff position and origin rules.
Australia and Vietnam are both parties to the ASEAN, Australia, New Zealand Free Trade Area, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. Where more than one agreement covers the goods, the one that produces the better outcome for that tariff classification can be claimed, provided the origin rules and documentation stack up.
Origin is the point to watch on Vietnamese sourcing. Where significant inputs or sub-assemblies come from a third country, the goods may not satisfy the origin rule even though final assembly happened in Vietnam. We look at the bill of materials, not just the shipping documents.
For the full cost picture, read the true landed cost of importing machined parts into Australia.
/ Quality norms
Expect to inspect more, early.
Vietnamese export factories serving western customers commonly hold ISO 9001, and the larger plants working for international brands run tight systems because their customers audit them. Below that tier the variation is wide, and the quality system is often newer than the equivalent Chinese supplier's.
Our approach is unchanged but front-loaded: audit before placement, first-article approval against the drawing, in-line checks through the first production runs, coordinate measuring machine reporting on critical dimensions, supplier non-disclosure agreements and a master service agreement with quality checkpoints written in. Where a part is critical, final inspection happens in Australia before release, and McIver Engineering in Sydney can take on finishing or rework onshore. See overseas manufacturing.
/ On the ground
What we have personally audited.
We publish audit claims only where we have done the visit ourselves. Our current published audit photography is from China, on the about page.
Our published audit photography is from China, so we make no site visit claim for Vietnam here. On a Vietnamese program we apply the same controls we use elsewhere: first article approval, dimensional reporting and inspection matched to how critical the part is.
/ Further reading
On splitting a program across origins, read offshore vs onshore manufacturing, when a hybrid program wins. Other origins: China, Malaysia and India.
Looking at Vietnam?
Tell us the part and the volume. We will map the full process route before anyone quotes.