The Rise of Manufacturing in Vietnam vs China: A Realistic Comparison

The global energy transition is creating massive demand for Chinese solar, battery, and EV components. China controls over 80% of solar manufacturing and 70% of battery production. Importers in these sectors face both opportunity and risk: competitive pricing but increasing regulatory scrutiny. Building relationships with compliant, certified Chinese manufacturers is essential for long-term supply security.

The EU's Digital Product Passport requirement is coming into effect for several product categories starting 2026. It requires manufacturers to provide detailed product lifecycle data: raw material sources, manufacturing processes, repair instructions, and end-of-life disposal. Chinese factories exporting to Europe need to implement systems to capture and share this data. Early compliance is a competitive advantage.

Supply chain diversification is no longer optional for most importers. The pandemic, trade tensions, and shipping disruptions have made single-country sourcing a significant risk. The practical approach is not to move everything from China but to develop parallel sources in Southeast Asia or Mexico for critical items. Keep China for high-volume, cost-sensitive production. Use alternative sources for geopolitical risk coverage.

China's manufacturing wage growth has slowed significantly. Average manufacturing wages rose about 3% annually in 2024-2026 compared to 8-10% a decade ago. Combined with automation investments, China remains cost-competitive for most manufactured goods. The gap with Southeast Asia is narrowing for labor-intensive products but China maintains advantages in infrastructure, supply chain density, and skilled technical workers.