Sourcing Tips for Vietnam

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HANOI – As sourcing from China becomes more expensive, foreign investors are increasingly turning to its neighbor, Vietnam, to meet their production needs.

Choosing Vietnam could be an answer for some companies looking to diversify their low-cost-country (LCC) sourcing campaigns beyond China.

Below are five basic tips that should guide companies wanting to source from Vietnam:

a) Work on strengths

A company should be able to evaluate its needs and assess if those needs correspond to the strengths Vietnam already has. For example, Vietnam’s top advantage includes access to a highly-skilled yet low-cost labor pool. The country is also rich in natural resources in terms of agriculture and fisheries.

It will be easier for a company venturing into sourcing from Vietnam for the first time to look for reliable suppliers in industries that Vietnam considers its strengths. After testing the waters in the established categories, a company may decide to source from other less evident industries.

b) Be the first

Another tact to adopt is to be the first in a less established industry. A company that enters an fledgling industry as a pioneer can exploit more opportunities and cement leadership in the long run. There are several industries in the country that are slowly opening up as Vietnam evolves further. These include: electronics, construction, IT services, plastic and laminated packing industry, mechanical components and wood-based products. The returns may be slower but to excel companies entering these markets must know that they are in it for the long-term. Supplier markets and relationships cannot be made overnight and a deeper commitment is needed to really make it grow and develop.

c) Use the western sourcing process

Vietnam is becoming receptive to the Western-style procuring process that counts on structure and objectivity when doing business. Networking still plays a factor but only counts as the default process when no such process like the latter exists. Savings are found to be easier achieved when done objectively rather than one that is acquired through informal means.

d) Team-effort

A company looking to source from Vietnam must also be ready to change their organization.It must be a team effort. Although this seems obvious, most companies fail to realize that to effectively take advantages of LCC it must rid itself of the internal barriers. Teams from Product Development, Quality, Logistics, and Production must be brought onboard for the effort.

e) Hire specific buyers for your needs

If a company wants to source for the export market it will do them well to hire specific buyers for the export market as opposed to just ordering goods from their local operations in Vietnam. Sourcing for the local market will have vastly different requirements from sourcing for the export market. A buyer for the export market will have to be versed with the intricacies of a different kind of supply base as well be knowledgeable in linguistic and technical skills needed for the job.