Choosing the right manufacturing partner can make all the difference in getting your product to market quickly. But OEM manufacturing in China or Vietnam can be complex. This guide will help you navigate the process with confidence.
China and Vietnam are prominent manufacturing hubs, each offering distinct advantages to businesses looking to manufacture new products, whether they consist of simple components or highly complex parts. Both countries have established themselves as reliable partners in global supply chains, but the choice between them often depends on specific business needs and priorities.
China remains the world leader in manufacturing, with advanced infrastructure and a vast network of suppliers. However, rising labour and overhead costs, including rent and electricity, have prompted many businesses to explore alternatives. Vietnam, with its proximity to China, has emerged as an attractive option.
While Vietnam's manufacturing infrastructure is less developed than China's, its location provides easy access to raw materials and inputs from its larger neighbour. This is why northern provinces like Quang Ninh, Lang Son, and Hai Duong have become factory hubs, strategically positioned near southern China's major manufacturing centres. This proximity allows Vietnamese factories to efficiently source materials and components from China, reducing production costs and ensuring a steady supply of manufacturing inputs. In fact, to capitalise on its proximity with China, Vietnam is planning to build a $7.3 billion rail route linking Lao Cai and Quang Ninh which share a border with China. Additionally, shipping times to the US and Europe are comparable from both countries, making Vietnam a viable alternative for many industries.
In today’s competitive business landscape, selecting the right manufacturing partner can make all the difference in how quickly you get your product to market. But OEM or ODM manufacturing in either country can be complex and overwhelming, even for experienced professionals. With numerous decisions to make, it's crucial to evaluate potential partners carefully. This guide is designed to help you navigate the process with confidence.
The decision to source from China or Vietnam depends on several key factors, including product type, target market, minimum order quantities (MOQs), lead times, and cost considerations.
China's vast supplier network and deep industry expertise make it ideal for sourcing highly technical products, complex components, and large-scale manufacturing. It also accommodates lower volumes, as many manufacturers offer flexibility with minimum order quantities (MOQs), allowing for smaller production runs. Additionally, China's advanced infrastructure and logistics ensure efficient international shipping and fast bulk order delivery.
For businesses looking to streamline production, China's mature contract manufacturing ecosystem allows companies to outsource the entire manufacturing process – from product design to final assembly – enabling them to get their product to market faster.
Vietnam, which has emerged as a strong alternative to China for manufacturing, in recent years is also well known for industries such as electronics, furniture, footwear, and wood products. Known for its cost-effective labour, it offers lower production costs and a growing focus on sustainability and ethical manufacturing. Its proximity to China also provides logistical advantages, making it a strong option for businesses seeking to balance the strengths of both countries. Vietnam may be a better bet for businesses aiming to reduce supply chain risks or diversify sourcing. For example, if you export to the US and existing and new tariffs on China under the Donald Trump administration are a concern.
Ultimately, the decision between China and Vietnam for your manufacturing needs should align with your production requirements, quality standards, budget, and long-term goals.
Preparation is key to finding the right manufacturer, ensuring smooth communication and saving time. To start with, prepare a technical pack, where you include all the technical details about your product such as minimum order quantity (MOQ), quantity per SKU (if applicable), order frequency, factory requirements and certifications, material specifications and certifications (like eco-friendly or safety standards), packaging requirements including design and labelling, and any compliance requirements for your target market. You should also prepare physical or digital samples to clearly illustrate your product and be ready to discuss any unique features or adjustments that may be necessary.
Start by using reputable platforms like Alibaba (see our guide on buying from Alibaba) or industry-specific directories to shortlist potential manufacturers. Attending trade fairs can also help expand your options. The Canton Fair held twice a year in Guangzhou (April and October/November), is one of the largest sourcing events in the world, while Vietnam Expo, Vietnam’s longest-running trade promotion event, takes place in April in Hanoi. The Vietnam Industrial and Manufacturing Fair or VIMF, another valuable option, takes place in June in Thủ Dầu Một.
At this stage, aim to create a longlist of potential suppliers in Vietnam or China.
Do remember that finding manufacturers in China is relatively easy due to platforms like Alibaba, but sourcing in Vietnam can be more challenging since there isn’t a comparable centralised directory. In such cases, visiting the country yourself or working with an experienced sourcing agent in Vietnam is often the best way to find a reliable manufacturer.
To find the right supplier in China or Vietnam, you’ll need to vet them by reviewing their certifications, customer feedback, and references from previous clients. Here’s a checklist of key factors to consider.
Conduct a thorough background check to ensure the supplier’s legitimacy. Request key details such as: the number of employees, major product lines, and which processes are subcontracted. Ask for sales figures in both domestic and export markets and inquire about their experience exporting to your target market (e.g., the US or Europe). Ensure they are familiar with safety and compliance regulations for your product. Consider their geographic location in relation to ports and raw material suppliers to minimise logistics costs, as well as their production capacity and technology. A reliable supplier will provide clear, specific answers; hesitation or vague responses may indicate unreliability.
Suppliers familiar with exporting to the USA or Europe will understand your compliance requirements and offer relevant documentation to support your due diligence. Always verify the authenticity of these documents, as fake or outdated certificates are not uncommon.
Note: The Chinese or Vietnamese supplier should provide at least their business license and a valid ISO certificate. Review these for accuracy and ensure their scope matches the product you plan to manufacture or import.
Before shortlisting a supplier, confirm whether they are a manufacturer or a trading company. A trading company acts as a middleman between the factory and you. Such middlemen often add costs, lack control over customisation, and prioritise their profits over your needs. While middlemen can be helpful in specific cases, such as testing niche products, partnering directly with a manufacturer is generally more cost-efficient and provides greater control. Here’s how you can spot a middleman:
Cultural and language differences can lead to misunderstandings when working with manufacturers. To minimise these risks while communicating with them:
If direct communication proves challenging, hiring a sourcing agent can simplify the process. A skilled agent – fluent in Mandarin/Vietnamese and familiar with local business etiquette – can bridge cultural gaps, facilitate negotiations, and ensure your requirements are accurately conveyed. This not only streamlines the supplier relationship but also helps prevent costly misunderstandings in production and quality control.
Read more: How to choose the right sourcing agent
Yes. Factories can vary significantly in terms of capacity and capability in both China and Vietnam, so conducting thorough audits and site visits is crucial to ensure that the factory can meet your quality and production standards. Therefore, before committing to a supplier you must verify their infrastructure, production processes, and workforce conditions. A site visit is an excellent way to do this. If traveling isn’t feasible, request a virtual tour or photos and videos of their operations to get a sense of their infrastructure and capabilities. Alternatively, hire a third-party inspection service to conduct an audit on your behalf for an unbiased assessment of the factory's operations, quality control practices, and workforce conditions.
Once you have shortlisted suitable manufacturers for your product, the next step is to request a detailed quotation that includes a comprehensive breakdown of costs, including raw materials, labour, production, shipping, payment terms (such as deposits, balance, payment methods, and due dates), lead times (estimated production and delivery times), and any factors that may cause delays. Check for discounts on bulk orders or long-term partnerships and ask about sample costs and shipping if not already provided. Ensure the quotation includes minimum order quantities (MOQs) and costs for customisation (such as design, moulds, post-production finishing and so on). Finally, ask if the quotation includes costs for certifications or compliance with your market’s regulations.
Securing a good price requires thorough research and careful negotiation. To achieve the best quality-to-price ratio:
Remember, it’s not uncommon for suppliers in China to raise prices once production begins. Price changes can occur due to factors like increased raw material costs or national events that impact production. To avoid significant price fluctuations, ask your supplier to specify the validity of the quoted price. This validity period may range from as short as 90 days to over a year for large orders. To safeguard against unexpected price hikes, it’s a good idea to negotiate a price validity of at least 180 days.
A written contract should generally include the following and preferably be bilingual: the parties involved, such as the legal Chinese or Vietnamese name of the supplier; terms on samples, price, quality management, and logistics; a definition of product quality, quality satisfaction, and timely delivery; payment terms (it is advisable not to make full payment upfront); and delivery terms such as incoterms; liability for breaching the contract; quality assurances; intellectual property rights (if your product is unique); jurisdiction and choice of law; a dispute resolution/arbitration clause; termination provisions; and details of non-disclosure, non-use, and non-circumvention.
Before committing to full-scale production, place a small test order or sample run to assess the supplier’s reliability, product quality, and delivery efficiency. Providing a sample or prototype can significantly improve the chances of receiving the product exactly as you envision. However, the decision to provide one isn’t always straightforward.
If possible, send a sample or prototype only to your top 1 to 3 shortlisted suppliers, rather than to everyone you’ve requested quotes from. This approach ensures you’re working with suppliers who are best suited to meet your needs. Creating a prototype can involve a lot of back-and-forth communication until the product meets your specifications. It’s often more efficient to have the prototype made locally (outside of China or Vietnam) before sending it to your supplier for mass production. Once they have the prototype, they can replicate it more accurately using your provided specifications. Overall, providing a sample or prototype increases the likelihood that the final product will meet your quality standards and specifications.
Provide detailed feedback, including photos or videos of the defects. Request a re-sample and reemphasise your specifications and strict quality control measures. If issues persist, consider engaging a third-party quality inspection service or reevaluate your choice of manufacturer.
Working with a sourcing agent in China or Vietnam provides significant advantages, especially for businesses navigating manufacturing and supply chain complexities for the first time or transitioning to new markets.
A reliable sourcing agent brings invaluable local expertise and connections, saving time and reducing risks while ensuring your products are manufactured in a cost-effective way. They have established networks of trustworthy manufacturers and suppliers, and can quickly identify suitable manufacturers for you and also facilitate smooth negotiations because of their understanding of local business practices, cultural nuances, and language. Acting as your on-the-ground representative, they can oversee quality assurance through factory audits, inspections, and compliance checks, ensuring products meet your standards.
Sourcing agents help you negotiate better prices and avoid hidden costs from inflated fees, substandard materials, or delays. They optimise supply chains by coordinating procurement, logistics, and shipment while assisting with customs documentation and recommending reliable freight forwarders.
Additionally, they mitigate risks by avoiding common pitfalls such as scams, untrustworthy manufacturers, or intellectual property theft and ensure proper contracts to protect your interests. For niche products, they assist with specialised manufacturing, product development, prototyping, and customisation. Whether facing language barriers, regulatory changes, or supply chain disruptions, sourcing agents offer tailored solutions to effectively navigate challenges.
Read more: We are experienced China and Vietnam sourcing agents, click on this link to find out what we can do for you: Sourcing Allies: Our Process
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