The transformation of Vietnam’s Bac Ninh is obvious within the indicators above its retailers and the spicy Chinese language and Korean dishes on its tables.
As soon as identified for its rice fields and the love duets of its centuries-old Quan Ho people songs, town simply north of Hanoi has turn out to be certainly one of Vietnam’s busiest manufacturing unit zones, reflecting a surge of funding, hastened by President Donald Trump’s tariff hikes, which can be reshaping the area.
The financial system has profited from friction between Washington and Beijing as factories shifted out of China, becoming a member of earlier waves of international funding by the Japanese and South Koreans which have made Vietnam a world manufacturing hub. However rising labor prices, employee shortages and insufficient infrastructure are exposing the bounds to its fast rise.
With rivals like Indonesia and the Philippines competing arduous for brand new tasks, Vietnam is attempting to climb into higher-value manufacturing and broaden export markets to keep up that momentum. That effort is obvious in Bac Ninh.
Vietnam is constructing extra capability
Historically a middle for artisans, Bac Ninh’s first increase started round 2008 when Samsung constructed its first telephone manufacturing unit there, turning Vietnam into its largest offshore manufacturing base.
Now, Chinese language firms are pouring in as they diversify their manufacturing unit areas to skirt U.S. tariffs and different commerce restrictions. After Hanoi and Beijing normalized ties within the Nineties, inflows of Chinese language funding started to choose up as Chinese language corporations in locations like Bac Ninh tapped Vietnam’s electronics provide chain, labor power and supportive native governments, usually aided by Chinese language-speaking intermediaries who clean paperwork and logistics.
However Vietnam is simply too small to interchange China, whose financial system is 40 instances bigger, because the world’s manufacturing unit flooring. To attempt to sustain, its leaders are constructing new infrastructure, together with a freeway to the Chinese language border that has lower journey time by greater than an hour. A railway will join Hanoi to Haiphong — Vietnam’s largest seaport — after which the border city of Lao Cai.
On Dec. 19, Bac Ninh broke floor on the growth of an industrial zone for high-tech manufacturing, together with electronics, prescribed drugs and clear power. It is a part of a synchronized nationwide push by which Vietnam launched 234 main tasks value greater than $129 billion simply weeks earlier than a pivotal Nationwide Get together Congress in January, when leaders will resolve the nation’s political management and financial course.
The China issue collides with actuality
In Bac Ninh’s downtown, a comfort retailer bears the title Tmall, after Alibaba’s flagship on-line market. Indicators in Chinese language promote providers for traders. Chinese language–Vietnamese language faculties have opened to assist locals and Chinese language to study every others’ languages.
However as Chinese language firms compete for the very best labor and different assets, prices are rising for the “China plus one” technique of transferring factories out of China to different areas, for instance, Apple’s shift into India.
“It’s changing into troublesome to recruit staff,” mentioned Peng, who works at a telecoms tools firm that moved from China’s southern expertise hub of Shenzhen. He gave just one title as a result of he was not licensed to talk to the media.
Labor prices have jumped 10%–15% since 2024, he mentioned, “And we anticipate them to maintain rising.”
Vietnam nonetheless want expertise, tools and experience from China, which had created “the very best manufacturing ecosystem,” mentioned Jacob Rothman, co-founder and CEO of China-based Velong Enterprises, which makes grill instruments and kitchen devices and has shifted some manufacturing to Southeast Asian nations together with Cambodia and Vietnam.
Provide chains and producers in China have benefited from a long time of presidency assist, large-scale funding and its enormous inhabitants, Rothman mentioned. “You possibly can’t recreate that in a single day.”
Brian Bourke, world chief industrial officer at U.S.-based SEKO Logistics, mentioned whereas factories making footwear, furnishings and expertise are nonetheless relocating to Vietnam, it lags China in infrastructure and logistics capabilities.
A few of these limits are surfacing in boomtowns like Bac Ninh, the place corporations try to lure staff with larger wages and bonuses, a field of on the spot noodles on their first day and bus fares in the event that they commute from one other metropolis, in accordance with state media.
Vietnam faces competitors from its neighbors
Few nations have benefitted extra from Trump’s commerce battle than Vietnam, whose greatest export market continues to be the U.S. In 2024, Vietnam ran a $123.5 billion surplus with the U.S., the third largest behind China and Mexico. That irked Trump, who threatened a 46% import tax on Vietnamese items earlier than selecting 20%.
The 2 nations are nonetheless working towards a deal to maintain most tariffs at 20%. Vietnam has provided broad preferential entry for U.S. merchandise, the White Home mentioned in October. To this point, it has largely absorbed the tariffs, operating a commerce surplus of $121.6 billion in January-November 2025.
The settlement in October by Trump and Chinese language chief Xi Jinping to a year-long commerce truce and decrease common tariffs on Chinese language exports to the U.S. to about 47% helped ease some issues. However persisting uncertainty over tariffs and different commerce restrictions means firms aren’t simply attempting to shift factories out of China however to unfold them throughout a number of nations, mentioned Frederic Neumann, chief Asia economist at HSBC.
Even with decrease U.S. tariffs on China, the calculus nonetheless favors transferring to Southeast Asia the place manufacturing inefficiencies add solely about 10% in value. However whereas massive firms can shift manufacturing simply, smaller corporations could battle to suit a brand new manufacturing unit with costly tools.
“(The) race to maneuver outdoors of China continues to be taking place, and it is accelerating,” Rothman mentioned.
Vietnam continues to be attracting ample international funding. Cumulative international funding topped $28.5 billion as of September, up 15% from final yr. However scrutiny of Vietnam’s function as a hub for tariff-dodging transshipments has some producers hedging their bets.
One in every of SEKO Logistics’ clients has shifted a few of its furnishings making to India, not eager to “put all their eggs in Vietnam,” Bourke mentioned.
International locations like Indonesia and the Philippines, which missed the early beneficial properties Vietnam captured, are selling themselves as various manufacturing bases. Within the Philippines, a brand new regulation permits international traders to lease non-public land for as much as 99 years to draw long-term industrial and industrial funding.
Vietnam as a ‘tiger financial system’
Vietnam has a aim of changing into wealthy by 2045. It goals to turn out to be Asia’s subsequent “tiger financial system,” following export powerhouses like South Korea and Taiwan by shifting from low-cost meeting work to fabricate higher-value merchandise like electronics and clear power tools.
It is providing incentives like tax breaks on imported equipment and discounted rents to assist manufacturing unit suppliers improve and modernize. A few third nonetheless use non-automated tools and solely about 10% use robots on their manufacturing traces.
The nation is also attempting to cut back its dependence on the U.S. market by increasing exports to the Center East, Latin America, Africa and India. Abroad commerce workplaces have been requested to share market intelligence and promote merchandise made in Vietnam.
Vietnam is aware of that rising prices and more durable competitors will check how far it — and locations like Bac Ninh — can climb. Asserting tons of of tasks in December, Prime Minister Pham Minh Chinh framed the stakes: Vietnam should “attain far into the ocean, delve deep underground and soar excessive into area.”
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Chan reported from Hong Kong. Related Press researcher Yu Bing in Beijing contributed.
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