Chinese President Xi Jinping’s ongoing tour of Vietnam, Malaysia, and Cambodia has drawn U.S. ire as he promotes free trade in a region facing some of the stiffest American tariffs.
During Xi’s stop in Vietnam, the two countries signed agreements on supply chains and a joint railway. U.S. President Donald Trump said Xi’s meeting with his Vietnamese counterpart was aimed at figuring out “how do we screw the United States of America.”
Earlier this month, when Trump unveiled “reciprocal tariffs” for many countries, he slapped a 46% levy on imports from Vietnam. This could prove disastrous for Vietnam, home to factories of global giants like Samsung and Intel and electronics suppliers of companies including Apple.
The U.S. has since announced a 90-day negotiation window before the tariffs come into effect. Vietnamese authorities began negotiating a bilateral trade deal with the U.S. last week.
Rest of World has been covering Vietnam’s evolution as a tech manufacturing hub for years. Here’s how Vietnam’s role in the global tech manufacturing ecosystem has evolved, how it has weathered past storms, and where it stands now:
How did Vietnam become a tech manufacturing hub?
Vietnam’s transformation into a global tech manufacturing hub started in 2008 when Samsung broke ground for its first smartphone factory.
In 2018, when Trump launched a trade war against China, Vietnam got a major opportunity to position itself as a politically safer region with plenty of affordable labor. Since then, Vietnam has emerged as a breakout star of the “China-plus-one” strategy, attracting billions of dollars in investment.
Samsung smartphones are made in Vietnam. Apple has moved production of iPads, MacBooks, AirPods, and Apple Watches to the country, while other big names like Foxconn, Nintendo, Lenovo, Luxshare, Goertek, and Pegatron have opened new factories.
The Bac Ninh province near Hanoi — which houses Samsung’s factory — and the neighboring Bac Giang province have become magnets for electronics manufacturers looking to reduce their dependence on China. The influx of Chinese tech manufacturers has led to the rise of a new “Chinatown” in Bac Ninh, creating business opportunities for restaurateurs, real estate brokers, logistics operators, and convenience stores.
Many Vietnamese residents, excited by new and diverse job opportunities, are learning Mandarin.
How has the industry evolved in recent years?
By mid-2023, a global demand slump hit Vietnam’s assembly lines hard, leading to major job cuts. More than 45,000 workers lost jobs in the first five months of 2023, revealing how fragile the hyperconnected tech supply chains are.
With factory jobs drying up, some women workers pivoted to Vietnam’s beauty industry, trading long shifts and rigid factory schedules for more flexibility.
As the industry recovered, manufacturers faced a new challenge: winning back workers they had previously laid off. Apple suppliers expanded their production deeper into Vietnam, intensifying competition for workers. Factories raised wages and offered fresh recruits record-high bonuses, free housing, and gift packages. HR staff from some factories filmed TikTok skits to lure workers back to factory floors.
How Vietnam’s manufacturing industry survived its last crisis
As Covid-19 threatened the tech supply chain in 2021, Vietnam came under pressure to prove to foreign investors that it could keep production going.
The government imposed a strict “three-on-site” policy in manufacturing provinces, requiring workers to work, eat, and sleep in one place. Samsung workers slept in abandoned classrooms with no beds and on factory premises. Intel spent millions of dollars to house its workers in hotels.
Vietnam managed to contain factory outbreaks by the end of 2021 and production returned to normal.
In 2022, China imposed even stricter zero-Covid measures, which forced more manufacturers to move to Vietnam. Lower costs, multiple free trade deals, and a friendly government made Vietnam a flashy destination for tech giants moving production out of China.
How would Trump’s tariffs impact Vietnam?
Being a beneficiary of the U.S.-China tensions comes with a price.
The tariff pause announced by the U.S. government offers only temporary relief and Vietnam still has plenty to worry about, Hanh Nguyen, a doctoral researcher at the Australian National University, focusing on Southeast Asia’s economy and security, told Rest of World earlier this month.
“The reciprocal tariff on China still complicates the issue for Vietnam as China is Vietnam’s leading trade partner and provides parts and components for Vietnam’s manufacturing sector,” Hanh said.