China Plus One: Why NZ Importers Are Looking at Vietnam Right Now

If you've been keeping an eye on the global sourcing world lately, you'll have noticed one phrase coming up again and again: 'China Plus One.' It's the strategy where businesses don't ditch China entirely — because honestly, that'd be madness — but they add a second sourcing country into the mix as a backup, a diversifier, and increasingly, a serious alternative for certain product categories.

And right now, for New Zealand importers, Vietnam is the name on everyone's lips.

NZ-Vietnam bilateral trade is targeting NZ$3 billion by 2026. Vietnam's furniture exports hit US$15.5 billion in the first eleven months of 2025 alone (up 5.4% year-on-year). The textile and garment sector is projected to reach nearly US$48 billion in exports by end of 2026. These are not small numbers — Vietnam is serious manufacturing territory. So, let's explore what this means for your sourcing strategy.

Why "China Plus One" and Why Now?

Look, China is still the world's manufacturing powerhouse. For most Kiwi businesses importing everything from bamboo sunglasses to hotel furniture to gym equipment, China remains the default and often the best option. But a few forces are pushing smart importers to diversify:

1. US-China tariffs at ~30%: While NZ's own tariffs on Chinese goods haven't changed, the global ripple effect of US-China trade tensions is real. Supply chains that relied on the US market are being restructured, and factories are shifting capacity.
2. Geopolitical risk: Having 100% of your sourcing in one country is a risk management issue. One factory disruption, one port closure, one political shift — and your supply chain is toast.
3. Category-specific advantages: For certain products — especially furniture, garments, and sustainable goods — Vietnam genuinely competes with (and sometimes beats) China on quality and price.
4. Sustainability credentials: Vietnamese factories are investing heavily in sustainability certifications like OEKO-TEX and GRS. If your customers care about ethical sourcing (and increasingly they do), Vietnam's story is a good one.

Sourcing Hack #1: Map Your Products to Countries — Don't think of it as 'move everything to Vietnam.' Instead, categorise your product range. Apparel, footwear, furniture, ceramics, and rattan goods? Vietnam is worth a serious look. Electronics, precision machinery, packaging, and complex components? China likely still wins. A 'China Plus One' strategy is about being strategic, not reactive.

What Is Vietnam Actually Good At Manufacturing?

Vietnam has evolved from a low-cost, low-quality manufacturer to a genuine ODM (Original Design Manufacturer) powerhouse in several key categories. Here's where it genuinely shines:

• Furniture & homewares: Vietnam is now one of the world's top furniture exporters. Natural materials like rattan, bamboo, and timber are a particular strength. The EU-Vietnam FTA means 0% tariffs to Europe, which has driven massive factory investment and quality upgrades — good news for NZ buyers too.
• Apparel & textiles: Garment manufacturing is Vietnam's largest export sector. From women's activewear to school uniforms to hotel linen, Vietnamese factories offer strong quality at competitive prices.
• Ceramics & tableware: Particularly in the central regions, Vietnam produces beautiful ceramic tableware and homewares that are finding fans in the NZ hospitality and retail sectors.
• Bags, shoes & accessories: Vietnam is a top-5 global footwear exporter. Leather goods, canvas bags, and accessories are a strong suit.
• Sustainable & natural products: Bamboo products, natural fibre homewares, organic cotton garments — Vietnam's manufacturing aligns well with the sustainability trend that's increasingly important to NZ consumers.

How Do Vietnam's Costs Compare to China?

Here's where it gets nuanced — because Vietnam isn't simply 'cheaper than China.' It's more complicated than that.

Vietnamese labour costs are generally lower than China (where wages have risen significantly over the past decade). However, Vietnamese production costs are still 40–45% higher than Bangladesh or Indonesia for basic garment manufacturing. And labour costs in Vietnam are themselves rising at around 10% per year as the economy develops.

For furniture and mid-complexity goods, Vietnam often hits a sweet spot: lower cost than Chinese factories in coastal manufacturing hubs, combined with strong quality and good communication. For highly complex, precision-manufactured goods (think electronics, intricate metal components), China's infrastructure and supply chain depth still wins.

The honest summary: Vietnam is cost-competitive for its key categories, but it's not a universal 'cheap option.' Evaluate product by product.

Sourcing Hack #2: Request Dual Quotes as Standard Practice — For any new product line, make it your process to request quotes from both Chinese and Vietnamese factories before making a decision. Your sourcing partner can facilitate this easily. You'll sometimes be surprised — and it gives you negotiating leverage even if you end up going with China. Knowledge is power in this game.

The Challenges of Sourcing from Vietnam

1. Smaller factory scale: Vietnamese factories are generally smaller than their Chinese counterparts. This means lower maximum production capacity and potentially longer lead times for large orders.
2. Less developed supply chains: China's manufacturing ecosystem is extraordinary — you can source virtually every component domestically. Vietnam often still imports raw materials and components from China, which adds complexity and sometimes cost.
3. Language barriers: While English proficiency is improving rapidly in Vietnam's manufacturing sector, Chinese factories have more experience communicating with international buyers. Working with a local agent or sourcing partner is strongly recommended.
4. Quality variation: As with any emerging manufacturing hub, quality varies significantly between factories. Without proper factory vetting and QC processes, you're taking a risk.
5. Logistics infrastructure: Vietnam's port and logistics infrastructure is improving fast, but it's not at China's level yet. Factor in potentially less frequent shipping services to NZ.

How NZ Importers Are Approaching Vietnam in Practice

• They start with one product category — usually furniture or apparel — rather than trying to shift everything at once.
• They visit Vietnamese factories in person (or have a trusted agent do so) before placing significant orders.
• They maintain their existing Chinese supplier relationships as a backup while they test and scale Vietnam production.
• They leverage the NZ-ASEAN trade relationship (NZ is party to RCEP, which includes Vietnam) to check duty implications.
• They work with sourcing partners who have boots on the ground in both China AND Vietnam.

As a side note — one of our active clients, a Kiwi furniture brand, is literally visiting Vietnamese factories this month as part of their 'China Plus One' strategy. It's not theoretical — it's happening right now.

So, Should You Add Vietnam to Your Sourcing Mix?

If you're importing furniture, homewares, garments, natural-material products, or ceramics — then yes, it's absolutely worth exploring Vietnam as a second source. The quality is there, the trajectory is upward, and the sustainability story resonates with NZ consumers.

If you're importing electronics, complex machinery, or products requiring highly specialised manufacturing — China is still your best bet for now.

The key is doing it properly: vetting factories, understanding the logistics, and having experienced people on the ground to guide you.

Keen to explore Vietnam sourcing for your business? Epic Sourcing has team members and supplier relationships in both China and Vietnam. Book a free consultation and let's map out what a 'China Plus One' strategy could look like for your specific product range.