Vietnam or China? How to Choose the Right Sourcing Country for Your NZ Business

If you've been researching manufacturing options for your NZ business lately, you've probably come across the same question: should I source from China or Vietnam?

It's a fair question — and one that's become even more relevant in 2026. The NZ-Vietnam Comprehensive Strategic Partnership was upgraded in early 2025, marking the 50th anniversary of diplomatic relations. The AANZFTA (ASEAN-Australia-New Zealand Free Trade Agreement) second protocol entered force in April 2025, streamlining tariff preferences and adding e-commerce provisions. Vietnam is quickly establishing itself as the go-to option for a growing range of product categories.

But China isn't going anywhere. It still handles more than NZ$41 billion in two-way trade annually, remains the world's dominant manufacturer for most product categories, and has decades of supply chain infrastructure that Vietnam simply can't match yet. So how do you choose? Let's break it down.

The Big Picture: Where Are Things at in 2026?

China remains NZ's largest trading partner. In 2025, NZ-China imports hit NZ$30 billion, with electronics and renewables leading growth. China's factories are increasingly investing in sustainability, carbon reduction, and circular production — which matters if your brand has green credentials.

Vietnam, meanwhile, is cementing its position as the second choice for many product categories — particularly labour-intensive manufacturing like garments, furniture, and footwear. SE Asia factory audit demand is up 24% year-on-year, and Vietnam alone is up 30%. The bilateral NZ-Vietnam trade target is NZ$3 billion by 2026, up from a current ~NZ$2.68 billion.

The broader trend the industry calls 'China+1' — using Vietnam or another SE Asian country as a secondary or even primary sourcing destination — is now well and truly mainstream. For NZ businesses, that's good news because you've got real options.

What Vietnam Does Really Well

Vietnam has carved out genuine expertise in a handful of categories:

1. Furniture: Mid-to-premium solid wood and upholstered furniture from Vietnam is highly regarded globally. Quality is often superior to Chinese equivalents at a similar price point.
2. Apparel and footwear: Labour-intensive garment production is increasingly moving to Vietnam, with lower wage costs (approximately 76% lower than China) and strong technical capability in cut-and-sew products.
3. Bags and accessories: Leather goods, woven bags, and fabric accessories are a Vietnamese strength.
4. Eco and natural products: Vietnam has strong production capacity for bamboo, rattan, hemp, and other natural materials increasingly popular with eco-conscious NZ consumers.

Vietnamese factories also tend to be smaller and more nimble than large Chinese manufacturers, which can work in your favour if you want a more responsive supplier relationship.

Sourcing Hack #1: Check Your AANZFTA Tariff Benefits for Vietnamese Products
Under the AANZFTA Second Protocol (entered force April 2025), many product categories from Vietnam enter NZ at 0% duty. Before you finalise your supplier choice, check the tariff schedule for your HS code — you might find Vietnamese goods land cheaper in NZ than Chinese equivalents, even if the ex-factory price is similar.

What China Still Does Better

Let's be real: for most product categories, China is still king. Here's why:

1. Technical manufacturing complexity: Electronics, machinery, precision components, aluminium products, plastics — China's manufacturing ecosystem is unmatched in depth and technical capability.
2. Scale and capacity: Need 50,000 units of something? China can handle it. Vietnam's capacity for high-volume orders in many categories is still catching up.
3. Supplier density: On Alibaba or in trade hubs like Yiwu, you'll find thousands of suppliers for virtually any product. Vietnam's supplier ecosystem, while growing fast, is narrower.
4. Innovation and speed to market: Particularly in consumer electronics and fashion, Chinese suppliers are faster to develop new products and samples.
5. Infrastructure: Ports, logistics, and supply chain services in China are significantly more developed than Vietnam's.

For anything tech-heavy, highly engineered, or where you need massive volumes and tight lead times, China remains the better bet in 2026.

Cost Comparison: Labour, Freight, and MOQ

Labour costs are often the headline comparison, and here Vietnam wins clearly: average manufacturing wages in Vietnam are approximately 76% lower than in China. For labour-intensive products where worker hours are a big chunk of your unit cost, that's a meaningful difference.

But freight matters too — and both countries have similar shipping lanes to NZ, so freight doesn't dramatically favour either origin. Minimum Order Quantities (MOQs) tend to be lower in Vietnam for many categories, which can work in favour of smaller NZ businesses testing a new product.

One key cost Vietnam can't always beat China on: raw materials. China's domestic supply of raw materials, components, and packaging is vast and cheap. Vietnam often imports these inputs from China, which can partially offset the labour savings.

Which Products Should You Source From Where?

Source from Vietnam: Solid wood and upholstered furniture, cut-and-sew apparel, activewear and footwear, leather goods and fabric accessories, bamboo and rattan products, candles and wax products.

Source from China: Electronics and electrical products, metal and engineered components, plastic products and packaging, high-volume consumer goods (homewares, kitchenware, toys), anything requiring complex tooling or moulds.

Could work well from either: Custom packaging, promotional products and corporate gifts, some apparel categories depending on style and complexity.

Sourcing Hack #2: Don't Rule Out a Split Strategy — China for Tech, Vietnam for Soft Goods
If your product range spans multiple categories, consider sourcing from both countries. Many NZ importers use China for tech components or packaging and Vietnam for soft goods or furniture. This 'China+1' approach also reduces geopolitical risk exposure.

The China+1 Strategy: Why Many Kiwi Businesses Are Going Both

The 'China+1' concept is simple: don't put all your sourcing eggs in one basket. The COVID-19 supply chain disruptions taught importers globally a painful lesson about concentration risk.

For NZ businesses, a China+1 strategy typically looks like this: maintain your existing China supplier relationships for core product lines, develop a Vietnam supplier for 1–2 categories where Vietnamese capability is strong, and test Vietnam MOQs with a smaller order before committing to volume.

In 2026, with trade dynamics still evolving — US tariffs, China's geopolitical positioning, Vietnam's growing infrastructure — having supplier relationships in both countries puts you in a much stronger position.

Looking to explore your options across China and Vietnam? Epic Sourcing NZ works with suppliers in both countries and can help you identify the best manufacturing source for your specific product. Get in touch for a free consultation at epicsourcing.co.nz.