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Big Questions About China and Vietnam

March 02, 2017

In the aftermath of the recent presidential election, the only thing for certain about manufacturing in Asia is that nobody knows anything for sure. Yes, the dollar soared and both the Chinese RMB (Yuan) and Vietnamese Dong tumbled. That’s usually good news: a strong dollar drastically lowers the cost of manufacturing in Asia. But at the same time, news headlines were churning a lot of questions about the future. Trade wars? Huge tariffs? What about the higher labor and material costs and the still slow economy in China? Should we be looking at the super-hot manufacturing environment in Vietnam?

This kind of uncertainty is nothing new to UGS. We’ve worked in Asia for three decades. We know how quickly manufacturing environments change — and how to take advantage of those changes to provide the best manufacturing solutions for our customers. We always study the pros and cons of manufacturing in different countries, and — for now — still draw the same conclusions. 

For precision and high-tech manufacturing with uncompromised quality, all key manufacturing considerations point to China. The country has an extensive manufacturing base, advanced infrastructure, and an enormous, well-trained workforce. Even with gradually rising prices, manufacturing costs are still lower in China than in the U.S.

With the recent lifting of sanctions and tariffs, Vietnam is becoming a strong manufacturing region. Its manufacturing sector is not as developed as China’s, but it’s rapidly getting stronger. The big attractions to doing business there are lower labor costs and less regulation. But there’s a trade-off. Vietnam is similar to what China was several years ago. It’s where you go to get low-cost, low-complexity molded plastics and metal components.

Right now, a strong dollar gives U.S. companies all the manufacturing advantages in Asia. But markets change. At UGS, we keep a close eye on every aspect of the Asian manufacturing environment to make sure our customers are receiving premier quality products at a competitive cost.