Vietnam is gaining share in EU sourcing due to EVFTA and “China+1 in the event of increased US tariffs on goods from China. But not many people are aware that many Vietnamese plants are funded by Chinese capital. However, few people realize that some Vietnamese plants are funded by Chinese capital, which may raise questions about the rules of origin and the risk of re-exportation. Is it worth continuing to import from China?
Why are imports from Vietnam growing?
Imports from Vietnam to the EU are growing year on year, reflecting the EVFTA tailwinds and increased interest in sourcing from outside China. The same trade agreement provides for asymmetric tariff elimination – from August 1, 2020, approximately 84% of imports from Vietnam to the EU enter the EU duty-free, and almost all remaining EU tariffs will be eliminated by 2030.
Global imports from China were on a general downward trend for quite some time. Some notable factors are slowing global demand, U.S. tariffs, and supply chain diversification efforts.
“Chinese Factories” in Vietnam and Re-Exports: What’s really going on?
To adapt to the growing trend of supply chain diversification, many Chinese manufacturers have strategically invested in overseas production facilities. However, as they still rely heavily on components sourced from China, the initial stages of production typically begin domestically before being transferred abroad. Final assembly and value-added processes are often completed in South Asia—particularly in countries like Vietnam—where favorable geographic positioning and lower labor costs offer significant advantages.
Imports from Vietnam to the EU are cheaper due to the EVFTA
EVFTA is gradually phasing out customs duties on goods from Vietnam, making imports of Vietnamese goods into the European Union cheaper. As long as the goods meet the Rules of Origin (RoO) requirement (by providing proper documentation of origin, such as EUR.1 / declaration of origin), imports can be exempted from EU tariffs.
Sourcing from China or Vietnam – which supplier should you choose?
Consider Chinese suppliers when sourcing products such as advanced electronics, precision mechanical components, or batteries. China offers significant advantages, including highly scalable manufacturing, a well-developed logistics infrastructure, broad access to components, and shorter lead times for introducing new products or technologies.
Vietnamese manufacturers, on the other hand, are a strong option for competitively priced textiles, fashion accessories, small household appliances, and electronic accessories. While Vietnam’s supply chains are still developing—which may result in longer shipping times—goods that meet the EU’s origin criteria for significant transformation can be imported without customs duties, lowering import costs by as much as 20%.
Regardless of the sourcing country, always verify your supplier before placing an order. A background check can be completed in as little as 48 hours and may help you avoid costly mistakes or unreliable partners. Save time, reduce risk, and ensure your supplier is trustworthy—start the verification process today. Verify a business partner from China and from other countries in Asia and the Middle East.