Global supply chains are undergoing significant restructuring, opening up opportunities for Vietnamese businesses to participate more deeply in international production networks.

Global supply chains are shifting.

Global supply chains are entering their most extensive restructuring phase in years. Geopolitical shifts, technological competition, escalating logistics costs, and pressure to ensure energy security are forcing multinational corporations to change their production strategies, reallocate supply chains, and reduce their dependence on a single market.

In this context, Viet Nam has emerged as an important destination for the wave of manufacturing relocation. However, along with the opportunities come increasing pressure regarding technology, green standards, traceability, and the genuine participation of domestic businesses in global value chains.

At the seminar "Trends and Solutions to Support Businesses Participating in Global Production and Supply Chains" organized by the Center for Trade Promotion and Investment Support under the Trade Promotion Department on the afternoon of May 26th in Hanoi, Mr. Le Hoang Tai - Deputy Director of the Trade Promotion Department ( Ministry of Industry and Trade ) stated that the global economic and geopolitical landscape continues to undergo significant changes, leading to a wave of supply chain restructuring occurring at a faster pace.

According to Mr. Le Hoang Tai, multinational corporations are accelerating their supply chain diversification strategies to mitigate systemic risks through various new production relocation models such as China+1, relocating production closer to consumer markets, or shifting value chains to countries with similar policies.

“In this historic wave of economic relocation, Viet Nam stands out as a bright spot thanks to its macroeconomic stability and extensive economic network, with 17 free trade agreements already signed and implemented. We are facing a great opportunity to transform ourselves from a mere processing link into a crucial production and supply center with high added value in the global network,” Mr. Le Hoang Tai emphasized.

According to the head of the Trade Promotion Department, the majority of Vietnamese small and medium-sized enterprises (SMEs) still lag far behind the requirements of multinational corporations in terms of capital, technology, data management, and logistics infrastructure. Without systemic solutions, domestic businesses are easily excluded from the global value chain.

Viet Nam is still mainly involved in the assembly stage.

From an international research perspective, Dr. Bui Hong Son, an economic expert at the Institute for International Economic Strategy, argues that global supply chains no longer operate according to the old logic of globalization, with all production activities gradually concentrating in China to optimize costs. Following Covid-19 and the US-China tensions, major economies have begun restructuring their supply chains to reduce dependence and increase risk control capabilities.

“Previously, supply chains tended to be heavily concentrated in China due to its advantages of cheap labor, large scale, and complete manufacturing ecosystem. But after Covid-19, major economies realized that they could no longer allow their entire supply chains to depend on one place. Therefore, a trend has emerged to move supply chains closer to or locate them in friendly partner countries for easier control,” analyzed Dr. Bui Hong Son.

According to Mr. Bui Hong Son, major economies are now viewing supply chains not only from a cost perspective, but are also prioritizing resilience, economic security, and technological self-reliance. Sectors such as AI, semiconductor chips, robotics, aerospace, and pharmaceuticals are being strongly impacted by this trend.

In the process of global manufacturing relocation, Viet Nam is becoming a destination for many Japanese, Korean, and Chinese businesses. However, according to Dr. Bui Hong Son, most of the relocation to Viet Nam is still primarily in assembly or low-value segments.

"There is a wave of relocation to Vietnam, but it's mainly in the low-end segment. Viet Nam hasn't yet escaped its role as an assembly hub. Most of the operations that have moved to Viet Nam are still labor-intensive processes, while the core technological and supply chain control stages remain overseas," Mr. Son observed.

According to this expert, this is a major paradox in the current growth picture. Exports are increasing sharply, FDI is continuously expanding, but domestic businesses still find it very difficult to break into high value-added links in the supply chain. The majority of technology, raw materials, and control over the supply chain remain in the hands of foreign companies.

New supply chains are tightening business standards.

Adding to the perspective on global shift trends, Dr. Nguyen Cao Duc - Deputy Director of the Institute for European and American Studies - stated that restructuring supply chains has become a prominent trend in the world economy, in which geopolitical factors, energy security, logistics costs, and the need for stable supply are directly impacting the production strategies of many international corporations.

According to Mr. Nguyen Cao Duc, geopolitical fluctuations in the Middle East, particularly maritime bottlenecks in the Strait of Hormuz, continue to demonstrate the vulnerability of global supply chains to non-economic shocks. As energy prices escalate and shipping and air freight costs increase, pressure extends beyond logistics to include production, trade, and supply chain allocation strategies across many economies.

“Previously, businesses designed supply chains with the primary goal of maximizing profits. However, nowadays, many businesses worldwide prioritize supply chain security, automation, and technological self-reliance. Global supply chains no longer operate purely on the logic of low cost, but instead prioritize resilience and long-term stability,” Dr. Nguyen Cao Duc observed.

According to him, the current restructuring process is also setting entirely new standards for businesses participating in global production chains. ESG, digital transformation, and traceability are gradually becoming fundamental requirements, rather than just additional criteria as before.

Dr. Nguyen Cao Duc argues that low-cost advantage is no longer sufficient for businesses to participate deeply in global value chains. To go further, Vietnamese businesses must improve their management capabilities, undergo digital transformation, and adapt to new international market standards.

From a market perspective, Xavier Duf, CEO of DXL Research and Consulting Company, stated that the "Made in Vietnam" brand is increasingly appearing in international markets, especially in the fields of electronics, textiles, agricultural products, furniture, and green packaging.

"I've traveled to many countries like Mexico and European countries and I've seen more and more Vietnamese-branded goods appearing. Previously, consumers were familiar with 'Made in China' or 'Made in Korea,' but now 'Made in Vietnam' is starting to appear more clearly on the global consumer map," shared Xavier Duf.

Xavier Duf argues that the playing field has changed significantly. While previously businesses could compete on low costs, now supply chain transparency, ESG compliance, and the ability to meet international standards are almost mandatory requirements for entering the US and European markets. International customers are now not only interested in price but also demand high standards regarding ESG data, production processes, and the transparency of business information.

Experts believe that the global shift in manufacturing is creating more opportunities for Viet Nam to attract investment and expand exports. However, most domestic businesses are still primarily involved in simple processing, assembly, or supply stages, while higher value-added stages remain in the hands of foreign companies.

The new context also reveals the limitations of the labor-based competition model. International corporations are now demanding increasingly higher standards for technology, ESG, traceability, data transparency, and the synchronized participation of the local supporting industrial ecosystem. This means that attracting FDI will be difficult to achieve sustainable value if domestic businesses cannot improve their production capacity, management skills, and ability to participate more deeply in the supply chains of multinational corporations.

Source: Vietnam.vn