The Vietnamese city of Bac Ninh has rapidly evolved into a major manufacturing center, driven by a shift of factories from China. This transformation reflects a significant increase in foreign investment, particularly following former President Donald Trump’s tariff hikes aimed at Chinese goods. Bac Ninh, once known for its rice fields and traditional Quan Ho folk songs, now hosts numerous factories, signaling its emergence as a key player in the global manufacturing landscape.
As companies relocate to avoid U.S. tariffs, Bac Ninh has become a focal point for foreign investment, particularly from South Korean and increasingly Chinese firms. The influx of Chinese investment has surged since the normalization of ties between Hanoi and Beijing in the 1990s. This shift has allowed Chinese companies to access Vietnam’s electronics supply chain and labor market, often with the assistance of Chinese-speaking intermediaries facilitating operations.
Despite these gains, Bac Ninh faces challenges. Rising labor costs, worker shortages, and inadequate infrastructure are becoming apparent limits to its rapid growth. According to Brian Bourke, global chief commercial officer at SEKO Logistics, while factories are still relocating to Vietnam, the country’s infrastructure and logistics capabilities lag behind those of China. This presents a significant hurdle as competition intensifies from other Southeast Asian nations like Indonesia and the Philippines, which are vying for a share of the manufacturing market.
Bac Ninh’s initial boom began with the establishment of a Samsung factory in 2008, which positioned Vietnam as the technology giant’s largest offshore manufacturing base. Now, with the expansion of industrial zones focused on high-tech manufacturing, including electronics, pharmaceuticals, and clean energy, Bac Ninh is aiming to secure its place in the global supply chain. On December 19, groundbreaking took place for a new industrial zone designed to foster high-value manufacturing projects.
To sustain its growth, Vietnam’s leaders are investing heavily in infrastructure improvements. A new highway to the Chinese border has reduced travel times significantly, while a planned railway will enhance connectivity between Hanoi, Haiphong—the country’s largest seaport—and the border town of Lao Cai. The government has announced plans to launch 234 major projects worth over $129 billion ahead of a crucial National Party Congress in January 2025, where future political and economic direction will be determined.
Despite the promising developments, Bac Ninh is grappling with rising labor costs. A telecom equipment company representative noted that labor expenses have surged by 10% to 15% since 2024, complicating efforts to attract and retain workers. Consequently, companies are offering higher wages, bonuses, and incentives such as transportation allowances to entice employees.
The economic landscape is further complicated by Vietnam’s ongoing trade relationship with the United States. In 2024, Vietnam achieved a trade surplus of $123.5 billion with the U.S., positioning it as a significant player in the global economy. While the U.S. has threatened increased tariffs, the two nations are negotiating to maintain most tariffs at 20%. The situation remains fluid, as uncertainty over tariffs continues to influence corporate strategies.
Vietnam is also aiming to diversify its export markets, reducing dependence on the U.S. by fostering trade relationships with countries in the Middle East, Latin America, Africa, and India. The government has launched initiatives to promote Vietnamese products internationally, recognizing the need to adapt to a changing global landscape.
As Bac Ninh continues to grow, its leaders have set ambitious goals for the future. With a vision to elevate the country to a higher economic status by 2045, Vietnam is striving to transition from low-cost assembly to higher-value manufacturing. This includes offering incentives such as tax breaks on imported machinery, aiming to modernize its manufacturing capabilities.
In conclusion, while Bac Ninh has become a crucial player in the global manufacturing sector, it must navigate the challenges of rising costs and competition from other nations. As Prime Minister Pham Minh Chinh stated during the announcement of new projects, Vietnam must “reach far into the ocean, delve deep underground and soar high into space” to secure its economic future. The path ahead will require careful planning and strategic investments to ensure sustained growth in an increasingly competitive environment.
