
Contract manufacturing is how most importers actually buy from Vietnam. You own the design, the brand and the specification, and a factory makes the product to your instructions. It is also where we see the most expensive misunderstandings: who owns the tooling, who is liable for a defect, and what “Made in Vietnam” will really cost you at the border. This guide puts the answers in one place.
The terms get used loosely, so it helps to pin them down before you ask anyone for a quote.
None of these is better in the abstract. Turnkey is simpler but leaves you dependent on the factory’s purchasing. Consigned gives you control of materials and more logistics to manage. Decide which model you are buying, and write it into the contract before you pay a deposit.

The usual reason is diversification, but there are practical ones too. Vietnam has deep manufacturing clusters in electronics, furniture, textiles and footwear, plastics and metal fabrication, and it is party to a long list of trade agreements, including CPTPP, RCEP, AANZFTA, the EU–Vietnam agreement and the UK–Vietnam agreement. Qualifying goods can enter several major markets at reduced or zero duty. Labour costs are lower than in China at the bottom of the scale: the Region I legal minimum wage rose to VND 5.31 million a month in January 2026, roughly US$200. That is a legal floor, not what skilled factory staff are paid, so treat it as a direction rather than a budget.
Two cautions belong here. First, Vietnam is not tariff-free into the United States, which we cover below. Second, Vietnamese factories rely heavily on imported inputs. In the first seven months of 2025, about 40% of Vietnam’s imports came from China. Ask every supplier where the key components come from, because it affects your costs, your lead times and your origin paperwork.
A quote is one number. The cost of a contract manufacturing programme is several:
On payment terms, a deposit on order (often around 30%) with the balance against shipping documents or before release is common for new buyers. Letters of credit are unusual at smaller volumes. These are norms, not rules, and they are negotiable once you have a track record.
As at 26 October 2026, goods of Vietnamese origin entering the United States pay the normal duty for the product plus a 12.5% Section 301 duty introduced in late July, after the Supreme Court struck down the earlier emergency tariffs in February. Steel, aluminium, copper and timber products can also attract Section 232 duties whatever their origin. Chinese-origin goods pay the same 12.5% and, on many products, older Section 301 duties of 7.5% to 25% on top. So the gap in Vietnam’s favour is smaller than it was in 2025, and it depends on your product, not on a headline. A US–Vietnam trade agreement and a separate Section 301 investigation into Vietnam’s intellectual property protection are both still pending. Price your actual tariff code and check it again before you place the order.
For Australia and New Zealand, AANZFTA and RCEP can bring qualifying goods in duty-free, but only with correct origin paperwork. Our guides to AANZFTA, CPTPP and RCEP and the AANZFTA upgrade explain the rules of origin.
Contract manufacturing means handing over your design, so protect it before you do.
The US Trade Representative opened a Section 301 investigation into Vietnam’s IP protection and enforcement on 29 May 2026, and no decision had been published when we checked. It is another reason to rely on your own agreements rather than on the system.

This is the work that separates a good first order from an expensive lesson.

Once production starts, the discipline is in the detail. Lock the specification and run every change through a written change request, so the factory is never working to two versions. Agree production milestones and ask for photographs at each one. Inspect early as well as before shipping, because a defect found at the pre-shipment stage is far cheaper to fix than one found in your warehouse. If you need a refresher on the documents, our guides to the product specification sheet, the request for quotation and manufacturing contracts are the place to start.
This is an illustration, not a client story. Take a US homewares brand moving a metal-and-bamboo storage product from a Chinese supplier. The Vietnamese quote is 8% higher ex-works. If the product sits on a Chinese Section 301 list at 25%, the Chinese route pays that 25% on top of the shared 12.5%, while the Vietnamese route pays only the 12.5%. A 25-point duty gap is enough to turn an 8% higher unit price into a lower landed cost. If the same product were on no Chinese list, the two routes would carry the same duty, and the Chinese quote could win. The answer depends on the product, which is why we work it out line by line.
Contract manufacturing in Vietnam works well when you decide the model first, protect your IP and tooling in writing, qualify the factory rather than the brochure, and price the programme on landed cost with the tariffs as they stand today. Start small, inspect early and keep the paperwork tidy. Our sourcing solutions cover each stage, from Supplier Identification and Supplier Evaluation to production management and Quality Assurance.
Tariff positions and rates in this article were checked on 26 October 2026 and can change quickly. Always confirm the current position for your product before ordering.
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This topic is also a short episode of the VDS podcast, on YouTube and Spotify.