Model Perspective

Sep 8, 2026 · Industry Insights

Vietnam's Cost Paradox: Why Firms Accept Higher Production Costs for Market Access

Despite Vietnamese wages being half of China's, comprehensive production costs run 10% higher due to lower productivity and supply chain gaps; yet firms still invest to secure tariff-free US market access and supply chain resilience, extending Chinese-led supply chains into Vietnam for final assembly while retaining high-value R&D and components in China.