Over the last decade, business has been growing at a rapid pace in both Hanoi and Ho Chi Minh City, the two of the most significant garment hubs of Vietnam – one in the north, very near to China border, and the other in the southern part of the country. While each of them has very different advantages as manufacturing destinations, they are equally competitive and both are seeing influx of investment for future growth.
While garment and textile manufacturing, which are the main export sectors in Vietnam, are concentrated in both Hanoi and Ho Chi Minh City, footwear and furniture manufacturing are both concentrated in Ho Chi Minh City. South has the advantage of being near the largest commercial port in Vietnam – there is no denying that proximity to key destinations such as airports, seaports and major cities are essential pre-requisites to economic development. Manoj Yasarathne, Merchandising Manager, Comtextile (H.K.) Ltd. substantiates it by saying that from Northern Vietnam, particularly Hanoi, the sailing lead time to USA is 35 days whereas it is only 28 to 29 days from Ho Chi Minh City.
One must, however, remember that since China and Taiwan are closer to Hanoi, the time taken to import fabric from both the countries is just one day. “They have their own advantages and disadvantages and to me there isn’t much difference between the two,” said Chris Walker, Marketing Manager, Thai Son SP Sewing Factory, Vietnam.
Weather also plays key role many a times in determining the growth of business in a city, and Hanoi is no exception. The city has cool, dry winters, and hot, wet summers. Saigon, on the other hand, has more consistent weather all through the year (tropical) instead of having defined summer and winter. The heavy rains and flash floods lately have affected the business in Hanoi. Inconsistent weather has been a problem with Hanoi.
According to a recently released report Ho Chi Minh City has a GDP per capita (in US $) of 5,428, quite higher than that of Hanoi, which stands at 3,425. Easy labour market is the strong determinant of long-term economic growth and there is no denying that Ho Chi Minh City has a surplus availability of workforce. “There are more job opportunities in Ho Chi Minh City mainly because of its good connectivity. It is the commercial capital of Vietnam like what Mumbai is to India,” said Giri Satendra Kumar, Assistant to The General Director Global Head – Material Sourcing, Quality Control & System Development, Phong Phu International JSC while speaking to Team Apparel Resources.
Since Hanoi has a lower per capita GDP, the labour is relatively cheaper in the region. Anybody who wants to place orders with less cost, prefers Hanoi. “Salary is less in Hanoi and also some parts of city are still new to the business, and therefore, they have young and inexperienced workers. So running the factory here is less expensive. Also it is comparatively easy to do business here,” remarked Manoj. He furthur added that the workforce in Ho Chi Minh City is comparatively more skilful and talented. According to e-commerce Association of Vietnam, it is a misconception that there is a major wage difference between the cities, especially in e-business.
Ho Chi Minh City is busy and full of life, and yet known for a more casual and vibrant feel – which is also reflected in the way business is done here. Hanoi is mostly traditional and there is always an influx of white-collar jobs. “Both the cities are culturally apart from each other. I have to approach customers from both cities with different strategies,” reasoned Pham Anh Tuan, Sales Director, Khoi Chi Hung, one of the leading thread suppliers in Vietnam.
All said and done, according to JLL City Momentum Index of 2017, both the cities are among the top 10 dynamic cities of the world – the parameters of the report being population, connectivity, economic development and corporate influx in addition to openness to technology.