In Part 1, we explored why Vietnam has become the top Plus One destination for DTC brands. Its trade access, competitive labor market, and proximity to China position it as a natural extension of the Asian supply chain.
Now we focus on how brands are executing the strategy.
After more than a decade of relying on Chinese manufacturing, leading DTC brands are building dual-market supply systems. The goal is not to leave China. It is to create flexibility, reduce tariff exposure, stabilize costs, and speed up fulfillment.
Brands are no longer thinking in terms of a single origin. They are distributing production and fulfillment across multiple hubs to build operational flexibility.
China remains the manufacturing backbone for high-precision and high-volume SKUs. Vietnam provides cost efficiency while acting as a tariff hedge that stabilizes costs if trade tensions rise. The goal is resilience, not replacing China but balancing exposure so no single market determines your margins.
That defensive strategy is most visible in how brands manage tariff exposure.
Tariffs on Chinese imports continue to rise across electronics, machinery, and consumer goods. The United States Trade Representative 2024 review confirmed expanded Section 301 measures, accelerating diversification across global brands.
For DTC companies operating on 30–50% margins, tariff increases directly affect cash flow and pricing flexibility. A product that costs $10 to manufacture may now incur several dollars in additional tariff fees depending on the category.
As a result, brands continue producing complex products in China but shift fulfillment to Vietnam to balance tariff exposure and landed cost.
The October 2025 U.S.–Vietnam Framework for Reciprocal Fair and Balanced Trade formalized a two-tier tariff system that remains in effect through 2026:
This agreement tightened rules of origin, requiring proof of value added in Vietnam to qualify for lower duties.
As a result, DTC brands have prioritized true local manufacturing and digital traceability to ensure compliance and protect margin.
Even with the 20% baseline tariff, Vietnam remains cost-competitive due to lower labor costs, trade access through CPTPP and EVFTA, and reduced exposure to Section 301 duties on Chinese-origin goods.
China's economic growth has raised labor costs and compliance requirements.
DTC operators are not leaving China. They are layering Vietnam to combine scale, speed, and savings.
Vietnam offers measurable savings across production and fulfillment:
These savings multiply when combined with direct fulfillment, where products ship directly from production hubs to customers without warehousing delays.
Vietnam participates in the CPTPP and the EU–Vietnam Free Trade Agreement (EVFTA), unlocking duty-free access to major markets.
This aligns directly with Portless’s fulfillment model, where brands can manufacture in Vietnam and ship globally while retaining tariff advantages.
Vietnam shares a border with China, which enables cross-border flow of materials and components. Many global manufacturers build parallel operations in both markets.
For example, Foxconn runs factories in both countries to balance cost and responsiveness. A common hybrid model: materials are sourced from China, final assembly occurs in Vietnam, and goods ship directly to customers.
Vietnam's supplier network is growing rapidly, yet some categories still have limited supplier density.
Most brands use a hybrid SKU strategy. High-complexity SKUs stay in China. Simpler or higher-margin SKUs move to Vietnam.
Vietnam still imports 50-70% of its raw materials from China.
The future is not competition. It is collaboration across two interconnected ecosystems.
To maintain efficiency:
These examples illustrate that resilience comes from regional balance, not relocation.
Building a China plus Vietnam model is not duplication. It is coordination.
The goal is to create a synchronized ecosystem where production, quality, and fulfillment data move seamlessly between both markets.
This roadmap minimizes disruption while accelerating diversification.
China remains the foundation of modern manufacturing, known for its precision and scale.
Vietnam’s rise represents the next chapter in that story: a flexible, digitally connected extension that helps brands lower costs and increase resilience.
The future of ecommerce supply chains will not be defined by a single country, but by how effectively brands connect the strengths of both.
Ready to diversify your supply chain and make tariffs work for you?
Contact Portless to simplify fulfillment across China and Vietnam.
