China+1.
Why Vietnam became
the answer.

For years, European companies looking east went to China by default. That reflex is fading. Trade tensions, shifting regulation and a plain wish to spread risk have pushed many to adopt what is now called a China+1 strategy.

The aim is not to leave China. It is to pair it with a second market that offers more flexibility, a welcome for foreign investment, and a way into Southeast Asia. Vietnam has become the most convincing candidate.

OneSpread the risk without losing China

China remains unavoidable. But putting all production and distribution in one country concentrates exposure: trade tensions, customs policy, supply chain shocks, regulatory shifts.

A second base in Vietnam spreads that exposure while keeping Chinese access where it still matters. It buys flexibility, and flexibility is what survives a changing world.

TwoThe free trade agreements do the arithmetic

Vietnam has pursued an unusually open trade policy and holds a dense web of free trade agreements, including the EU-Vietnam agreement (EVFTA).

For cosmetics, food, wine and spirits, the EVFTA phases tariffs down and often to zero, which changes what a European brand can charge and still win.

One example. French cheese enters Vietnam at 0% duty under the EVFTA. Into China it still faces the most-favoured-nation tariff of 12%, and since 2025 provisional anti-dumping duties of between 21.9% and 42.7% on certain European cheeses and dairy products.

Vietnam also sits inside major regional agreements, notably the ASEAN-China Free Trade Agreement (ACFTA), which cuts or removes duties on many goods moving between China and Vietnam. Certain face creams made in China, for instance, enter Vietnam at 0% under the ACFTA.

For a European company already producing or sourcing in China, Vietnam is therefore not a detour. It is a well-placed door into Southeast Asia.

ThreeA regional platform, not an outpost

Geography helps. Vietnam shares more than 1,280 kilometres of border with China, has numerous international crossings, 34 international seaports, and direct flights of two to four hours between the main Vietnamese and Chinese cities.

That proximity makes trade, team coordination and logistics markedly easier. Many companies now run Vietnam as a complementary operating base for the whole Asia-Pacific region.

FourIt stopped being a factory and became a customer

Vietnam is usually introduced as a production alternative to China. That framing is now out of date. It is, above all, a fast-growing consumer market.

The middle and high-income population is expanding quickly, and with it the appetite for international and especially European products. Vietnamese consumers are young, heavily connected and unusually receptive to global trends. The major cities also hold a large, high-spending expatriate community.

The question has moved from where you make it to who buys it.

The numbers say the same thing. Vietnam's cosmetics market was worth $2.66 billion in 2024, with 90% imported, a sign of demand domestic production cannot meet. In food, imports of consumer goods reached nearly $15 billion the same year, up 8% on 2023.

Cosmetics, premium food, wine, spirits, fashion, luxury and health all benefit directly from that move upmarket. Vietnam is no longer an industrial complement to China. It is a market in its own right.