Vietnam’s foreign trade is facing a series of challenges, with exports falling by 11.9 percent in the first quarter and 17.19 percent in April. Vietnam’s economy is heavily dependent on exports, which also led to GDP growth in the first quarter of just 3.32 percent, reaching a twelve-year low.

In comparison, China’s foreign trade increased significantly in March, up 48.4% compared to the same year. Exports of labor-intensive products also improved, up 8.8% compared to the first four months.

Against the backdrop of the pandemic and trade wars, Vietnam has become the preferred destination for some companies implementing the "China Plus One" strategy. Some Western media outlets believe that Southeast Asian countries, led by Vietnam, are poised to become strong contenders to replace China as the next "world factory."

However, becoming the next factory in the world in the short term can be difficult for Vietnam.Vietnam has always been an export-oriented country, relying on competitive labor costs to attract processing bases for many large enterprises.

The data show that Vietnams economic development is increasingly dependent on trade, especially foreign trade.Before the epidemic, Vietnams GDP growth was less than 5% and exports accounted for more than 100% of the total economy, making it one of the countries most dependent on trade in the world.

However, there are also problems with Vietnam’s trade structure. Vietnam’s GDP growth is mainly benefited by the demand for foreign direct investment firms for electronics and parts, such as Samsung, LG, etc. The data also show that Vietnam is highly dependent on the U.S. market, with the U.S. market accounting for 29% of its export share.

The weakness of Vietnams external demand did not begin in 2023.The textile and clothing industry is another major export industry in Vietnam, and in the second half of 2022, the enterprises faced losses due to the decline in demand from the major import markets.

However, when the key factors that make up strong growth are no longer apparent, economic growth needs to look for new support points, and Vietnam does not seem to have found new areas to support its economic growth.

Although Vietnam has always been seen as a competitor to Chinas manufacturing industry, in fact, Vietnam still relies on the support of Chinas manufacturing industry.

In the long run, Chinas manufacturing structure will inevitably adjust, and low-tech, labor-intensive industries will move to subsequent countries. Vietnam, as a participant in the global supply chain, is expected to further develop in the fields of electronics, textiles and clothing.