The Shift of Global Supply Chains: Vietnam, India, and China

In 2025, the global supply chain landscape is undergoing a decisive transformation. What was once an unchallenged reliance on China for manufacturing and export has shifted towards diversification, with Vietnam and India emerging as attractive alternatives.

This shift is not merely a temporary reaction to geopolitical tensions but reflects deeper structural changes, including rising labor costs in China, supply chain disruptions, trade policies such as Trump-era tariffs, and evolving customer demands for flexibility and risk mitigation. However, as companies move or diversify their sourcing footprints, they must navigate a complex web of logistics, infrastructure, and customs challenges.

Comparative Logistics & Customs Analysis (China vs. Vietnam vs. India)

According to data collected by FVSource, a sourcing and market entry company, the table below provides an overview of logistics and customs analysis for China, Vietnam, and India.

To help businesses better navigate the current shifts, the following video provides practical insights into the logistics and sourcing challenges between China, the U.S., Canada and Vietnam, covering key trends and considerations for companies looking to optimize their supply chains in 2025.

China’s Evolving Role: From Factory of the World to Strategic Supplier

For decades, China has served as the world’s manufacturing hub, benefiting from world-class infrastructure, established supply chain ecosystems, and highly competitive production costs. Even in 2025, China maintains a dominant position, particularly in advanced manufacturing, electronics, and automotive supply chains. Its logistics capacity — including major ports like Shanghai and Shenzhen, efficient freight forwarding systems, and robust customs clearance procedures — remains unmatched in Asia.

However, escalating US-China trade tensions, notably the re-imposition of Trump-era tariffs affecting key industries like electronics, textiles, and machinery, have made Chinese-made goods less cost-competitive in key Western markets. The combination of political uncertainty, increasing labor costs, and calls for supply chain resilience post-pandemic has prompted many businesses to adopt a “China Plus One” strategy, actively seeking to balance their production portfolios between China and neighboring countries such as Vietnam and India.

Vietnam: Agile and Export-Oriented, Yet Facing Growing Pains

>> Related article: Understanding Trump’s New Tariffs and Their Impact on Vietnam and other Asian Supply Chains

Vietnam has emerged as one of the most preferred sourcing destinations for companies diversifying away from China. Its attractiveness lies in its cost competitiveness, favorable trade agreements (such as the EVFTA and CPTPP), proximity to China, and rapidly developing industrial zones catering to sectors like garments, footwear, furniture, and electronics.

Vietnam’s logistics sector has made significant strides in recent years, fueled by increased foreign direct investment and partnerships with third-party logistics (3PL) providers. In 2025, companies sourcing from Vietnam will benefit from relatively efficient export procedures, especially for sea freight to the US, EU, and Japan. However, challenges persist. The country faces infrastructure bottlenecks, particularly around major ports like Cat Lai and Hai Phong, leading to congestion and delays. Moreover, customs clearance in Vietnam, while improving, is often perceived as less streamlined compared to China, with inconsistent application of regulations depending on the region.

Another key limitation is Vietnam’s limited raw material base, which often forces factories to import inputs from China, thus partially maintaining Vietnam’s dependence on its northern neighbor. This dependency increases lead times and exposure to cross-border logistics risks.

India: Manufacturing Potential and Logistical Complexity

India, with its large labor force and growing industrial base, is another attractive alternative. Sectors such as textiles, pharmaceuticals, and automotive components are particularly benefiting from the global supply chain shift. Additionally, India’s government has been actively promoting domestic manufacturing through the “Make in India” initiative and offering incentives to foreign investors.

However, sourcing from India in 2025 still presents several logistical hurdles. Although India boasts a large number of ports and significant capacity for both domestic and international shipping, its infrastructure remains inconsistent. Inland transportation, especially from production hubs to ports, can be plagued by poor road conditions, regulatory hurdles, and lengthy customs clearance processes. Compared to Vietnam and China, Indian customs procedures are often slower, and regional variations in rules and interpretations complicate logistics planning.

Nonetheless, India’s large domestic market and growing demand for consumer goods make it attractive not only as a sourcing destination but also as a potential consumer market for foreign companies.

The Role of Third-Party Logistics (3PL) and Technology

>> Related article: Vietnam as a Key Player in the China Plus One Strategy

An important trend observed in the 2025 supply chain environment is the increasing reliance on third-party logistics (3PL) providers, especially in Vietnam and India. Businesses are leveraging 3PLs not only for freight forwarding but also for warehouse management, customs brokerage, and last-mile delivery. With the rise of cross-border e-commerce and platforms like Amazon FBA, the demand for 3PL services has accelerated.

In the US, companies that source from Vietnam or India often depend on 3PL operators with facilities in California, Texas, or the East Coast to streamline customs clearance, warehousing, and distribution. The integration of automation and warehouse management systems (WMS) has become essential to manage increasing shipping volumes and to optimize fulfillment costs.

Final Thought: No One-Size-Fits-All

The shift of global supply chains is not a simple relocation from China to Vietnam or India. Instead, companies are adopting multi-country strategies depending on their industry, sourcing needs, and risk appetite. Vietnam offers agility and competitive costs but faces infrastructure bottlenecks. India offers scale and labor advantages but struggles with logistics inefficiencies. China, while under pressure, still provides unparalleled supply chain integration and logistics efficiency.

In 2025, the ability to navigate these trade-offs — leveraging the right combination of local expertise, third-party logistics partners, and infrastructure — is becoming the key differentiator for successful global sourcing strategies. Companies must balance cost, reliability, and speed while also staying agile in response to changing trade policies and market dynamics.

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Source: Vietnam Insider