In early June 2026, a labor reform proposal in Vietnam drew wide attention from manufacturers, exporters, logistics providers, and global supply chain planners.
The Vietnam General Confederation of Labour formally submitted a proposed amendment to the country’s Labour Code. Based on feedback collected from tens of thousands of workers and industry participants, the proposal suggests replacing the long-standing minimum wage mechanism with a broader “living wage” standard. It also calls for a phased reduction of statutory weekly working hours from the current 48 hours to 44 hours, with the long-term goal of moving toward a 40-hour workweek and a two-day weekend system.
If approved, this would represent one of the most significant labor system adjustments in Vietnam in nearly three decades.
Higher Labor Costs May Challenge Vietnam’s Low-Cost Advantage
According to the International Labour Organization’s 2019 report on working time in Vietnam, actual weekly working hours in Vietnam’s textile and garment sector had already exceeded 50 hours.
Under the current legal framework, work beyond 48 hours per week is treated as overtime. Overtime pay is generally calculated at 1.5 times the normal wage on regular working days, 2 times on rest days, and 3 times on public holidays.
If the standard working week is reduced to 40 hours, many hours that were previously considered normal working time could become overtime. This would significantly increase labor costs for manufacturers, especially in labor-intensive industries such as textiles, garments, footwear, electronics assembly, and consumer goods production.
For years, Vietnam has attracted global manufacturing investment due to its relatively low labor costs, favorable trade position, and proximity to China’s supply chain network. However, this proposed reform suggests that Vietnam’s cost advantage may be gradually weakening at the institutional level.
Some Orders May Shift Back to China or Other Markets
Different types of companies are likely to respond to this change in different ways.
Large manufacturers with stronger capital, technology, and management capabilities may choose to stay in Vietnam. They can absorb the impact through automation, process optimization, workforce training, and productivity improvement.
However, many small and medium-sized manufacturers, including Taiwanese, Korean, and Chinese-invested OEM factories, may become more cautious. Some companies have already started reassessing their global production footprint. If the new labor policy is implemented, certain manufacturers may consider moving to lower-cost Southeast Asian countries or shifting part of their orders back to China.
Vietnam has often been described as “the next world factory,” but its infrastructure limitations are becoming more visible. Power supply pressure, logistics bottlenecks, and incomplete upstream industrial chains remain key challenges. Many critical components, raw materials, and supporting products still rely heavily on imports from China.
In addition, tariff policy changes could further affect Vietnam’s competitiveness. If Vietnam’s tariff advantage is reduced, buyers and manufacturers may re-evaluate the total landed cost of sourcing from Vietnam compared with China and other Asian production bases.
China’s Export and Logistics Demand Show Signs of Rebound
At the same time, China’s foreign trade has shown strong momentum.
According to customs data, in the first five months of 2026, China’s total goods import and export value reached RMB 20.68 trillion, up 15.3% year-on-year. Exports reached RMB 11.91 trillion, increasing by 11.8%, while imports reached RMB 8.77 trillion, increasing by 20.5%.
In May alone, China’s total goods import and export value reached RMB 4.45 trillion, up 16.9% year-on-year. Exports reached RMB 2.59 trillion, increasing by 13.8%, while imports reached RMB 1.86 trillion, increasing by 21.5%.
After the recent improvement in China-U.S. trade sentiment, manufacturers and traders have become more optimistic about future export demand. In May, China’s exports to the United States reportedly increased by 35.6% year-on-year, reaching USD 39.03 billion.
The China-U.S. shipping market also saw a sharp rebound. According to recent container shipping data, U.S. container imports increased significantly month-on-month and year-on-year, while container volumes shipped from China to the United States also recorded strong growth.
For logistics companies, freight forwarders, and importers, this rebound may indicate renewed demand for China-U.S. ocean freight, customs clearance, warehousing, and door-to-door delivery services.
What This Means for Global Supply Chains
Vietnam’s proposed labor reform should not be viewed as a short-term disturbance only. It reflects a broader shift in global manufacturing and supply chain strategy.
The global textile, garment, and consumer goods industries are entering a deeper stage of restructuring. Buyers are no longer focusing only on low wages and long working hours. Instead, they are placing more importance on supply chain stability, delivery speed, production flexibility, compliance, and sustainability.
For Chinese manufacturers and exporters, this is a valuable strategic window. However, companies should not simply rely on the idea that “Vietnam is losing competitiveness.” Instead, they should accelerate transformation in several key areas:
- Moving toward higher-value manufacturing
- Improving product quality and customization capabilities
- Building stronger overseas brands
- Strengthening green and low-carbon supply chain standards
- Enhancing logistics efficiency and global delivery reliability
In the future, global manufacturing competition will not only be about which country has lower wages or longer working hours. It will be about which supply chain is more resilient, more responsive, more compliant, and more sustainable.
Logistics Perspective: Flexibility Will Become More Important
For importers, exporters, and global buyers, changes in labor policy, tariffs, production costs, and infrastructure conditions can directly affect sourcing decisions and shipping plans.
A flexible logistics strategy is becoming increasingly important. Companies should closely monitor production location changes, shipping rate fluctuations, customs policies, and delivery timelines. Diversified sourcing and stable logistics partnerships can help reduce risk and improve supply chain resilience.
As global manufacturing continues to adjust, China remains a key production and supply chain hub with strong industrial capacity, mature infrastructure, and comprehensive export logistics support. For international buyers, working with reliable manufacturing partners and experienced freight forwarders will be essential to maintaining stable procurement and delivery performance.
