Your next lawn chair is coming from Vietnam, but it's still kind of Chinese

Mint

14-07-2025

In May, hundreds of workers at a furniture factory here got a nice surprise. Their Chinese bosses were giving them a nearly 45% raise.
Factory owner Ren Li said so many other Chinese factories were moving to Vietnam to avoid high U.S. tariffs that he needed to give his workers a big increase to keep them from getting poached.
'They just flood in," Li said of Chinese companies. 'And that will cause a tsunami."
For factory owners, the economic logic is simple. Goods made in China generally face tariffs of 40% to 50% when imported into the U.S. Vietnam is a relative bargain after President Trump this month announced a new tariff rate of 20%, upholding expectations that Vietnam would get more-lenient treatment. Western buyers such as Lowe's and Hasbro have promised to cut their exposure to China.
The rush to produce in Vietnam and other lower-tariff countries, far from wiping China off the map, keeps Chinese companies at the center of the export trade. Chinese businesspeople typically have the edge when it comes to building factories anywhere in the world—even in the U.S.
'They have all the technology, all the know-how," said Le Hong Hiep, a senior fellow at Singapore's ISEAS-Yusof Ishak Institute think tank. 'It will take them less time to set up factories in Vietnam than for local companies to develop their own capabilities."
Outdoor furniture awaits shipment in Thai Nguyen. The factory's Chinese owner counts some of America's biggest retailers among its customers.
The Hanoi airport on a recent visit was clogged with Chinese workers and managers coming to collect their visas.
For Trump administration officials, that isn't exactly the desired outcome of a trade war. In trade talks, the U.S. has called on Southeast Asian nations to take a hard line on economic ties with China, including by stopping Chinese companies from setting up manufacturing and export operations in their countries. The goal is to reduce U.S. dependence on Chinese companies regardless of where they are located.
But for the first half of this year, China—including Hong Kong—was responsible for more than 800 new investment projects in Vietnam, far more than any other country. Much of the investment was concentrated in manufacturing.
Li is the founder of Letright Industrial, one of China's largest outdoor-furniture manufacturers with a customer list that includes Walmart and Lowe's. His factory in Thai Nguyen, near Hanoi, first opened in 2021 and today employs around 1,200 workers making lounge chairs, coffee tables and sofas.
A set of six pieces can retail at American stores for around $700 to $2,000. Teams of U.S. buyers have visited recently to tour the factory and review their products.
On the factory floor, laborers use laser-welding tools to construct sofa frames. Others hunch over waist-high tables, hand-weaving wicker chairs. With faux-natural materials popular in the U.S. this season, a team of workers uses brown spray paint to make metal chairs resemble wooden ones.
Workers at the Vietnam facility have received training from their Chinese counterparts as production moves across the border.
At the company's testing center, a machine slams a heavy weight into the seat of a finished chair more than 10,000 times, to prove its durability.
Anticipating demand from U.S. clients, the company is building a second factory here a 10-minute drive away and is hiring hundreds more workers while trimming the workforce at its home base in Hangzhou, China. Teams of Chinese welders and weavers have been dispatched to train the Vietnamese.
The company's ambitious goal: move 100% of U.S.-bound production to Vietnam this year, up from 30% last year.
But getting work done in Vietnam is tougher than in China, and the first factory has yet to turn a profit.
The intense heat and humidity of the region saps worker productivity, especially because furniture factories don't have high enough margins to use air conditioning in their high-ceilinged factories, says Li.
'The hot weather makes them very sleepy," said Li of his workers. He said they also don't have air conditioning at home, so they don't rest well during Vietnam's summers.
The work culture in Vietnam is different from China. Chinese workers are known to show up at 7 a.m. in the hopes of getting started early and earning extra commissions. In Vietnam, workers tend to stick to standard hours.
Employees at the Thai Nguyen complex have benefited from wage hikes as rival Chinese companies seek to ramp up hiring in the area.
Luke Lu, who heads the company's North American sales, said the company's Vietnamese workers operate at a more deliberate pace when weaving wicker furniture. The company recently introduced extra pay for highly efficient workers, but Vietnamese workers remain about 30% less productive than Chinese workers, Lu said.
In China, every raw material can be easily acquired. But in Vietnam, materials such as certain metal pipes used in chairs and fabrics for seat cushions need to be imported from China. When ports fill up, parts can be trucked over the Chinese border, five hours away.
Trump has pledged a double tariff rate of 40% on foreign goods, including Chinese goods, transshipped through Vietnam, without specifying what counts as transshipment. Lu said some 70% of the materials that go into the company's Vietnam-made furniture are sourced locally, and it is working to find Vietnamese producers for the rest.
Li said not all companies operating abroad should be considered transshippers. 'He has to separate the good people from the bad people," Li said of Trump.
Overall Lu estimates that it is about 10% to 15% more expensive to produce outdoor furniture in Vietnam compared with China—which gives Vietnam the edge for U.S. exports, assuming Trump doesn't throw any more tariff curveballs. 'We already invested a lot here, and expanded production," said Lu. 'We just want things to be stable."
Li said he was better off than some fellow Chinese manufacturers because he started planning the shift in Trump's first term. He recalled attending an Asia-Pacific leaders' summit in 2017 in Da Nang, Vietnam, where Trump took the stage and unleashed a fiery speech accusing China of cheating the U.S. on trade.
'Trust between the U.S. and China is getting less and less," Li said.
Write to Jon Emont at [e-mail]