Vietnam’s Machinery & Equipment Industry 2025

Summary

As Vietnam solidifies its position as a major alternative manufacturing destination, its machinery and equipment (M&E) industry is experiencing significant growth. Businesses seeking to diversify their supply chains, accelerated by the pandemic and shifts away from China, are increasingly setting up operations in Vietnam.

This industrial boom is fueling domestic demand for M&E. The industry has grown consistently, counting 2,223 companies by 2020, up from 1,825 in 2018. That same year, these companies generated total revenue of US$4.6 billion. Therefore, the Vietnam machinery industry is one of the country’s fastest-growing manufacturing sectors, supporting both domestic production and global exports. Vietnam now stands as a leading destination for companies seeking to diversify their industrial machinery and equipment production outside China.

A Shifting Landscape: Import & Export Dynamics

Vietnam’s M&E sector is characterized by strong import dependencies but also rapidly growing export capabilities.

• Major suppliers. Vietnam relies heavily on foreign machinery sources. Key Asian partners – China, South Korea, Japan, and Taiwan – account for approximately 70% of the total foreign machinery supply in the Vietnamese market.
• Rapid export growth. Vietnamese-made machinery exports have shown remarkable growth, surging from US $10.1 billion in 2016 to US $38.3 billion in 2021. This highlights the nation’s expanding production capacity, particularly in the electrical and electronics industries.

Seizing Key Opportunities for Investors

For foreign investors and manufacturers, Vietnam offers several strategic advantages and high-demand sectors.

Key Export Markets & Trade Agreements

Free Trade Agreements (FTAs) have opened lucrative pathways for manufacturers based in Vietnam.

• United States: The US is Vietnam’s biggest export market, consuming around 40% of the total export turnover. Products entering the US market benefit from relatively low imported tariffs, often around 5%.
• European Union (EU): The EU represents 10-15% of the total export turnover, with key partners including the Netherlands, Germany, Poland, and Italy. The EVFTA (EU-Vietnam Free Trade Agreement) provides a major competitive edge, offering 0% import tax duties to the EU market.

• China, Japan, and South Korea supply around 70 % of imported machinery and spare parts to Vietnam.

Therefore, Vietnam’s trade openness and logistics network make it a crucial hub in the global industrial machinery and equipment market.

High-Demand Domestic Industries

The industrial machinery and equipment industry in Vietnam covers three key segments: agricultural, industrial, and construction machinery. Each segment has recorded steady growth over the past decade, driven by rising domestic demand and export orders.

By 2021:

• Machinery imports reached US$63.9 billion.
• Machinery exports climbed to US$38.3 billion, a record high.
• Foreign-owned enterprises accounted for most export turnover.

In addition, Vietnam has over 110,000 firms in manufacturing, making it a strong production base for industrial machinery & equipment.

Meanwhile, the Vietnamese machinery industry benefits from free-trade agreements such as EVFTA, CPTPP, and RCEP, which reduce tariffs on exported industrial equipment machinery to markets like the U.S. and EU.

Why Vietnam Matters in the Global Machinery Supply Chain

The Vietnamese machinery and equipment market is “relatively open” to foreign investors. The government permits 100% foreign-owned companies in both the manufacturing and trading businesses of M&E.

For multinational brands, the two most common entry strategies are:

• Establishing a subsidiary: Setting up a dedicated, fully-owned entity in Vietnam.
• Collaborating with a partner: Working through a local distributor or engaging an Original Equipment Manufacturer (OEM).

Besides, the machinery manufacturing industry in Vietnam is highly attractive for foreign investors, thanks to favorable conditions:

• Tax incentives: reduced import duties on parts, materials, and advanced machinery.
• Strategic location: proximity to supply chains in ASEAN, China, and South Korea.

Moreover, the Vietnamese government promotes technology transfer and R&D cooperation in the industrial equipment and machinery sector to boost innovation and localization.

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